States, like the union govt, draw their authority from the Constitution and are free to operate in the field allocated to them
By Dr Seela Subba Rao
The Seventh Schedule under Article 246 of the Constitution provides a dual polity with a clear division of powers between the union and the States, each being supreme within the sphere allotted to it. The States are not the creation of the Centre nor do they draw their authority from the union government.
On the other hand, like the union government, they draw their authority directly from the Constitution and are free to operate in the field allocated to them by the Constitution. The Constitution has made elaborate provisions such as union List, State List and Concurrent List, and divides all power – legislative, executive and financial – between the union and the States.
But, the actual operation of the Centre-State relations for all these seven decades has given rise to a controversy about the arrangement made under the Constitution. The arrangement means – the Centre’s control over the States through different institutions such as Governor, directions by the union to the State government, delegation of Union’s functions, grants-in-aid and inter-State councils. Critics have expressed doubts about the present system of arrangement and suggested re-allocation and adjustment for refinement of the Centre-State relations.
Three-tier System
The 73rd and 74th constitutional amendments in 1992 mandated the establishment of panchayats and municipalities as elected local governments and devolved a range of powers and responsibilities to them. Thus, India’s two-tier system of a Central and State government got transformed into a three-tier one.
However, little progress has been made so far in this direction. Local governments remain hamstrung and ineffective and are mere agents to do the bidding of the higher-level government. Currently, democracy has not been enhanced to the expected level in spite of nearly 32 lakh people’s representatives being elected to 2.50 lakh local government bodies across India every five years with great fanfare.
Certain provisions empower the States to take active participation in administrative, legislative and financial matters. For example, the States are empowered to make their own laws in accordance with the State List. Similarly, they perform their administrative or executive functions without much interference from the Centre. Also, they perform certain financial functions such as levying and collecting taxes. All these functions make the State autonomous and make India a better federal.
The provision for different Lists ensures less confusion and conflicts between the Centre and States. Similarly, making the laws of Parliament superior to that of State legislature ensures a streamlined mechanism.
Covid-19 has left behind a few scars and the PM-CARES Fund was brought under the ambit of corporate social responsibility. State-based funds did not get the same treatment. As a result, companies were more inclined to make donations to the Centre than the States which led to financial constraints for many States to undertake welfare measures. Also, delay in payment of GST dues to the States by the Centre have caused heartburn. As regards the legislative relations, the States were not consulted in many matters which were stipulated in the statutes.
Local Bodies
Devolution, envisioned by the Constitution, is not mere delegation. It implies that precisely defined governance functions are formally assigned by law to the local governments backed by adequate transfer of a basket of financial grants and tax handles. They are provided staff so that they have the necessary wherewithal to carry out their responsibilities. Above all, local governments are to report primarily to their voters and not much to higher-level departments.
The Constitution mandates that panchayats and municipalities shall be elected every five years and enjoins States to devolve functions and responsibilities to them through law. A study by the Centre for Policy Research shows that all States have formally devolved powers with respect to five core functions viz water supply, sanitation & roads, communication, streetlight provision and management of community assets to gram panchayats.
While some States have transferred relatively more powers to local bodies, real decentralisation has a long way to go. The power to devolve functions to local governments rests with the State governments. For various reasons, States do not devolve adequate functions to local government bodies severely affecting the system’s efficiency and effectiveness.
For instance, the State governments have been known to create parallel structures for the implementation of projects around agriculture, health and education – undermining areas for which the local bodies are constitutionally responsible.
Devolution functions are meaningless without providing funds to carry out said functions. After nearly three decades of centralisation, local government expenditure as a percentage of GDP is only 2% – a number that is extremely low when compared with other major emerging economies such as China (11%) and Brazil (7%).
It is pertinent to mention that in 1983, the Central government constituted the Sarkaria Commission to examine and review the working arrangement of the Centre and States relationship. After much deliberations, the Sarkaria Commission recommended 247 suggestions, of which 179 were implemented in 2007. A few suggestions were also made by the Commission to minimise the powers of the Union.
However, the demand to minimise the powers of the union government was not acceded to for various reasons.
Since the relationship between the States and the Centre is very delicate, more institutional reforms are required to eliminate the friction.
Cooperative federalism should not be transformed into coercive federalism. More bodies like the National Development Council, National Integration Council and inter-State Council must be set up to enhance the spirit of federalism.
For the past few years, there is a paradigm shift to competitive federalism which is a good sign for the development of all regions. There is a need for the higher-tier government to act wizth a broader perspective and extend necessary support by all means as per statutes to its lower-tier government for overall development.
Utmost care may be exercised by the higher-tier government to shun the Machiavellian attitude to avoid friction at any cost while dealing with its lower-tier government. Maximum harmony and perfect coordination are essential for the effective operation of the federal system.
(The author is former Assistant General Manager, Nabard)