Table of Contents

THEME 1 : FEDERALISM...................................................................................................... 4
Sub-themes................................................................................................................... 4
Federalism.......................................................................................................................... 5
Federal and Unitary provisions under the Constitution...............................................5
Asymmetric Federalism.................................................................................................... 6
Vertical Asymmetry (Centre and States)............................................................. 6
Horizontal Asymmetry (Between States/UTs).................................................... 6
Fiscal Asymmetry................................................................................................... 7
Need for Asymmetric Federalism.............................................................................. 7
Issues............................................................................................................................. 8
Way Forward.................................................................................................................9
Cooperative Federalism.................................................................................................. 10
Mechanisms for cooperative federalism................................................................ 10
Issues........................................................................................................................... 10
Way Forward...............................................................................................................11
Competitive Federalism..................................................................................................11
Mechanisms................................................................................................................12
Significance.................................................................................................................12
Issues........................................................................................................................... 13
Way Forward...............................................................................................................14
Fiscal Federalism............................................................................................................. 14
Changes in the last few years...................................................................................15
Significance.................................................................................................................15
Issues........................................................................................................................... 16
Way Forward...............................................................................................................17
Office of Governor........................................................................................................... 17
Essential Conditions for the Exercise of Legislative Powers by the Governor... 18
Issues pertaining to the office of governor............................................................ 19
Impact of such issues................................................................................................ 20
SC on the position of Governor...........................................................................................21
Recommendations of Various Commissions.................................................................... 21
Way Forward.......................................................................................................................... 22
President’s Rule............................................................................................................... 23
Need of President’s Rule...................................................................................................... 23
Impact of President’s Rule................................................................................................... 23
Issues pertaining to Article 356...........................................................................................24
Institutions of Centre-State Coordination....................................................................26
Inter-State Council................................................................................................................ 27
Issues................................................................................................................................ 28
Way Forward....................................................................................................................29
Areas of Friction...............................................................................................................29
Inter-State Water Disputes.................................................................................................. 29
Constitutional Provision: Article 262............................................................................ 30
Legislative Acts under Article 262.................................................................................30
Functional Inter-State Water Disputes Tribunals (as of 2022)..................................30
Reasons............................................................................................................................ 30
Challenges in solving water disputes........................................................................... 32
Way Forward....................................................................................................................33
Inter-State Border Disputes.................................................................................................34
Present state of Inter-State border disputes in India................................................ 34
Causes of Inter-State Border Disputes........................................................................ 34
Impacts of Inter-state Border Disputes....................................................................... 35
Way Forward....................................................................................................................36
7th Schedule..................................................................................................................... 36
Developmental Policies and Federalism.......................................................................39
Programmes in conflict with federal principle..................................................................39
Frequency and Intensity of Disputes in Federal System and Its Consequences......... 40
Recommendation for effective federal system.................................................................42
Federalism is a pivotal theme in the context of the UPSC Civil Services Examination (CSE)
Mains due to its fundamental role in shaping the political, administrative, and
socio-economic landscape of India.
Since 2013, 9 questions have appeared in the UPSC CSE (Mains) from this particular theme:

[2023] Explain the significance of the 101st Constitutional Amendment Act. To what extent does
it reflect the accommodative spirit of federalism? (15M)

[2022] While the national political parties in India favor centralisation, the regional parties are
in favor of State autonomy. Comment.(15M)

[2020] Indian Constitution exhibits centralizing tendencies to maintain unity and integrity of
the nation. Elucidate in the perspective of the Epidemic Diseases Act, 1897; The Disaster
Management Act, 2005 and recently passed Farm Acts.(15M)

[2020] How far do you think cooperation, competition and confrontation have shaped the
nature of federation in India? Cite some recent examples to validate your answer. (10M)

[2016] Discuss the essentials of the 69th Constitutional Amendment Act and anomalies, if any,
that have led to recent reported conflicts between the elected representatives and the
institution of the Lieutenant Governor in the administration of Delhi. Do you think that this will
give rise to a new trend in the functioning of Indian federal politics? (12.5)

[2016] To what extent is Article 370 of the Indian Constitution, bearing marginal note
“Temporary provision with respect to the State of Jammu and Kashmir”, temporary? Discuss
the future prospects of this provision in the context of Indian polity. (12.5)

[2015] The concept of cooperative federalism has been increasingly emphasized in recent
years. Highlight the drawbacks in the existing structure and the extent to which cooperative
federalism would answer the shortcomings.(12.5M)

[2014] Though the federal principle is dominant in our Constitution and that principle is one of
its basic features, it is equally true that federalism under the Indian Constitution leans in favor
of a strong Centre, a feature that militates against the concept of strong federalism.
Discuss.(12.5M)

[2013] Recent directives from the Ministry of Petroleum and Natural Gas are perceived by the
`Nagas' as a threat to override the exceptional status enjoyed by the State. Discuss in light of
Article 371A of the Indian Constitution.(10M)

Sub-themes
In line with the trends of the exam, we have prepared this study material with the following
subthemes:
1. Asymmetric Federalism
2. Cooperative Federalism
3. Competitive Federalism
4. Fiscal Fedralism
5. Office of the Governor
6. President’s Rule
7. Institutions of Centre-State Coordination
8. Areas of Friction
 9. 7th Schedule
10. Developmental Policies and Federalism

This compendium will help you get an edge in the Mains Exam. The intention of this
material is that you are able to solve the PYQs and are well prepared for any surprises
thrown by UPSC from this theme.
Federalism
“Indian Union is a unitary state with subsidiary federal features rather than a federal state
with subsidiary unitary features.” - K.C. Wheare.

However, G. Austin rejects appellations such as ‘statutory decentralisation’ or

‘quasi-federal’ as interesting but not particularly illuminating’. He points out the pragmatic
character of Indian federalism which was a ‘new kind of federalism to meet India’s peculiar
needs’, and which is what he calls ‘a cooperative federalism’ that ‘produces a strong
central government yet not necessarily resulting in weak provincial governments.

Federalism is a system where power is shared between different levels of government, like
the national government, state governments, and local bodies. Countries with federal
systems include the United States, Canada, Switzerland, Australia, and India.

In Ganga Ram Moolchandani v. State of Rajasthan the Supreme Court reiterated:

'Indian Constitution is basically federal in form and is marked by the traditional
characteristics of a federal system, namely supremacy of the Constitution, division of power
between the Union and States and existence independent judiciary.

In the case of S. R. Bommai v Union of India, the SC held that the Indian Constitution
has features of pragmatic federalism which, while distributing legislative powers and
indicating the spheres of governmental powers of State and Central Governments, is overlaid
by strong unitary features. It also included Federalism in ‘Basic Structure of the
Constitution’.

Federal and Unitary provisions under the Constitution

Features Federal Unitary

Polity Dual Polity Strong Centre

Constitution ● Written Constitution Single Constitution

● Supremacy of the
Constitution

Amendments Rigid Constitution: Ratification by Flexibility of the Constitution:

50% of the states required. Amendment by Parliament alone,
either by a simple or special majority.
States cannot propose amendments,
unlike in the US.

Division of The 7th schedule provides clear The Union List has 100 subjects, the
Powers division of powers with rigid State List 61, and the Concurrent List
Amendment procedure 52, with conflicts favoring Central law.
 Judiciary Independent Judiciary: Helps to Integrated Judiciary: No separate
resolve Centre-state disputes. federal and state courts like the USA.

Rajya Sabha Bicameralism No Equality of State Representation in

Rajya Sabha. Uttar Pradesh has 31
seats, while several smaller states like
Goa have only one.

Asymmetric Federalism
Asymmetric federalism is a model where different units within a federation have varying
degrees of political, administrative, and fiscal powers, unlike symmetric federalism where all
units have equal powers. It addresses unique needs arising from ethnic, linguistic, or cultural
differences.
While constructing an asymmetrical framework, our founding fathers chose the salad bowl
approach instead of the melting pot approach.
Recognising the existing pluricultural society in India necessitated such a choice.
1. De jure asymmetry: Constitutional differences in legislative powers, central
representation, and rights.
2. De facto asymmetry: Differences based on national policy agreements.

