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(f) The role, responsibility and jurisdiction of the Centre in | adopting approaches and policies based on positive | discrimination in favour of backward States. |
(g) The impact of the recommendations made by the 8th to 12th | Finance Commissions on the fiscal relations between the | Centre and the States, especially the greater dependence of |
the States on devolution of funds from the Centre. | (h) The need and relevance of separate taxes on the production | and on the sales of goods and services subsequent to the |
introduction of Value Added Tax regime. | (i) The need for freeing inter-State trade in order to establish a | unified and integrated domestic market as also in the context |
of the reluctance of State Governments to adopt the relevant | Sarkaria Commission’s recommendation in chapter XVIII of its | report. |
(j) The need for setting up a Central Law Enforcement Agency | empowered to take up suo moto investigation of crimes | having inter-State and/ or international ramifications with |
serious implications on national security. | (k) The feasibility of a supporting legislation under Article 355 for | the purpose of suo moto deployment of Central forces in the |
States if and when the situation so demands. | The Commission submitted its report to the government in April | 2010. In finalising the 1,456 page report, in seven volumes, the |
Commission took extensive help from the Sarkaria Commission | report, the National Commission to Review the Working of the | Constitution (NCRWC) report and the Second Administrative Reforms |
Commission report. However, in a number of areas, the Commission | report differed from the Sarkaria Commission recommendations. | After examining at length the issues raised in its Terms of |
Reference and the related aspects in all their hues and shades, the | Commission came to the conclusion that ‘cooperative federalism’ will | be the key for sustaining India’s unity, integrity and social and |
economic development in future. The principles of cooperative | federalism thus may have to act as a practical guide for Indian polity | and governance. |
In all, the Commission made over 310 recommendations, touching | upon several significant areas in the working of Centre-state relations. | The important recommendations are mentioned below: |
1. To facilitate effective implementation of the laws on List III | subjects, it is necessary that some broad agreement is reached | between the Union and states before introducing legislation in |
Parliament on matters in the Concurrent List. | 2. The Union should be extremely restrained in asserting | Parliamentary supremacy in matters assigned to the states. |
Greater flexibility to states in relation to subjects in the State List | and “transferred items” in the Concurrent List is the key for better | Centre-state relations. |
3. The Union should occupy only that many of subjects in | concurrent or overlapping jurisdiction which are absolutely | necessary to achieve uniformity of policy in demonstrable |
national interest. | 4. There should be a continuing auditing role for the Inter-state | Council in the management of matters in concurrent or |
overlapping jurisdiction. | 5. The period of six months prescribed in Article 201 for State | Legislature to act when the bill is returned by the President can |
be made applicable for the President also to decide on assenting | or withholding assent to a state bill reserved for consideration of | the President. |
6. Parliament should make a law on the subject of Entry 14 of List I | (treaty making and implementing it through Parliamentary | legislation) to streamline the procedures involved. The exercise |
of the power obviously cannot be absolute or unchartered in | view of the federal structure of legislative and executive powers. | 7. Financial obligations and its implications on state finances |
arising out of treaties and agreements should be a permanent | term of reference to the Finance Commissions constituted from | time to time. |
8. While selecting Governors, the Central Government should | adopt the following strict guidelines as recommended in the | Sarkaria Commission report and follow its mandate in letter and |
spirit : | (i) He should be eminent in some walk of life | (ii) He should be a person from outside the state |
(iv) He should be a person who has not taken too great a par | politics generally and particularly in the recent past | 9. Governors should be given a fixed tenure of five years and their |
removal should not be at the sweet will of the Government at the | Centre. | 10. The procedure laid down for impeachment of President, mutatis |
mutandis can be made applicable for impeachment of Governors | as well. | 11. Article 163 does not give the Governor a general discretionary |
power to act against or without the advice of his Council of | Ministers. In fact, the area for the exercise of discretion is limited | and even in this limited area, his choice of action should not be |
arbitrary or fanciful. It must be a choice dictated by reason, | activated by good faith and tempered by caution. | 12. In respect of bills passed by the Legislative Assembly of a state, |
the Governor should take the decision within six months whether | to grant assent or to reserve it for consideration of the President. | 13. On the question of Governor’s role in appointment of Chief |
Minister in the case of an hung assembly, it is necessary to lay | down certain clear guidelines to be followed as Constitutional | conventions. These guidelines may be as follows: |
