Legislative Challenges in Centre and State Relations
| Sarkaria Commission | Punchhi Commission |
| The Parliament should retain the residuary powers of taxation, while other residuary powers ought to be placed in the Concurrent List. | Greater flexibility should be given to states and the union should restrain itself to legislate on the matters of the ‘state list’. |
| The Centre must consult with states prior to enacting legislation on any topic within the Concurrent List.. | Only those subjects should be included in the concurrent list which are absolutely necessary to achieve uniformity of policy in the national interests. |
Administrative Challenges in Centre and State Relations
| Issue | Sarkaria Commission | Punchhi Commission |
| Central forces may be deployed in states to uphold law and order | The Centre should possess the authority to deploy its forces without state approval, although it is preferable to consult states beforehand. | In cases of communal unrest, the Centre should have the ability to deploy its forces without state consent for a limited duration of one week. |
| Management of All-India Services | The All-India Services should be further enhanced, and additional such services should be established. | New All-India Services in areas such as health, education, engineering, and the judiciary should be initiated. |
Financial Matters in Centre and State Relations
| Sarkaria Commission | Punchhi Commission |
| The Centre should refrain from imposing a surcharge on income tax except for a clearly defined purpose and a restricted time frame. | All fiscal legislation must include provisions for an annual evaluation by an independent entity, with the findings presented to both Houses of Parliament or the state legislature. |
| The Central Government should assess all current cesses and surcharges to reduce their contribution to total tax revenue. |
Recommendations on the Finance Commission
- States ought to be involved in the determination of the Terms of Reference (ToR) for the Finance Commission.
- A permanent secretariat for the Finance Commission should be established within the finance ministry.
Enhancing Federal Governance: Institutional Measures for Strengthening Centre and State Relations
| Sarkaria Commission | Punchhi Commission |
| The National Development Council (NDC) should be renamed and restructured as the National Economic and Development Council (NEDC). | The Inter-State Council should maintain a continuous oversight role in managing issues within concurrent or overlapping jurisdictions. |
| Zonal councils should be newly constituted and revitalized to foster a sense of federalism. | Zonal Councils should convene at least biannually, with agendas suggested by the respective states to enhance coordination. |
| An Inter-State Trade and Commerce Commission under Article 307 should be formed, equipped with binding authority over both states and the Centre. |
Way forward
- Work towards greater economic Federalism: The revenue sources of the state should be improved and diversified. Firstly, the Finance commission should be given greater allocation powers. The commission should have representation from states as it will lend greater credibility to it. Secondly, States should be given more substantive participation in regulatory systems including forests, mines etc. Third, there is a need to focus on ‘resource federalism’ by building an acceptable framework of revenue sharing. Fourth, States which are responsible or hold the burden for increasing or maintaining green coverage should be adequately compensated as they sacrifice economic development for maintaining common good.
- Amend the 7th schedule: A high powered Commission should be constituted to examine the entries in the union, state and the concurrent list and suggest distribution of entries. The items in the State list need to be increased for example areas such as taxation and Jurisdiction involving centrally sponsored schemes can be shifted to the state list, also many States have demanded that subjects like entry No. 58 of the Union list which is related to legislation on salts should be transferred to state list. NCRWC recommended setting up an institutional mechanism to facilitate mandatory consultation between Union and states in the area of legislation under the concurrent list.
- Focus on cooperative federalism: Niti Aayog should be used as a forum for cooperative federalism with increased participation of states. To promote the concept of ‘Cooperative federalism’. State should be given freedom to make decisions on subjects which have a bearing on the local economy (subjects like land, labour, Infrastructure). Along with cooperative federalism healthy competition should also be promoted by incentivising performance of better performing states.
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- Strengthen ‘Federal Bridging’ Institutions: There is a need to overcome shortage India faces in Institutions and mechanisms for negotiation, bargaining and dispute resolution. Steps should be taken to strengthen and revitalise critical institutions like Inter-State council and Zonal councils. Meetings of inter-state council should be held frequently i.e. the council should meet at least twice a year. The council can also be taken out of jurisdiction of the Home Ministry and placed under the Prime Minister office or Cabinet secretariat to lend more credibility and importance to the council.
- Institutionalise the culture of dialogue: A culture of dialogue and regular conversation between centre and states needs to be promoted. There is an urgent need to develop institutions to bridge the gap and mistrust that exists between the centre and states.
Conclusion
Centre-State relations are a crucial aspect of the federal structure of any country, particularly India. The delicate balance between the powers and responsibilities of the Centre and the States is essential for the effective functioning of the government and the welfare of the citizens. Over the years, there have been challenges and controversies in this relationship, but it has generally been marked by cooperation and mutual respect. The Constitution of India has provided a framework for the distribution of powers between the Centre and the States, but it is up to the political leaders and the judiciary to ensure that this balance is maintained. As the country faces new challenges and evolves, it is crucial that the Centre and the States work together in a spirit of partnership to serve the people and maintain the stability of the country.
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