Vertical Asymmetry (Centre and States)

Provision Description
Article 3 The Centre can unilaterally alter
state names and
boundaries.
Single Citizenship Only single citizenship is available to Indian citizens, with no
state citizenship.
Articles 352 & 356 Provisions related to National Emergency and President's
Rule.
Article 248 Residual legislative powers rest with Parliament.
Governor’s The governor of a state acts as the Centre’s representative in
Appointment the state.
Horizontal Asymmetry (Between States/UTs)
Provision Description
Articles 371A-371J Special positions, powers, and protections for northeastern
states.
Schedule 5 and 6 Administration and control of Scheduled Areas and
Scheduled Tribes.
Article 370 Granted Jammu & Kashmir a unique status under the
Constitution, providing it with substantial autonomy until its
revocation in 2019.
Special status to Delhi Unique administrative and governance structures within
and Pondicherry Union territories.
Fiscal Asymmetry
 Provision Description
Vertical Asymmetry As per the 15th Finance Commission's recommendations,
states' share of central taxes for 2021-26 is 41%.
Devolution among Criteria like income disparity, demographic performance,
states (Horizontal and ecological factors are used for fund allocation.
asymmetry)
Centrally Sponsored For special category states, the Centre provides 90% of CSS
Schemes (CSS) funding, compared to 60% for other states.
Special Category Granted by the National Development Council (NDC) to
Status certain states based on criteria like hilly terrain, low
population density, and economic backwardness.

Need for Asymmetric Federalism

Aspect Description Examples
Capacity to Recognizes that some states have North-Eastern States
Accommodate Social distinct needs and facilitates their
Groups and Interests accommodation, ensuring India's
federal democracy thrives.
Minority Rights Asymmetric federalism The Fifth and Sixth
acknowledges distinctive cultural Schedules.
differences and allows self-rule
within a shared framework for
territorially concentrated minorities.
Addressing Regional Diversity
Accommodating Ethnic Grants autonomy to regions with The Sixth Schedule.
and Cultural Diversity unique cultural practices and
governance structures.
Managing Diverse Maintains the distinct Article 371F : Sikkim.
Socio-economic socio-economic and cultural identity
Conditions of regions.
Enhancing Political Stability
Mitigating Regional Establishes councils and bodies to The Bodoland Territorial
Conflicts address demands for autonomy and Council (BTC) addresses
reduce ethnic tensions. autonomy demands in the
Bodoland region.
Preventing Secessionist Grants special statuses to manage Article 370 (before its
Movements unique political and historical revocation in 2019).
contexts.
Border Security Grants greater autonomy to border The Inner Line Permit
states for managing internal security. system.
Protecting Tribal Rights and Interests
Preserving Tribal Provides special protections and The Fifth Schedule.
Autonomy administrative measures for
Scheduled Tribes.
Empowering Tribal Allows tribal communities to govern Autonomous District
Governance themselves on local matters. Councils under the Sixth
Schedule.
Promoting Development
Targeted Development Focuses on economic and social The North Eastern Council
Initiatives development in specific regions. (NEC).
Economic Upliftment of Allocates resources to The Backward Regions
Backward Regions underdeveloped districts to promote Grant Fund (BRGF).
balanced regional development.
Facilitating Administrative Efficiency
Decentralised Provides administrative autonomy to The Gorkhaland Territorial
Governance regions for more efficient local Administration (GTA).
governance.
Special Administrative Grants special powers to governors Article 371H grants special
Provisions for tailored administrative control. powers to the Governor of
Arunachal Pradesh.
Ensuring Balanced Resource Distribution
Equitable Allocation of Ensures equitable distribution of Article 371J establishes a
Resources funds and resources to historically development board for
disadvantaged areas. the Hyderabad-Karnataka
region.
Fiscal Autonomy and Provides additional financial Special Category Status.
Support assistance to states with unique
developmental needs.
Maintaining National Unity
Integrating Diverse Respects regional social and cultural Article 371A respects
Regions practices while integrating them into Nagaland's practices.
the national framework.
Reducing Alienation Acknowledges and respects regional Special provisions for
distinctiveness to reduce feelings of states like Mizoram
alienation. (Article 371G).

Issues
Aspect Description Examples
Administrative Challenges
Complexity in Different laws and administrative Unique land laws in Nagaland
Governance practices in states lead to under Article 371A
complex and fragmented
governance.
Bureaucratic Special administrative The Sixth Schedule's autonomous
Overload arrangements add bureaucratic district councils.
layers, slowing decision-making
and implementation.
Political Tensions
Regional Disparities States without special provisions Demand for Special Category Status
feel disadvantaged compared to (SCS) by Bihar and Andhra Pradesh.
those with special privileges,
fostering political discontent.
Local vs. National Autonomy can lead to conflicts Article 370.
Interests between regional aspirations and
central government policies.
Selective Application Influence of political considerations Politicization of Special Category
of Asymmetric can lead to inconsistent treatment. Status.
Federal Principles
Fiscal Imbalance States with unique financial States with Special Category Status
arrangements adopt varied fiscal receive preferential treatment in tax
devolution and grants.
 policies, impacting national fiscal
stability.
Legal and Constitutional Issues
Ambiguities in Certain provisions in the Varying interpretations of Article 371.
Provisions Constitution require judicial
interpretation, leading to
ambiguities and potential legal
challenges.
Conflict of Jurisdiction Special powers granted to
Governors in some states lead to
conflicts between state and central
authorities.
Social and Cultural Impact
Ethnic Tensions Autonomous regions experience The Bodoland Territorial Council (BTC)
internal ethnic conflicts, area in Assam has witnessed ethnic
exacerbating social divisions. tensions between Bodos and
non-Bodos.
Security Concerns
Internal Security Greater autonomy in sensitive Autonomous regions in North Eastern
Challenges regions complicates internal states have faced insurgency issues.
security management.
Coordination Issues Different security protocols and
administrative practices in
autonomous regions hinder
effective coordination with national
security agencies.
Governance and Accountability
Lack of Uniform Diverse administrative practices
Policies hinder the implementation of
uniform national policies and
programs.
Accountability Issues Regions with significant Corruption in Autonomous District
self-governance struggle with Councils.
maintaining transparency and
accountability in their
administration.

Way Forward
Strategy Action Example
Strengthening Inter-State Empower the Council to resolve
Council interstate water disputes.
Develop a consistent Establish clear criteria for granting
framework for applying Special Category Status.
asymmetric federal
provisions
Balanced Resource Reform Finance Consider factors like population size
Allocation Commission guidelines for and development needs for state
fairer resource allocations.
distribution.

Cooperative Federalism
Cooperative federalism is a concept of federalism where national, state, and local governments
interact cooperatively and collectively to solve common problems, rather than making policies
separately but more or less equally (which is known as dual federalism).

Cooperative federalism recognizes the overlapping functions of the centre and state
governments. Eg- bureaucratic agencies at the central and state level normally carry out
governmental programs jointly. Schemes concieved at the central level have to carried out by
the states.

Mechanisms for cooperative federalism

Category Feature
Legislative Concurrent List allows both central and state govts to legislate on shared
subjects, promoting collaboration in governance.
Executive Mutual delegation of functions, immunity of instrumentalities, All India
Services, and Article 355 ensure cooperative federalism.
Fiscal Finance Commission recommends financial resource distribution; GST Council
ensures uniform tax structure and dispute resolution.
Institutional Inter-State Council, Zonal Councils, NITI Aayog, and MoUs between centre
and states on project basis foster collaboration and coordination between
central and state governments.

Issues
Category Issue Example
Legislative and Policy Issues
Centralized The Centre often makes decisions During COVID-19, the Centre
Decision Making without considering state invoked the Disaster
perspectives. Management Act, 2005,
imposing binding guidelines on
states regarding public health, a
state subject.
Legislative Uneven distribution of subjects Union List has more subjects
Distribution between Centre and states than State List.
(Schedule VII).
Policy States and the Centre often clash National Education Policy, New
Disagreements over policy decisions. Pension Scheme.
Governor's Political Governors are often seen as agents Governors referring state bills
Role of the Centre, which can lead to (e.g., Tamil Nadu's NEET Bill) to
political tensions. the President under Article 201.
'One size fits all' The central government's policy Farm Laws, 2020
approach in policy formulation often overlooks India's
making diversity, employing a
one-size-fits-all approach
unsuitable for such a
heterogeneous nation.
Administrative Issues
Emergency Misuse of Emergency Provisions
Provisions under Article 356 for political gains
undermines state autonomy and
disrupts the balance of
cooperative federalism.
Officer Transfers Tension over cadre officers being Tension over West Bengal cadre
and Postings called on central deputation; IPS officers called on central
deputation; Delhi government's
 disputes over state governments' power over bureaucrat transfers
power over bureaucrat transfers. and Centre's use of ordinance.
Alleged misuse of Instances of tussle between the Many states have revoked
Central Agencies agencies of central government general consent to the CBI,
and the state governments have alleging misuse in
now become common in India. opposition-ruled states.

BSF Jurisdiction The Centre extended the BSF's

Extension jurisdiction in Assam, West Bengal,
and Punjab without consulting the
states.
Lack of institutions Ineffectiveness of Inter-State It is merely an advisory body
for federal Council with no bindings on either the
communication centre or the state.
Financial Issues Covered in fiscal federalism.
Other Issues
Increasing tensions over issues
Confrontational such as governor appointments,
Federalism the National Register of Citizens
(NRC), Citizenship Amendment Act
(CAA), and farm bills.

