Division of Powers in Indian Federalism

The Indian Constitution performs a delicate balancing act. It creates a strong Union government while also empowering 28 states and 8 Union Territories to govern their own affairs. This careful arrangement, often called the backbone of Indian federalism, is made possible through a clear division of powers across three spheres: legislative, administrative, and financial. Understanding this division is essential to grasp how laws are made, how policies are implemented, and how money flows between New Delhi and the state capitals.

Why the Constitution divides powers 🔗

India is a country of immense diversity, with different languages, cultures, economies, and priorities across its regions. A single, centralised authority trying to legislate on every matter would be impractical. At the same time, a completely decentralised system could threaten national unity. The framers of the Constitution, drawing heavily from the Government of India Act of 1935, adopted a federal structure that divides powers between the Union (Centre) and the States.

This division is primarily outlined in Part XI and Part XII of the Constitution. Articles 245 to 255 deal with legislative relations, Articles 256 to 263 govern administrative relations, and Articles 268 to 293 cover financial relations. Together, these provisions create a framework where the Centre and States operate in their own spheres but remain interconnected for the nation’s overall welfare.

Legislative division of powers 🔗

The legislative sphere is perhaps the most structured aspect of the division of powers. The Constitution uses the Seventh Schedule to categorise subjects into three distinct lists, ensuring clarity about who can make laws on what.

The Union List 🔗

The Union List contains subjects of national importance on which only Parliament has the authority to legislate. These include areas like defence, foreign affairs, banking, railways, atomic energy, and currency. The rationale is simple: matters affecting the sovereignty, security, and uniformity of the nation must be handled by a single authority. Imagine the chaos if each state had its own currency or army. By centralising these subjects, the Constitution ensures India speaks with one voice on issues of national concern.

The State List 🔗

The State List comprises subjects that are primarily of regional or local concern. State legislatures have exclusive authority over these areas. Examples include police, public health, agriculture, and local government. These subjects require contextual understanding, which state governments are better positioned to provide. For instance, agricultural practices in Punjab differ vastly from those in Kerala, and a state-level approach allows for tailored policymaking.

The Concurrent List 🔗

The Concurrent List is where both Parliament and state legislatures can make laws. It covers subjects like criminal law and procedure, forests, industrial disputes, and population control. When laws conflict on a concurrent subject, the central law generally prevails, though state laws can survive if they receive the President’s assent. This list reflects the need for both national uniformity and regional flexibility.

Residuary powers 🔗

What happens when a subject doesn’t fit neatly into any of the three lists? Article 248 grants Parliament the exclusive power to legislate on residuary matters. This provision is particularly valuable for addressing emerging issues that the framers could not have anticipated. Cybercrime, data privacy, and cryptocurrency regulation are modern examples where the Union government can step in because these subjects were nonexistent when the Constitution was drafted.

When Parliament can legislate on State List subjects 🔗

Although the State List is the exclusive domain of states, there are specific circumstances under which Parliament can make laws on these subjects. These include situations where the Rajya Sabha passes a resolution declaring it necessary in the national interest, during a national emergency, when two or more states request such legislation, or for implementing international treaties and agreements. These exceptions reflect the Centre’s overarching authority in matters affecting national interest.

Administrative division of powers 🔗

Legislation alone is meaningless without effective implementation. The administrative division of powers ensures that laws are executed smoothly across the country, with clear mechanisms for coordination between the Centre and the States.

The principle of administrative compliance 🔗

The executive powers of the Union and States generally follow the legislative division. However, the Constitution builds in safeguards to prevent administrative chaos. Article 256 mandates that the executive power of every State must be exercised in a manner that ensures compliance with laws made by Parliament, and the Union can issue directions to states for this purpose. This provision is the bedrock of administrative coordination, ensuring that central laws don’t remain paper tigers.

Centre’s directions to States 🔗

Beyond Article 256, the Constitution provides additional mechanisms for the Centre to direct States. Article 257 extends Union directions to matters concerning the construction and maintenance of means of communication declared to be of national or military importance, as well as measures for the protection of railways within a state. Where states incur additional costs while following these directions, the Union compensates them, with disputes resolved through arbitration appointed by the Chief Justice of India.