(i) The party or combination of parties which commands the wid | support in the Legislative Assembly should be called upon to f | the Government. |
(ii) If there is a pre-poll alliance or coalition, it should be treated | one political party and if such coalition obtains a majority, | leader of such coalition shall be called by the Governor to f |
the Government. | (iii) In case no party or pre-poll coalition has a clear majority, | Governor should select the Chief Minister in the order |
preference indicated here. | (a) The group of parties which had pre-poll alliance | commanding the largest number |
(b) The largest single party staking a claim to form the | government with the support of others | (c) A post-electoral coalition with all partners joining the |
government | (d) A post-electoral alliance with some parties joining the | government and the remaining including independents |
14. On the question of dismissal of a Chief Minister, the Governor | should invariably insist on the Chief Minister proving his majority | on the floor of the House for which he should prescribe a time |
limit. | 15. The Governor should have the right to sanction for prosecution | of a state minister against the advice of the Council of Ministers, |
if the Cabinet decision appears to the Governor to be motivated | by bias in the face of overwhelming material. | 16. The convention of Governors acting as Chancellors of |
Universities and holding other statutory positions should be done | away with. His role should be confined to the Constitutional | provisions only. |
17. When an external aggression or internal disturbance paralyses | the state administration creating a situation of a potential break | down of the Constitutional machinery of the state, all alternative |
courses available to the Union for discharging its paramount | responsibility under Article 355 should be exhausted to contain | the situation and the exercise of the power under Article 356 |
should be limited strictly to rectifying a “failure of the | Constitutional machinery in the state”. | 18. On the question of invoking Article 356 in case of failure of |
Constitutional machinery in states, suitable amendments are | required to incorporate the guidelines set forth in the landmark | judgement of the Supreme Court in S.R. Bommai V. Union of |
India (1994). This would remove possible misgivings in this | regard on the part of states and help in smoothening Centre- | state relations. |
19. Given the strict parameters now set for invoking the emergency | provisions under Articles 352 and 356 to be used only as a | measure of “last resort”, and the duty of the Union to protect |
states under Article 355, it is necessary to provide a | Constitutional or legal framework to deal with situations which | require Central intervention but do not warrant invoking the |
extreme steps under Articles 352 and 356. Providing the | framework for “localised emergency” would ensure that the state | government can continue to function and the Assembly would |
not have to be dissolved while providing a mechanism to let the | Central Government respond to the issue specifically and locally. | The imposition of local emergency is fully justified under the |
20. Suitable amendments to Article 263 are required to make the | Inter-State Council a credible, powerful and fair mechanism for | management of interstate and Centre-state differences. |
21. The Zonal Councils should meet at least twice a year with an | agenda proposed by states concerned to maximise co-ordination | and promote harmonisation of policies and action having inter- |
state ramification. The Secretariat of a strengthened Inter-State | Council can function as the Secretariat of the Zonal Councils as | well. |
22. The Empowered Committee of Finance Ministers of States | proved to be a successful experiment in inter-state coordination | on fiscal matters. There is need to institutionalise similar models |
in other sectors as well. A forum of Chief Ministers, Chaired by | one of the Chief Minister by rotation can be similarly thought | about particularly to co-ordinate policies of sectors like energy, |
food, education, environment and health. | 23. New all-India services in sectors like health, education, | engineering and judiciary should be created. |
24. Factors inhibiting the composition and functioning of the Second | Chamber as a representative forum of states should be removed | or modified even if it requires amendment of the Constitutional |
provisions. In fact, Rajya Sabha offers immense potential to | negotiate acceptable solutions to the friction points which | emerge between Centre and states in fiscal, legislative and |
administrative relations. | 25. A balance of power between states inter se is desirable and this | is possible by equality of representation in the Rajya Sabha. This |
requires amendment of the relevant provisions to give equality of | seats to states in the Rajya Sabha, irrespective of their | population size. |
26. The scope of devolution of powers to local bodies to act as | institutions of self-government should be constitutionally defined | through appropriate amendments. |
27. All future Central legislations involving states’ involvement | should provide for cost sharing as in the case of the RTE Act. | Existing Central legislations where the states are entrusted with |
the responsibility of implementation should be suitably amended | providing for sharing of costs by the Central Government. | 28. The royalty rates on major minerals should be revised at least |
compensated for any delay in the revision of royalty beyond | three years. | 29. The current ceiling on profession tax should be completely done |