Way Forward
Strategy Recommendation Details/Examples
Political Integrate State Parties Ensure that state parties are part of federal
Integration in Federal Coalitions coalitions to enhance their role in national
governance.
Legislative Fast-Track State Bills Accelerate the presidential assent process for
Efficiency state bills to foster timely cooperation
between the Centre and states. The time limit
of 6 months can be set for these bills.
Fiscal Federalism Timely Disbursal of Ensure timely disbursal of funds to states and
Funds provide greater fiscal autonomy to states in
managing their finances.
Cooperative Encouraging Establish a legislative advisory committee to
Legislation Cooperative Legislation draft model laws in consultation with state
governments.
Administrative Revising 7th Schedule M.M. Punchhi Commission suggested
Empowerment reallocation of more subjects to the State List
to empower state governments and reduce
central interference.
According to G Subbarao, as the economic centre of gravity shifts towards states, India's
growth and aspiration for a $5 trillion economy hinge on cooperative federalism.
Competitive Federalism
Competitive federalism is a framework of governance where different levels of government
(national, state, and local) compete with each other to deliver the best services and attract
resources. This model promotes efficiency, innovation, and accountability by encouraging
governments to be more responsive to the needs of their citizens.
With liberalisation, privatization and globalization, Indian federalism started shifting from
cooperative federalism to competitive federalism to achieve overall inclusive development.
According to Ronald watts, Just as in economie realm where, competition produces superior
benefits, so as competition between governments provides citrzens with better services.
Mechanisms
Institution Details
NITI Aayog Promotes competitive federalism by facilitating improved performance of
States/UTs through transparent rankings and a hand-holding approach.
Examples: School Education Quality Index, India Innovation Index, Export
Competitiveness Index, Composite Water Management Index, rankings
of Aspirational Districts.
Finance 15th Finance Commission employed various metrics to allocate central
Commission taxes among states (2021-26). Recommended performance incentives
and grants based on agricultural reforms, exports, groundwater recharge,
and allowed additional borrowing for power sector reforms.
Business Reform The Centre releases rankings categorizing states as ‘top achievers’,
Action Plan ‘achievers’, or ‘aspirers’.
Schemes Aspirational Districts Programme: Targets underdeveloped districts'
development through competitive ranking.
Smart Cities Mission: Cities selected based on competitive proposals.
Swachh Bharat Abhiyan Rankings: Municipalities and states ranked on
cleanliness and sanitation.

Significance
Subhead Point Details Examples
State-Centric Diverse State The one-size-fits-all Each state will craft its
Development Policies approach is replaced own city development
with diverse state strategies funded
policies reflecting their autonomously, fostering
unique priorities. discipline among states.
Regional Encourages lagging states Aspirational Districts
Development to catch up with more Programme.
and Reduced developed ones,
Disparities reducing regional
disparities.
Enhanced Competition for Intense competition States like Gujarat and
Economic Growth EoDB among states for EoDB Maharashtra attracting
fosters the creation of significant foreign direct
favourable policies for investment (FDI) due to
private investors, thereby business-friendly
reducing states' reliance policies.
on the central
government.
Promotion of The Finance Implementation of GST
Fiscal Commission's allocation compliance measures
Responsibility is influenced by factors
like tax and fiscal efforts, across states.
thereby promoting fiscal
responsibility among
states.
Improved Improve Ensures minimum waste Kerala's efficient
Governance and Administrative and maximum resource handling of disaster
Accountability Efficiency usage by stimulating
healthy competition management and
among states in creating resource allocation
physical and social during floods.
infrastructure.
 Increased Performance Monitoring NITI Aayog's SDG
Accountability through regular rankings India Index ranking
and evaluations make
state governments more states based on
accountable to their sustainable
citizens. development goals
performance.
Enhanced Heightened public Digital India initiatives
Service Delivery awareness and increased in states like Karnataka
Quality state government
accountability contribute improving public
to an improvement in service access.
service delivery quality.
Improved Social Focus on improving Tamil Nadu's health
Indicators health, education, and and education
welfare indicators leads
to overall social schemes significantly
development. improving social
indicators.
Innovation and Promote Competitive federalism Telangana's T-Hub and
Future Readiness Continuous spurs states to Kerala's Kerala Startup
Reforms and continually evolve Mission (KSUM).
Innovation through policy reforms
and innovative
approaches, thereby
driving progress and
efficiency in governance.
Future Readiness The competitive spirit will Maharashtra's
ensure the readiness of response to COVID-19
the nation to face
contingencies such as with the "Mahakavach"
Covid-19. app for tracking and
management
Para-Diplomacy States are engaging in Vibrant Gujarat Summit.
diplomatic activities in
fields such as trade,
commerce, foreign direct
investment (FDI),
education, and cultural
exchanges.

Issues
Challenge Description Example
Resource States with better initial resources Maharashtra and Gujarat attract
Disparities and infrastructure attract more more FDI than Bihar and
investments, widening the gap Jharkhand.
between rich and poor states.
Fiscal Imbalances Unequal distribution of fiscal Tamil Nadu generates more
resources can exacerbate disparities, revenue than Odisha, which
as wealthier states have greater relies heavily on central grants.
capacity to generate revenue through
taxes and attract investments.
Policy Lack of coordination between states Differing state lockdown
Coordination and the central government can lead measures during COVID-19
 to policy incoherence and caused confusion and logistical
inefficiencies. issues.
Regional Competition may lead to the neglect Andhra Pradesh focuses on
Disparities in of less developed regions within developing Amaravati,
Development states, as state governments focus on neglecting Rayalaseema.
developing areas with higher
economic potential.
Social Inequalities Economic competition can Industrialization in Gujarat has
sometimes lead to social inequalities, displaced tribal communities
with marginalized communities being without adequate
left behind in the race for compensation.
development.
Environmental In the race to attract investments, Andhra Pradesh and Tamil Nadu
Concerns states might compromise on face deforestation and pollution
environmental regulations, leading to due to industrial projects.
ecological degradation.
Political Rivalries Political rivalries between state Central-state tensions in West
governments and the central Bengal have delayed
government can hinder collaborative implementation of central
efforts necessary for holistic national schemes.
development.
Competition Over States with better educational and Kerala and Karnataka attract
Human Capital healthcare facilities attract talent from professionals from Uttar
other states, leading to brain drain in Pradesh and Bihar, causing brain
less developed states. drain in these less developed
states.

Way Forward
Strategy Description Example
Cooperative Balancing cooperation and On the lines of decision making in The
Competitive competition ensures states not Goods and Services Tax (GST) Council
Federalism only strive for excellence within
their borders but also seek
necessary support.
Empowering Granting states greater autonomy Providing states more control over
States with over Concurrent List subjects education and healthcare policies to
Autonomy fosters healthier competition. tailor programs to their specific
needs, promoting innovative solutions
and competition.
Setting Establishing sector-specific The Swachh Bharat Abhiyan where
Standards and standards and benchmarks the central government sets
Benchmarks enables the Central Government cleanliness standards and
to encourage states to meet and benchmarks, encouraging states to
exceed these criteria. compete in achieving higher
sanitation levels.

Fiscal Federalism
It entails the division of responsibilities and resources between the central and state
governments, with the Finance Commission playing a key role in recommending tax proceeds
distribution.
Changes in the last few years
Change in Fiscal Federalism of Description
India
Introduction of Goods and Replaced multiple indirect taxes with a single tax system,
Services Tax (GST) creating a unified tax structure.
14th Finance Commission Increased the share of states in central taxes from 32% to
42%.
15th Finance Commission Recommended devolution of 41% of central taxes to
states.
Implementation of Direct Shifted subsidy and welfare benefit delivery from
Benefit Transfer (DBT) intermediaries to direct transfers to beneficiaries' bank
accounts.
Fiscal Responsibility and Budget Introduced to ensure fiscal discipline by setting targets for
Management (FRBM) fiscal deficit and public debt.
Adoption of National Institution Replaced the Planning Commission in 2015 to promote
for Transforming India (NITI cooperative federalism and provide a platform for states
Aayog) to engage in policy-making.
Special Category Status and Certain states receive special financial assistance based on
Finance Commission Grants specific criteria like hilly terrain, low population density,
and socio-economic backwardness.
Changes in Centrally Sponsored Restructuring of CSS to reduce the number and increase
Schemes (CSS) the flexibility of schemes, allowing states more discretion
in their implementation.
Local Government Enhanced financial allocations and autonomy to
Empowerment Panchayats and Municipalities through the
recommendations of Finance Commissions.
Borrowing Limits and State borrowing limits adjusted, often tied to fiscal
Conditionalities performance and compliance with central guidelines.