The consequences of non-compliance can be severe. Under Article 365, if a State fails to comply with Union directions, the President can declare that the state government cannot function according to constitutional provisions, potentially leading to President’s Rule under Article 356.

Delegation of functions and All-India Services 🔗

Administrative cooperation is not a one-way street. Article 258 allows the President, with the consent of the state government, to entrust Union executive functions to the states. Similarly, Article 258A permits states to entrust their functions to the Union. This mutual delegation reflects the cooperative spirit embedded in the Constitution.

A unique feature of Indian administration is the All-India Services, such as the IAS and IPS. Officers of these services are recruited by the Union but serve both the Centre and the States, acting as a bridge between the two levels of government. This system ensures administrative uniformity and facilitates the smooth implementation of national policies at the state level.

Inter-State Council and commissions 🔗

Article 263 empowers the President to establish an Inter-State Council to facilitate coordination and resolve disputes between states. Following the Sarkaria Commission’s recommendations, the Inter-State Council was established through a presidential notification on 25 May 1990. The Union can also appoint commissions for specific purposes, such as the Sarkaria Commission and the Punchhi Commission, both of which examined Centre-State relations and made far-reaching recommendations.

Financial division of powers 🔗

Money is the lifeblood of governance. The financial division of powers ensures that both the Centre and the States have adequate resources to fulfill their responsibilities, while also maintaining equity across regions.

Distribution of taxing powers 🔗

Taxation powers are clearly demarcated. Parliament has exclusive authority to levy taxes on subjects in the Union List (15 taxes), state legislatures on the State List (20 taxes), and both can tax subjects on the Concurrent List. The residuary power of taxation lies with Parliament, similar to residuary legislative powers.

The divisible pool and tax devolution 🔗

A significant portion of central tax revenues is shared with the states. Article 270 outlines the distribution of net tax proceeds, including corporation tax, personal income tax, Central GST, and the Centre’s share of Integrated GST. This shared revenue forms the divisible pool, which is then distributed among states based on recommendations of the Finance Commission.

The Finance Commission 🔗

The Finance Commission is the cornerstone of India’s fiscal federalism. Established under Article 280, it is a quasi-judicial body constituted by the President every five years, comprising a Chairman and four other members. Its primary tasks include recommending the distribution of tax proceeds between the Centre and States (vertical devolution), allocating shares among states (horizontal devolution), and laying down principles for grants-in-aid.

The 15th Finance Commission, for instance, recommended that states receive 41% of central taxes for the 2021-26 period, adjusted from the earlier 42% to account for the new Union Territories of Jammu and Kashmir and Ladakh. The 16th Finance Commission, currently at work, will define distribution for the period beginning FY 2026-27.

Grants-in-aid and borrowing powers 🔗

Beyond tax devolution, the Constitution provides for grants-in-aid to states under Articles 275 and 282. Article 275 covers statutory grants for states in need of assistance, while Article 282 allows discretionary grants for any public purpose. These grants address regional disparities and help states meet specific developmental challenges.

Borrowing powers are also divided. The Union can borrow without limits, while states can borrow only within India and may require Union permission if they have outstanding loans from the Centre. Article 293 specifies these territorial limits on state borrowing, which must be secured against the Consolidated Fund of the State.

The overall balance 🔗

A closer look at the division of powers reveals that the Indian Constitution leans towards a stronger Centre. This is evident in the allocation of residuary powers to the Union, the predominance of central laws on concurrent subjects, and the Centre’s authority to issue directions to states. Many scholars describe India as quasi-federal rather than strictly federal, a characterisation rooted in the need to maintain unity in a vast and diverse country.

Yet, the system is not without its tensions. Disputes over tax devolution, the misuse of Article 356, and debates over state autonomy have been recurring themes in Indian politics. Commissions like the Sarkaria Commission (1983) and the Punchhi Commission (2007) have made several recommendations to improve Centre-State relations, many of which continue to influence the ongoing dialogue about federalism in India.

What do you think? Does the current division of powers adequately reflect the aspirations of India’s diverse states, or should there be a rebalancing in favour of greater state autonomy? Given the rise of new-age challenges like digital governance and climate change, should the three lists in the Seventh Schedule be revisited to meet contemporary realities?

References

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