away with by a Constitutional amendment. | 30. The scope for raising more revenue from the taxes mentioned in | article 268 should be examined afresh. This issue may be either |
referred to the next Finance Commission or an expert committee | be appointed to look into the matter. | 31. To bring greater accountability, all fiscal legislations should |
provide for an annual assessment by an independent body and | the reports of these bodies should be laid in both Houses of | Parliament/state legislature. |
32. Considerations specified in the Terms of Reference (ToR) of the | Finance Commission should be even handed as between the | Centre and the states. There should be an effective mechanism |
to involve the states in the finalisation of the ToR of the Finance | Commissions. | 33. The Central Government should review all the existing cesses |
and surcharges with a view to bringing down their share in the | gross tax revenue. | 34. Because of the close linkages between the plan and non-plan |
expenditure, an expert committee may be appointed to look into | the issue of distinction between the plan and non-plan | expenditure. |
35. There should be much better coordination between the Finance | Commission and the Planning Commission. The synchronisation | of the periods covered by the Finance Commission and the Five- |
Year Plan will considerably improve such coordination. | 36. The Finance Commission division in the Ministry of Finance | should be converted into a full-fledged department, serving as |
the permanent secretariat for the Finance Commissions. | 37. The Planning Commission has a crucial role in the current | situation. But its role should be that of coordination rather that of |
micro managing sectoral plans of the Central ministries and the | states. | 38. Steps should be taken for the setting up of an Inter-State Trade |
and Commerce Commission under Article 307 read with Entry | 42 of List-I. This Commission should be vested with both | advisory and executive roles with decision making powers. As a |
party aggrieved with the decision of the Commission may prefer | an appeal to the Supreme Court. | The Report of the Commission was circulated to all stakeholders |
including State Governments / UT Administrations and Union | Ministries / Departments concerned for their considered views on the | recommendations of the Commission. The comments received from |
the Union Ministries / Departments and the State Governments / UT | Administrations are under the consideration of the Inter-State | Council.28 |
NOTES AND REFERENCES | 1. Even now, the last entry is numbered as 97 but the total | number of entries is 98. The entries numbered as 2A, 92A |
and 92B have been added and entries 33, 92 and 92C have | been omitted. See Appendix II. | 2. Even now, the last entry is numbered as 66 but the total |
number of entries is 59. The entries numbered as 11, 19, | 20, 29, 36, 52 and 55 have been omitted. See Appendix II. | 3. Even now, the last entry is numbered as 47 but the total |
number of entries is 52. The entries numbered as 11A, 17A, | 17B, 20A and 33A have been added. See Appendix II. | 3a. The provision for goods and services tax was added by the |
101st Amendment Act of 2016. | 3b. Ibid. | 4. Report of the Commission on centre-state Relations, Part I |
(Government of India, 1988) PP. 28–29. | 5. For example, under the Essential Commodities Act, made | by the Parliament on a concurrent subject, the executive |
power is vested in the Centre. | 6. This provision (the power of the states to entrust functions | to the Centre) was added by the 7th Constitutional |
Amendment Act of 1956. Before that, only the Centre had | the power. | 7. For details in this regard, see Chapter 15. |
8. Constituent Assembly Debates, Volume VII, PP. 41–42. | 9. For details, see Chapter 54. | 10. For details, see Chapter 78. |
12. Entries–82, 83, 84, 85, 86, 87, 88, 89, 90, 91, 92A, 92B and | 96. See Appendix II. | 13. Entries–45, 46, 47, 48, 49, 50, 51, 53, 54, 56, 57, 58, 59, |
60, 61, 62, 63, and 66. See Appendix II. | 14. In this regard, the 101st Amendment Act of 2016 inserted | Article 246-A in the Constitution. |
15. Originally, this limit was only ₹250 per annum. The 60th | Amendment Act of 1988 raised it to ₹2,500 per annum. | 16. These provisions are contained in Article 286, as amended |
by the 101st Amendment Act of 2016. | 17. This amendment deleted Article 272 (Taxes which are | levied and collected by the Centre and may be distributed |
between the Centre and the states). | 18. Entry 52 (taxes on the entry of goods into a local area for | consumption, use or sale therein) and entry 55 (taxes on |
advertisements other than advertisements published in the | newspapers and advertisements broadcast by radio or | television) were omitted by the 101st Amendment Act of |
2016. | 19. See ‘Property of the Union’ in Chapter 67. | 20. See ‘Property of the States’ in Chapter 67. |
21. M.P. Jain: Indian Constitutional Law, Wadhwa, Fourth | Edition, PP. 342–43. | 22. Article 279-A(1) says that the President shall, within sixty |
days from the commencement of the Constitution (One | Hundred and First Amendment) Act, 2016, by order, | constitute a Council to be called the Goods and Services |
Tax Council. | 23. This function was added by the 73rd and 74th Amendment | Acts of 1992 which have granted constitutional status on the |
panchayats and the municipalities respectively. | 24. In Re. Sea Customs Act (1963). | 25. The other two members of the committee were Dr. |
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