Significance
Aspect of Fiscal Description Example
Federalism
Equitable Ensures fair distribution of The 15th Finance Commission allocated
Resource resources among states, a higher share of central taxes to
Allocation reducing disparities. populous and lower-income states like
Bihar and Uttar Pradesh.
Decentralized Empowers states with Maharashtra and Karnataka
Decision-Making autonomy in taxation and implemented state-level GST policies
welfare, enhancing to tailor tax rates to local economic
responsiveness to regional conditions.
challenges.
Interstate Promotes state collaboration. During COVID-19, the GST Council
Cooperation adjusted tax rates and granted
exemptions for medical supplies and
vaccines, ensuring a coordinated
response.
Incentivizing Promotes resource The 15th Finance Commission
Efficient Use of optimization and best rewarded states like Gujarat and Tamil
Resources practices. Nadu with higher tax collection
efficiency, improving governance.
Enhanced Holds states accountable for Performance-based grants incentivize
Accountability financial management, states like Kerala and Telangana to
encouraging efficient resource demonstrate effective fiscal
use. management.
Enhanced Service States with greater financial Kerala and Tamil Nadu, with greater
Delivery control improve public financial autonomy, invested
service delivery. significantly in healthcare and
education, resulting in better service
delivery compared to other states.

Issues
Challenge Details Examples
Implementation of Promised 42% vertical devolution States' share in central taxes fell
14th Finance of taxes not realised; peaked at sharply in 2019-20 and
Commission 36.6% in 2018-19, declining 2020-21.
thereafter.
Principles of Conflicting views on grant-in-aid Karnataka and Tamil Nadu
Grant-in-Aid distribution; better-off states prefer incentive-based grants,
prefer incentive-based grants, while Madhya Pradesh and
while less developed states seek Odisha seek deficit-based
deficit-based grants. grants.
Nature of the 7th Outdated fiscal powers division Division of subjects in Union,
Schedule reflecting pre-independence State, and Concurrent lists
socio-economic realities. based on 1950s context, not
current needs.
Article 282 Misuse Central government transgressing Implementation of schemes like
state powers through Centrally MGNREGA and PMGSY, which
Sponsored Schemes (CSS) and states fund but have limited
Central Sector Schemes. decision-making power over.
Overuse of Cesses Increasing reliance on cesses and Swachh Bharat Cess, Krishi
and Surcharges surcharges, which are outside the Kalyan Cess, and various
divisible pool of taxes. surcharges on income tax and
corporate tax.
Finances of Third Tier Negligible own revenue and Rural local bodies rely heavily
of Government complete dependence on state on state transfers for
governments. functioning, lacking
independent revenue streams.
Fiscal Stability and Central government debt at Punjab's debt at 42.8% of GSDP,
Discipline 48.4% of GDP in 2018-19, Chhattisgarh's debt at 17% of
exceeding FRBM Act targets; wide GSDP.
variance in state debt levels.
GST Compensation GST implementation led to loss of States like Kerala and Punjab
and Trust Issues unilateral tax policy threatened legal action over
determination; shortfall in GST non-payment of GST
Compensation Cess during compensation.
COVID-19.
 Coordination Between Lack of coordination between Discrepancies between
Finance Commission Finance Commission projections revenue projections and actual
and GST Council and GST Council decisions on collections due to GST rate
rates and exemptions. changes not considered by
Finance Commission.

Way Forward
Strategy Details Examples
Symmetry in GST Improve coordination between Consider making Finance
Council and Finance Finance Commission and GST Commission a permanent body
Commission Council to optimise revenue for continuous monitoring.
outcomes.
Revising the 7th Examine and redistribute entries Update Union, State, and
Schedule in the 7th Schedule to align with Concurrent lists to reflect current
modern socio-economic governance and economic
realities. needs.
Credible Policy for Develop a policy for rationalising Create mechanisms to
CSS Rationalisation Centrally Sponsored Schemes amalgamate CSS with central
(CSS) in consultation with State sector outlays.
Governments.
Reviving Institutional Rejuvenate the Inter-State Use the Inter-State Council and
Capital Council to fill the vacuum left by Chief Minister's Conference to
the abolition of the Planning discuss Terms of Reference for
Commission. Finance Commission.
Effective Devolution Ensure steady financial flow and Improve property tax collection
to Local Bodies provide local bodies with more by Urban Local Bodies;
taxation powers for independent constitute State Finance
revenue streams. Commissions as per Article
243(I).
Fiscal Consolidation Adhere to the amended FRBM Recognise constraints and legacy
Roadmap Act for sound fiscal management debt issues; judicious use of
and create differentiated debt resources.
paths for states.

Office of Governor
"The Governor is a constitutional head and the custodian of the Constitution within the state.
His role is to ensure that the governance in the state is carried out in accordance with the
Constitution." - Ambedkar

"The Governor is the key link between the Centre and the states. He serves as a bridge,
ensuring that the dual system of governance works in harmony within the constitutional
framework." - S. Radhakrishnan

"The significance of the Governor lies in his role as a constitutional sentinel, ensuring that the
governance of the state adheres to the Constitution’s mandates and principles." - M. C. Chagla

"The Governor should act not as an agent of the Centre but as a constitutional head, whose
actions are governed solely by the mandate of the Constitution and the interests of the state." -
P. V. Rajamannar

"The Governor's role in a state should be that of an impartial head who stands above the fray of
political machinations, ensuring that the rule of law prevails and democratic norms are upheld."
- Jawaharlal Nehru
Essential Conditions for the Exercise of Legislative Powers by the Governor

Condition Details Examples

Constitutional The Governor's legislative Articles 200 and 213 outline
Provisions powers are defined and the Governor's powers related
limited by the Constitution of to bills and ordinances.
India.
Advice of Council The Governor must act on the While assenting to a bill or
of Ministers advice of the Council of returning it for
Ministers headed by the Chief reconsideration, the Governor
Minister. acts on the advice of the
Council of Ministers.
Discretionary In specific situations, the Reserving a bill for the
Powers Governor can exercise consideration of the President
discretion without the advice (Article 200).
of the Council of Ministers.
Assent to Bills The Governor can give assent, Assent given to a bill passed by
withhold assent, or reserve the state legislature to make it
the bill for the President's a law.
consideration.
Ordinance-making The Governor can promulgate Ordinance issued to address
Power ordinances when the state urgent matters that cannot
legislature is not in session, wait for the next legislative
subject to constitutional session (Article 213).
limits.
Judicial Review The actions of the Governor Rameshwar Prasad and Ors vs
can be subject to judicial Union Of India (2006)
review if challenged.
Consultation with The Governor may consult Seeking legal advice before
Legal Experts legal experts to ensure reserving a bill for the
actions are constitutionally President's consideration.
sound.
Duration and Ordinances must be Ordinance passed in an
Approval of approved by the state emergency must be ratified by
Ordinances legislature within six weeks of the legislature once it
reassembling, or they cease reconvenes.
to operate.
Emergency During emergencies, the Promulgating ordinances
Situations Governor has special powers during a state emergency to
to ensure governance maintain law and order.
continuity.
Communication The Governor communicates Bill reserved for the President
with the President certain legislative decisions under Article 200 for
and bills to the President for consideration before
assent or consideration. becoming law.
Issues pertaining to the office of governor
Issue Details Examples
Appointment Lack of specific provisions related to - Former Delhi CM Sheila Dikshit
appointment of Governors in the was appointed Governor of
Constitution. Kerala after her defeat in the 2014
legislative elections.
Only requirements: Indian citizen
and 35 years old.
Central government appoints
loyalists and retired politicians.
Misuse of - Misuse of the office for political - In 1952, Governor of Madras
Position purposes since 1952. invited C. Rajagopalachari to form
the government despite not being
an elected member.
- Misused 115 times from 1951 to - In 2016, President's rule was
2016 to dismiss duly elected imposed in Arunachal Pradesh by
governments. the Governor's actions.
- Supreme Court ruling: Governor
bound by the aid and advice of the
Council of Ministers except where
Constitution specifies otherwise.
Acting as Agent - Abuse of position at the behest of - Governor of Rajasthan appealed
of Centre the ruling party at the Centre. to re-elect Modi in 2019 General
Elections.
- Post seen as retirement package
for loyal politicians.
- Governors send motivated,
distorted reports to the Centre to
hamper state governments.
Constitutional - Constitution lacks detailed - Present Governors of Karnataka,
Ambiguity qualifications for Governor Kerala, Goa, and Manipur are
appointment, leading to political leaders from the ruling
manipulation by the ruling party at party.
the Centre.
- Most Governors have political
backgrounds, affecting
decision-making.
Disregard for - Convention of consulting Chief - Consultation has been replaced
Convention Ministers before Governor with merely informing the Chief
appointment has been disregarded. Minister.
- Sometimes, prior intimation is not
given at all.
Arbitrary - Governors are arbitrarily removed - In December 1989, V.P. Singh
Removal when there is a change of government asked all Governors
government at the Centre, as there appointed by the previous
is no provision for Governor government to resign.
impeachment.
- Supreme Court: President can
remove a Governor without reason,
but this power must not be
exercised arbitrarily.
Reservation of - Article 239AA (4): In case of a - Lt. Governor of Delhi misused
Bills difference between Lt. Governor this provision to take
 and Council of Ministers, the issue is administrative decisions,
referred to the President. depriving the state assemblies.
- Supreme Court: Lt. Governor must
work on the aid and advice of the
Council of Ministers; not all matters
should be referred to the President.
Misuse of Article - Governors recommend President's - President's rule imposed in
356 rule under Article 356 during Uttarakhand and Arunachal
political instability without Pradesh in 2016, Jharkhand in
exhausting all options. 2013.
- Exercise of power to dismiss state - Sarkaria Commission noted
governments opposed to the ruling Article 356 misuse 100 times
party at the Centre. since Independence.

Impact of such issues

Aspect Points Examples

Democracy Democracy ensures the elected Governors dismissing state

party represents the people's governments or refusing bills
mandate. Governor misusing per central directives.
power defies this mandate.

Federalism Federalism separates centre Central government using

and state powers. States have Governors to recommend
autonomy in state list areas. President's rule in
Governor appointed by central opposition-led states.
government.

Centre-state Article 355 mandates the centre Imposition of President's rule

relations to protect states. Governor in states like Arunachal
interference creates trust Pradesh and Uttarakhand
deficit. based on Governors'
influenced reports.

Administration Governors running parallel Governors holding back or

administration on central delaying state bills,
advice. This paralyzes state hampering state
legislative rights. governments' functioning.
 Public trust Frequent political removals Removal of Governors when a
lower Governor office prestige. new central government
Public trust in Governor's post assumes power, seen across
eroded. different political regimes.

SC on the position of Governor

S.No Case Judgement

1 Samsher Singh vs Governor's discretion should align with the Council of

State of Punjab Ministers. Decisions should not oppose the Council's
(1974) wishes.

2 S.R Bommai vs Union Historic case on arbitrary state government dismissal

of India (1994) under Article 356. Governor cannot deny CM's floor
test. Governor's report for President's Rule is subject
to judicial review.

3 PU Myllai Hylchho vs Governor is a constitutional head acting on the

State of Mizoram Council's advice. Governor's satisfaction must align
(2005) with constitutional provisions.

4 Rameshwar Prasad Supreme Court can review Governor's discretion.

vs Union of India Article 361 (1) does not grant immunity from judicial
(2006) scrutiny on mala fides or ultra vires grounds.

5 B.P Singhal vs Union President cannot arbitrarily dismiss a Governor.

of India (2010) Central government change is not a valid reason for
Governor removal.

6 State of Arunachal Governor must follow the Council's advice, except as

Pradesh vs Nabam specified in the Constitution. Cannot disqualify the
Rebia (2016) Speaker or summon Assembly sessions unilaterally.

Recommendations of Various Commissions

a. Administrative Reforms Commission (1969): Governors should be
non-partisan individuals with substantial public life and administrative
experience.
b. Sarkaria Commission (1988):
i. Appointment: Governors should be appointed after consulting the
Chief Minister of State, should be eminent and from outside the State,
and not have recent intense political links.
 ii. Removal: Governors should be removed only for issues of morality,
dignity, or constitutional propriety, with the State Government consulted.
iii. Article 200: When Bill is reserved by the Governor, the Centre should
decide within 6 months.
iv. Article 356: Use sparingly, as a last resort in political crises, internal
subversion, or non-compliance with Constitutional directives.
c. National Commission to Review the Working of the Constitution
(NCRWC) (2002): Governors should be appointed by a committee
including the Prime Minister, Home Minister, Lok Sabha Speaker, and the Chief
Minister of State.
d. Second Administrative Reforms Commission (ARC) (2008): The
Inter-State Council should provide guidelines for governors' discretionary
powers.
e. Punchhi Commission (2010):
i. Term and Removal: Governors should have a fixed 5-year term and
can be removed by impeachment by the State Legislature; the doctrine
of pleasure should be deleted.
ii. Appointment: Reiterated Sarkaria Commission's recommendations;
Governors should not be active in politics.
iii. Chancellorship: Governors should not be university chancellors.
iv. Article 355 and 356: Amend to allow the Union Government to manage
specific troubled areas, not entire states.

In the NCT of Delhi vs. Union of India (2018) case, the Supreme Court held that
"constitutional morality places responsibilities and duties on individuals who occupy
constitutional institutions and offices." This principle should be adhered to by the Governor.

Way Forward

Recommendations Details

Examine Commission - Review Sarkaria and Punchhi Commission reports

Reports for amendments to Governor functions.

Apolitical Governor Office - Involve opposition, ruling party, civil society,

judiciary, and Chief Minister in Governor selection.

Consultation with Experts - Consult eminent jurists and intellectuals for

appointing ethical Governors.

Fixed Tenure for Governors - Encourage neutrality and fairness with fixed terms,
independent of central government changes.

Implement Committee - Use "Rajyapal —Vikas Ke Rajdoot" report to improve

Report Governor's role in development.

Replicate Best Practices - Adapt global best practices, like the USA's National
Governors Association, to enhance Governor's office.
Panel of Names for - Use state legislature-elected panel for President to
Governor choose Governors, as suggested by Sardar Hukum
Singh.

Discretion as People's - Follow Dr. B.R. Ambedkar's principle: Governors

Representative should act as representatives of the state's people,
not parties.

President’s Rule
Need of President’s Rule

Need for Article 356 Explanation Examples

1. Maintaining Ensures state governments Imposition of President's Rule in

Constitutional function according to the Arunachal Pradesh (2016) due to
Governance Constitution. alleged constitutional breakdown.

2. Addressing Provides a mechanism to handle President's Rule in Maharashtra

Political Instability situations where no stable (2019) following a hung assembly
government can be formed in a and failure to form a government.
state.

3. Preventing Internal Allows intervention in states Imposition of President's Rule in

Disturbances facing severe internal Punjab (1987) during insurgency and
disturbances threatening breakdown of law and order.
governance.

4. Protecting Ensures protection of minority President's Rule in Uttar Pradesh

Minority Rights rights in states where they may (1992) following the demolition of
be threatened. the Babri Masjid and ensuing
communal unrest.

5. Ensuring Enforces compliance with

Compliance with central laws and directives when
Central Laws state governments fail to do so.

6. Emergency Provides a constitutional remedy

Situations during natural calamities or
severe crises.

Impact of President’s Rule

 1. State Executive:
a. Assumption of State Government Functions: The President gains
authority to assume the functions of the state government and wield
powers vested in the governor or any other executive authority.
b. Dismissal of Council of Ministers: The President reserves the right to
dismiss the Council of Ministers headed by the Chief Minister, transferring
state administration responsibilities to the governor, assisted by the Chief
Secretary, acting on behalf of the President.
c. Utilization of State Consolidated Fund: The President is permitted to
sanction expenditure from the state consolidated fund when the Lok
Sabha is not in session, pending Parliament's approval.
d. Ordinance Promulgation: During parliamentary recess, the President
holds the authority to promulgate ordinances for state governance.
2. State Legislature:
a. Delegation of Legislative Power: In the absence of the state legislature,
Parliament may delegate legislative authority to the President or another
designated authority appointed by the President.
b. Centralization of Legislative Powers: The President holds the
prerogative to declare that the powers of the state legislature are to be
exercised by the Parliament.
c. Suspension or Dissolution of State Legislative Assembly: The President
is authorized to either suspend or dissolve the state legislative assembly.
d. Parliament's Authority Over State Matters: Parliament assumes the
responsibility of passing state bills and budgets during President's Rule.
e. Continuity of Central Laws: Laws enacted by Parliament, the President,
or designated authorities continue to remain effective even after the
imposition of President's Rule.
3. Judiciary: The Constitutional position, status, powers, and functions of the
State High Court remain unchanged even amidst President's Rule, preserving
judicial autonomy within the state.
4. Fundamental Rights of Citizens: The fundamental Rights of citizens does not
have any impact on Article 356.

Issues pertaining to Article 356

Dr. B.R. Ambedkar hoped that the drastic power under Article 356 would remain Dead
Letter and only be a last resort. However, as H.V. Kamath notes, while Dr. Ambedkar is
dead, Article 356 is still very much alive.

Aspect Explanation Examples

Breakdown of Term lacks clear definition, leading - Ambiguity exploited

Constitutional to ambiguity and potential misuse. during President's Rule
Machinery in Punjab (1987).

Frequent Use for Article 356 frequently used to remove - Dismissal of

Political Reasons state governments not aligned with opposition-led state
the central ruling party. governments post-1977
general elections.
Influenced Reports submitted by governors - Governor's report
Governor Reports often influenced or prepared by the leading to President's
Union Government. Rule in Arunachal
Pradesh (2016).

Denied Opposition Opposition parties consistently - No opportunity for

denied the chance to form an opposition in
alternative government. Uttarakhand (2016) to
prove majority.

Constitutional Article 356 allows for the imposition - Misuse highlighted in

Ambiguity of President's Rule based on S.R. Bommai case (1994).
subjective assessments of state
governors, leading to potential
misuse.

Centralization of Suspends state government, - Central control during

Power transferring control to the central President's Rule in Tamil
government, which can undermine Nadu (1976).
federal principles.

Scope for Judicial Judicial review checks misuse - Judicial review in S.R.
Review (established in S.R. Bommai case), Bommai vs Union of
but criteria for evaluation can be India (1994).
vague, affecting consistent
application.

Political Misuse Historically used to destabilize - Dismissal of state

opposition-led state governments, governments post-1977
reflecting political bias rather than elections.
constitutional necessity.

Suspension of Suspending the state legislature and - Suspension of

Democratic concentrating power in the legislature during
Process Governor's hands during President's President's Rule in
Rule is viewed as a setback to Kerala (1959).
democracy.

Impact on The instability and uncertainty - Delayed policy

Development caused by President's Rule can delay decisions during
policy decisions and hinder state President's Rule in Bihar
development and long-term (2005).
planning.

1. Supreme Court Guidelines: In the S.R. Bommai case (1994), the Supreme
Court of India set strict guidelines for invoking Article 356:
a. Judicial Review: Proclamations of President’s Rule are subject to judicial
review.
 b. Exceptional Power: The power under Article 356 is exceptional and should
be used only in special situations.
c. Relevant Material: The President's satisfaction must be based on relevant
material. Proclamations based on irrelevant grounds can be struck down.
d. Scope of Review: The court can assess the relevance but not the correctness
or adequacy of the material.
e. Floor Test: The loss of confidence in the Legislative Assembly should be
decided on the floor of the House before unseating the State Council of
Ministers.
f. Burden of Proof: The Centre must prove the existence of relevant material
to justify the proclamation.
g. Assembly Suspension: The State Legislative Assembly can only be
dissolved after parliamentary approval of the proclamation. Until then, it can
be suspended.
h. Restoration Power: If a proclamation is found unconstitutional, the court
can restore the dismissed State Government and revive the State Legislative
Assembly.
i. Reactivation upon Failure: If Parliament does not approve the
proclamation, the assembly will be reactivated.
j. Secularism: Secularism is a basic feature of the Constitution. A state
government pursuing anti-secular policies can face action under Article 356.
k. Party Politics: A new central government cannot dismiss state governments
formed by other parties.
2. Sarkaria Commission Recommendations (1983)
a. Sparing Use: Article 356 should be used "very sparingly" and as a last resort.
b. Reasons for Proclamation: The President’s proclamation of President’s Rule
should state reasons for the decision.
c. Warning to State Government: The Centre should warn the state
government before imposing Article 356 when possible.
d. Avoid Political Scores: Article 356 should not be used to settle political
scores.
e. Amendment for Dissolution: Amend Article 356 to allow the President to
dissolve the state legislature only after parliamentary approval.
3. Punchhi Commission Recommendations
a. Specific Area Jurisdiction: The Centre should manage only troubled areas
under its jurisdiction, for a brief period (up to three months).
b. Amendments for Bommai Guidelines: Amend the article to incorporate
guidelines from the SC in the Bommai case.
c. Localized Emergency: Introduce a 'Localized Emergency' to address issues at
town/district levels without dissolving the state legislature, fulfilling the Union's
duty to protect states as per Article 355.
4. National Commission to Review the Working of the Constitution
a. Mandatory Floor Test: A floor test should be compulsory.
b. Specific Reasons for Imposition: Provide clear reasons for invoking Article
356.

Institutions of Centre-State Coordination

Institution Established Purpose and Functions

 Inter-State Article 263 of the Facilitates coordination on policies and
Council Constitution matters of common interest; advises on
disputes and policy recommendations.

National 1952 by an Strengthens efforts for economic

Development executive order planning and development; reviews
Council
national plans and recommends
measures for development objectives.

Zonal Councils States Promotes cooperation between states

Reorganization Act, and union territories in zones; advises on
1956 economic, social planning, border
disputes, and transport.

Finance Article 280 of the Ensures fair financial resource

Commission Constitution distribution; recommends tax revenue
distribution, grants-in-aid, and fund
augmentation measures.

NITI Aayog 2015, replacing the Acts as the premier policy-making

Planning institution; provides strategic advice,
Commission coordinates economic policy, and
promotes federalism.

GST Council Article 279A of the Makes recommendations on GST issues;

Constitution decides tax rates, exemptions,
thresholds, and resolves GST disputes.

Rajya Sabha Constitution of India Represents states at the federal level;

(Council of reviews, amends, and passes legislation,
States)
and debates on matters affecting states.

Here we will be discussing about:

1. Inter State Council
2. Zonal Council
3. NITI Aayog

Inter-State Council
The Inter-State Council (ISC) is a Constitutionally mandated body established under
Article 263 of the Constitution of India that facilitates coordination and cooperation
between the central government and the state governments. It was set up on the
recommenda.tion of the Sarkaria Commission.
Mandate:
1. To enquire and advise upon inter-state disputes.
2. Investigating & discussing subjects in which states or the Centre and the states
have a common interest.
3. Recommending on any matter for better coordination of policy & action.
4. Its decisions are advisory and not binding.
Issues

Issue Explanation Examples

Infrequent Meetings The Inter-State Council Order - Last meeting took place
mandates at least three in 2016. The council and
meetings a year, but it has only its standing body were
met 11 times since 1990. reconstituted in 2022.

Narrow Agenda of Meetings are held in camera - Limited discussion topics,

Meetings with proceedings not made need to broaden scope for
public, focusing mainly on more comprehensive
Sarkaria and Punchhi inter-state issues.
commission recommendations.

Non-binding ISC recommendations are - Eleventh Finance

Recommendations non-binding, with no obligation Commission observed
for the center and states to ISC’s limited role in
accept them, limiting the evolving national
council's effectiveness. consensus on economic
and other matters.

Lack of Functional The council lacks functional In 2001, the ISC

Autonomy autonomy due to the absence Secretariat was composed
of a committed professional largely of bureaucrats
secretariat; the secretariat is appointed by the Prime
appointed by the Prime Minister, limiting its
Minister. independence and
effectiveness.
Dominance of a Meetings often dominated by During the UPA
Single Party states ruled by the central government (2004-2014),
ruling party, turning the council several states governed by
into a forum to push central opposition parties
government's agenda. complained about being
sidelined in ISC
discussions.

Way Forward

Recommendation Explanation Examples

Strengthen Legal Improve the legal - Constitutional amendment to

Position standing of the Article 263 for permanent status
Inter-State Council (ISC) and regular meetings.
by making it a
permanent
constitutional body.

Need for Technical Enhance policy research - Sarkaria Commission suggested

Expertise and investigation ad hoc Sub-Committees; Punchhi
capacity by including Commission recommended an
non-partisan experts. expert advisory committee.

Dedicated and Establish a dedicated - Example: Canada's

Permanent secretariat with staff intergovernmental conference
Secretariat
from both the center secretariat.
and states, ensuring
effective coordination.

Increased Role of Expand the ISC's role in - National Commission to Review

Council discussing and the Working of the Constitution
endorsing additional recommended states’
terms of reference for involvement in deciding Finance
the Finance Commission. Commission terms.

Areas of Friction
Inter-State Water Disputes
India has 14 major rivers, all of which are inter-state rivers. Despite constitutional and
legal provisions aimed at resolving water disputes, inter-state river disputes remain a
persistent challenge to India's federal system.

Constitutional Provision: Article 262

Article 262 provides for adjudication of inter-state river water disputes, allowing
Parliament to:

● Create laws for resolving disputes over inter-state river waters.

● Exclude the jurisdiction of the Supreme Court and other courts from such
disputes.

Legislative Acts under Article 262

River Boards Act, 1956

● Objective: Establishes advisory river boards for regulation and development of

inter-state rivers.
● Formation: Central Government sets up boards at the request of state
governments.
● Composition: Includes a Chairman and experts in relevant fields.
● Nature: Advisory, covering water conservation, irrigation, hydro-electric power,
and pollution control.

Inter State Water Dispute Act, 1956

● Objective: Empowers the Central Government to set up ad-hoc tribunals for

inter-state water disputes.
● Procedure: State governments request the Central Government; if negotiations
fail, the matter is referred to a tribunal.
● Power of Tribunal: Decisions are final and binding; courts' jurisdiction is
excluded.

Functional Inter-State Water Disputes Tribunals (as of 2022)

1. Krishna Water Disputes Tribunal-II (2004): Andhra Pradesh, Telangana,

Maharashtra, Karnataka.
2. Mahanadi Water Disputes Tribunal (2018): Chhattisgarh, Odisha.
3. Mahadayi Water Disputes Tribunal (2010): Maharashtra, Goa, Karnataka.
4. Ravi and Beas Water Disputes Tribunal (1986): Punjab, Haryana, Rajasthan.

Reasons
 Reasons
Details Examples

Historical origin Colonial rule: Centralised Secretary of State under

of disputes decision-making by the British Government of India Act, 1919
government. and 1935 made final decisions
on water utilisation.

Top-down approach: Led to continued inter-state

Provinces had no authority to river disputes
make decisions. post-independence.

Post-Independenc State Reorganisation Act: Cauvery dispute between

e State Integration of princely states Karnataka and Tamil Nadu.
reorganisation and formation of new states
in 1956.

Colonial agreements: Mysuru Kingdom and Madras

Pre-Independence Presidency agreements did not
agreements based on old account for later territorial
territorial boundaries. changes in Karnataka.

Inconclusive negotiations: States file review petitions and

Decades of unresolved seek renegotiation despite
negotiations and continued tribunal and court orders in
legal challenges. disputes like Cauvery.

Provision in Jurisdictional ambiguity: Union Parliament can regulate

Seventh schedule Federal jurisdictional inter-state disputes, but states
ambiguity in the constitution. retain power over water
supply and irrigation.

Impact: Indefinite Intensifies disputes like the

distribution of power leads to Ravi-Beas dispute between
constitutional and legislative Punjab and Haryana.
complexities.

Institutional Water dispute tribunals: Tribunal awards are final and

ambiguity Article 262 empowers binding, similar to Supreme
Parliament to adjudicate Court orders.
disputes through tribunals.
 Role of the Supreme Court: Cauvery Water Disputes
Supreme Court allows Tribunal award appealed in
appeals against tribunal Supreme Court, causing
orders under Article 136. delays.

Growing water Scarcity factors: Water crisis in Punjab and

scarcity Overutilization, pollution, Haryana due to Green
climate change, and political Revolution leading to disputes
factors. over the Sutlej-Yamuna Link
canal.

Challenges in solving water disputes

Challenges Details Examples

Delayed No time limit for tribunals to Cauvery Water Tribunal took

awards deliver awards, leading to 17 years to deliver its award.
prolonged disputes.

Judicial Awards by tribunals are binding, Cauvery Tribunal award was

interference but can be challenged under challenged in the Supreme
Article 136 (Special Leave Court, causing further delays.
Petition) in the Supreme Court.

Composition Tribunals were composed only of Awards were based on judicial

of Tribunal judicial members, lacking wisdom without proper
multidisciplinary and technical consideration of ground
expertise. realities.

Lack of Inefficient collection of Implementation delays occur

Hydrological hydrological data leads to due to incomplete information
Data decisions lacking scientific on water availability and
reasoning. usage.

Politicisation Regional parties leverage water Water disputes, like those

of water issue disputes for political gain, involving the Cauvery and
reducing political will to resolve Mahadayi rivers, are often
issues. used as political tools in
elections.
Way Forward

Way Forward Details

Timely Resolution Set Time Limits: Introduce mandatory time limits for
tribunals to deliver awards.

Fast-Track Mechanism: Establish fast-track procedures

for urgent cases.

Minimize Judicial Limit Appeals: Amend laws to restrict the scope of

Interference Article 136 (Special Leave Petition).

Finality of Tribunal Awards: Strengthen the finality and

binding nature of tribunal awards.

Enhanced Tribunal Multidisciplinary Panels: Include experts from fields like

Composition hydrology, environmental science, and engineering.

Technical Expertise: Ensure tribunals have access to

technical and scientific expertise.

Improved Data Centralized Data Repository: Develop a centralized,

Collection transparent hydrological database.

Modern Technology: Use remote sensing and GIS for

accurate data collection and monitoring.

Political Will and Political Consensus: Foster political consensus and

Cooperation cooperation among states.

Depoliticize Water Issues: Encourage a non-partisan

approach towards water disputes.

Strengthening Empowered River Boards: Empower river boards with

Institutional decision-making authority and resources.
Framework

Regular Review Mechanisms: Establish regular reviews

to assess implementation and effectiveness of awards
and agreements.
 Public Awareness and Stakeholder Involvement: Involve local communities,
Participation farmers, and stakeholders in decision-making.

Awareness Campaigns: Conduct public awareness

campaigns about equitable water sharing and
conservation.

Environmental Sustainable Practices: Promote sustainable water

Considerations management practices.

Climate Change Adaptation: Develop strategies to

address the impacts of climate change on water
resources.

Inter-State Border Disputes

Present state of Inter-State border disputes in India

● Belgaum border dispute: Karnataka and Maharashtra claim region. Mahajan Commission
suggested village transfers. Maharashtra rejected report. Dispute pending in Supreme Court.
Recent clashes resolved with committee formation.
● Assam-Nagaland: Began in 1963 - Nagaland claims Naga-dominated areas in
North Cachar and Nowgong (Nagaon) districts - Efforts to resolve
unsuccessful.Frequent clashes continue.
● Assam-Arunachal Pradesh: 804 km boundary - Dispute since Arunachal's
statehood in 1987 - Areas transferred to Assam traditionally belonged to tribes -
District-level committees formed in April 2022 -Namsai declaration signed to
resolve disputes.
● Himachal Pradesh-Ladakh: Both Himachal Pradesh and UT of Ladakh claim
Sarchu, an area between Leh and Manali.
● Haryana-Himachal Pradesh: The Parwanoo region is the major point of dispute
between both states.

Causes of Inter-State Border Disputes

· Issue Explanation Examples

Colonial Divisions Use of British records for - Northeast India disputes due to
boundary demarcation has led British-era boundaries.
to disputes.
 Parameters of State reorganisation in the - Karnataka-Kerala dispute over
Reorganisation 1950s based on language, Kasargod, Maharashtra-Karnataka
using colonial cartographies, dispute over Belgaum.
led to conflicts.

Competition for Limited resources drive states - Himachal Pradesh and UT of

Resources into disputes for maximum Ladakh dispute over Sarchu for
gains. tourism potential.

Regionalism Regionalism based on ethnicity - Nagaland's claim over

and language fuels disputes. Naga-dominated areas in North
Cachar.

Opportunist Political motives and election - Border disputes intensify during

Behaviour of Political strategies perpetuate disputes election periods.
Parties rather than resolving them.

Geographical Factors Natural geographical changes - Uttar Pradesh and Bihar dispute due
make boundary demarcation to changing course of the Ganga
difficult. River.

Lack of Proactive The Union government acts as - Union government suggests states
Role of Union a neutral mediator rather than must engage in dialogue, with the
Government taking a proactive role. center only mediating.

Ineffective Use of Constitutional mechanisms like - Article 263's provision for the
Mechanisms the Inter-State Council and Inter-State Council and the State
Zonal Councils are Reorganisation Act's Zonal Councils
underutilized. not effectively utilized.

Impacts of Inter-state Border Disputes

Issue Explanation Examples

Rise of Secessionist Long unresolved border disputes - Northeast India, with growing
Tendencies can foster secessionist feelings, secessionist sentiments due to
threatening national unity. unresolved border disputes.

Violent Clashes Border disputes can turn violent, - In 2021, 5 policemen died in the
leading to loss of life and property. Assam-Mizoram dispute.

Lack of Development Disputed areas become unstable, - Development issues in disputed

in Disputed Regions hampering economic and regions like Kashmir and
infrastructure development. Northeast India.
Spillover Effect Unresolved disputes often affect - Border disputes exacerbating
other issues like interstate water interstate water disputes between
disputes and migration. Tamil Nadu and Karnataka.

Loss of Faith in Law Violence and instability from - Public disillusionment in Assam
and Order disputes cause people to doubt the and Mizoram due to ineffective
Machinery efficacy of law and order handling of border disputes.
institutions.

Way Forward

Recommendation Explanation Examples

Permanent A permanent inter-state council can - As suggested by the Sarkaria

Inter-state Councils ensure better coordination among Commission.
states and resolve disputes amicably.

Role of Judiciary Article 131 allows states to approach - Many pending cases, like the
the Supreme Court for dispute Cauvery water dispute, need
resolution, requiring timely timely Supreme Court
judgments. decisions.

Role of Union The union government should - Union government’s active

Government actively facilitate consensus among role in resolving the Andhra
states for timely dispute resolution. Pradesh-Telangana bifurcation
issues.

Involvement of Border dispute resolution committees - Inclusion of local

Locals should include local members to representatives in committees
ensure successful and sustainable for Northeast India border
resolutions. disputes.

Rehabilitation Policy Comprehensive rehabilitation - Rehabilitation efforts post the

policies considering Punjab-Haryana boundary
socio-economic-political aspects are demarcation, considering all
necessary post border demarcation. dimensions.

7th Schedule

Article 246 of the Constitution defines three lists in the

Seventh Schedule: Union, State, and Concurrent. The
central government can legislate on the Union List, state
governments on the State List, and both can legislate on
the Concurrent List. In case of a conflict on the Concurrent
List, the central law prevails.
Recently, Finance Commission chairman N K Singh on Friday underlined the need for
revisiting the seventh schedule in view of changes in technology and national
priorities.

Need For Revision

Arguments against

Category Details Example

Defined Roles The division into State, Union, and Public health managed by
Concurrent Lists ensures distinct states like Kerala, while
responsibilities. For instance, public defense is managed by the
health falls under state jurisdiction, central government.
while defense is managed by the union.

Maintaining Clear separation of powers prevents Avoiding conflicts, such as

Harmony constitutional conflicts, promoting peace. between central and state
governments over
COVID-19 lockdown
measures.

Disruption of Revising the 7th Schedule may disturb Proposal to transfer police
Federal Balance the delicate balance of power between from state list to
the Centre and the states, undermining concurrent list, which could
the federal structure of India. reduce state autonomy.

Administrative Changes to the schedule could lead to Reallocation issues seen in

Challenges significant administrative challenges, the implementation of the
including reallocation of responsibilities Goods and Services Tax
and potential conflicts over jurisdiction. (GST) between states.

National Unity Post-partition, strong central governance Central government

and Integrity was crucial for integration. The central handling insurgencies in
government’s role in national security regions like Kashmir and
has safeguarded against external threats, addressing cross-border
as seen in the handling of cross-border terrorism.
terrorism.

Arguments For

Category Details Example

Outdated Structure The 7th Schedule originates from the Many areas like digital
Government of India Act 1935, and its governance are not
lists remain largely unchanged despite clearly addressed in the
evolving governance needs. 7th Schedule.

Shifting States often shift responsibilities to the States reclassifying state

Responsibilities to Centre for even the subjects covered highways as national
the Centre under the state list, such as reclassifying highways to secure
state highways as national highways central funding.
and requesting paramilitary forces
during crises, despite law and order
being a state subject.

Advocacy for States have also advocated the transfer Entry No. 58 of the Union
Subject Transfer of some subjects from the Union and list on the manufacturing,
concurrent lists to the state list. supply, and distribution
of salt by Union agencies.

Local Government Local Government list for effective Empowering local bodies
List for decentralization. This list is especially to manage urban
Decentralization pertinent in the light of rapid planning and
urbanization. infrastructure
development in cities like
Bengaluru and Mumbai.

Increasing The transfer of education to the The central government's

Centralization concurrent list in 1976 expanded role in setting educational
central influence over state matters, curricula and standards
indicating a trend towards across all states.
centralization.

Eliminating Overlaps in criminal law legislation Conflicts between central

Concurrent List between the centre and states often lead and state laws on subjects
to conflicts, illustrating the need to like criminal justice and
remove the concurrent list to clarify environmental
legislative boundaries and reduce regulations.
disputes.

Way Forward

Recommendations Details

Sarkaria Commission Residuary powers should be transferred to the concurrent list

instead of being solely with the center, and states should be
consulted before the union government exercises powers under the
concurrent list.
Punchhi Commission There should be a consultation process between the Union and
states via an Interstate Council for legislation on concurrent
subjects.

Venkatachaliah Both individual and collective consultation with states should

Commission precede the enactment of legislations in the concurrent list.

Consultation Forums Forums like zonal councils should be revitalized and utilized as
platforms for effective discussions between the union and state
governments.

Periodic Review Regular reviews of lists should be conducted, focusing on

removing outdated entries, adding new ones, and ensuring
appropriate placement of existing entries.

Developmental Policies and Federalism

The current context of economic relations between the Centre and States is very
different from the 1980s and 1990s. Continuing economic reforms since 1991 has led to
the relaxation of many controls on investments, giving some room to States, but the
autonomy regarding public expenditure policies is not absolute as State governments
depend on the Centre for their revenue receipts.

Programmes in conflict with federal principle

Sector State Responsibilities Central Involvement

Drinking - State governments ensure - The Centre supports difficult

Water local bodies (panchayats, areas lacking infrastructure; e.g.,
municipal boards) provide Jal Jeevan Mission aims to provide
piped water to households. piped water to all rural households
by 2024.

Agriculture - States improve agricultural - PM-Kisan scheme transfers direct

productivity and income with income support to farmers' bank
better irrigation and technical accounts. - Centre promises to
support for farmers. double farmers' incomes by
providing financial assistance.

Housing - States plan and execute - 'Housing for All' initiative

housing projects, including announced by the Centre aims to
schemes for pucca houses.
 provide affordable housing with
specific deadlines.

Health - State governments manage - Ayushman Bharat provides

(including health and nutrition programs health insurance coverage to
nutrition) with local implementation. millions. - Free food grains
distribution during COVID-19
under PM Garib Kalyan Anna
Yojana.

Food & -States oversee public health - Central procurement of food

Nutrition nutrition, while the Centre grains under National Food
manages public procurement Security Act ensures adequate
and distribution of food supply for public distribution.
grains.

Frequency and Intensity of Disputes in Federal System and Its Consequences

Aspect Specific Examples Implications

Crowding out the - PM Gati Shakti centralized - States' capital expenditure on

State’s investment infrastructure planning infrastructure, like roads and
under a national master bridges, decreased significantly
plan, reducing state as the Centre's spending grew
autonomy. disproportionately, affecting
regional development.

- Combined capital
expenditure of 16 states on
roads and bridges dropped
to 0.58% of GSDP,
contrasting with the
Centre's annual growth
rate of 32.3%.
Concentration of - Uttar Pradesh, - States' budgets versus actual
Funds Maharashtra, and Gujarat expenditure disparity (₹7.49
received nearly half of the lakh crore budgeted versus
expenditure by 16 states ₹5.71 lakh crore spent) affects
between 2021-22 and local economic linkages and
2023-24, concentrating development prospects.
spending in few states.

- Concentration impacts
local economies that
depend heavily on
state-level investments and
initiatives.

Peculiar Form of - Centre's fiscal dominance - States focus on competing for

Fiscal Competition limits states' resources internally and with
revenue-raising abilities, the Centre, potentially
leading to fiscal hindering collaborative efforts
competition among states and holistic national
rather than cooperation development strategies.
with the Centre.

- Welfare provisioning
disparities highlight central
versus state funding
disparities and their impact
on service delivery and
governance.

Inefficiencies - National Pension System - Trust deficit in federal

Associated with (NPS) adoption by Centre relations leads to policy
‘Parallel Policies’ and states led to duplications and inefficiencies,
overlapping pension complicating governance and
policies, causing future economic planning.
fiscal challenges as states
reconsider sustainability.

- Variations in pension
schemes underscore fiscal
disparities and long-term
 economic impacts across
states.

Recommendation for effective federal system

1. Sarkaria Commission Established in 1983 was tasked with examining and

reviewing existing arrangements between the Centre and the States in all
spheres and recommending appropriate changes and measures. Some of the
recommendation of the commission are,
a. Establishment of an Inter-state Council under Article 263 of the
Constitution.
b. Delegation of powers to the maximum extent to the states. o
Augmenting financial resources of the states through fiscal transfers
from the center.
2. Punchhi Commission Established in 2007 was tasked with examining the
current state of Centre-State relations and making recommendations for
improving them. Some of the recommendation of the commission are,
a. Strengthening the institution of All-India Services.
b. Residuary power should remain with the parliament.
c. Setting up a permanent Inter-state Council. o Article 356 should be
used sparingly.
3. The Second Administrative Reforms Commission (ARC) recommended that
the maximum extent of powers should be delegated to the states. This would
enable the states to have more autonomy and control over their affairs. The
commission also suggested augmenting the financial resources of the states
through fiscal transfers from the center.
a. Another important recommendations of the commission was the
establishment of an Inter-State Council under Article 263 of the
Constitution . The council would be responsible for resolving disputes
between states and ensuring that the interests of all states are taken
into account when making decisions.