The Sarkaria Commission made several recommendations to improve center-state relations in India. Regarding legislative relations, it recommended that residuary powers should remain with Parliament but the concurrent list be expanded. It recommended greater consultation with states on concurrent list legislation. Regarding financial relations, it recommended periodic review of duties imposed by the center, consultation on taxation, and greater transparency from the Finance Commission. It recommended setting up a permanent Inter-Governmental Council and strengthening the National Development Council to improve coordination on economic and social planning.

1. Sarkaria Commission
1) INTRODUCTION AND PERSPECTIVE
2) LEGISLATIVE RELATIONS
3) ADMINISTRATIVE RELATIONS
4) FINANCIAL RELATIONS
5) DEPLOYMENT OF UNION FORCES IN THE STATES
6) ALL INDIA SERVICES
7) SOCIAL AND ECONOMIC PLANNING
8) INTER GOVERNMENT COUNCIL
Prashant Subhash Arbune
LL.M (1 Year Course)
Roll no. 18
BVP New Law College, Pune
Center State Relations and Constitutional Governance

2. 1) Introduction and Perspective
• The Constitution has been in operation for the last 37 years. A review of the
administrative aspects of Union-State relations was made by the Administrative
Reforms Commission (1966-70). Much has happened since then in the realm of
Union-State relations. In the wake of social, economic and political developments
over the years, new trends, tensions and issues have arisen.
• 'Consensus and Cooperation‘ which is a pre-requisite for smooth functioning of
Union-State relations is threatened by politics of confrontation.
• Stresses, strains and irritations generated by such problems may stifle the working
of the system and endanger the unity and integrity of the country.
• In India, the last 37 years of the working of the Union-State relations witnessed
continuous expansion of the responsibilities of the national government. The role
of the Union now extends into areas in the State field. This extension has come
about as a result of the legislative and executive action of the Union.

3. Recommendations regarding LEGISLATIVE RELATIONS
• Regarding non-obstante clause, rule of repugnancy and union supremacy- Supremacy rule is the key-stone
of federal power. The commission did not recommend any structural changes in Articles 246 and 254 of the
Constitution.
• Regarding art. 248 Residuary powers r/w entry 97 of List 1- The commission did not recommend that the
residuary powers shall vest in state. The commission also turned down the suggestion that entry 97 of List I
to be transferred to concurrent list because The Constitution-makers did not place any Entry relating to tax
in the Concurrent List. (The commission also referred to the position laid down by Dhillon’s case)
• The Commission recommended that residuary powers of legislation in regard to taxation matters should
remain with Parliament, while the residuary field, other than that of taxation, should be placed in the
Concurrent List. The Constitution may be suitably amended to give effect to this recommendation.
• Regarding Union List- that the Union should be restricted to Defence, Foreign Relations, Currency and
General Communications; and all other powers should vest in the States- the commission denied the
suggestion and concluded that under such arrangements the country cannot survive as one integrated
nation. Nowhere in the world today, exists a Union or a federation in which the National Government has
no fiscal resources of its own, independent of the constituent units. Thereafter as per the suggestions by the
state governments, the union list was extensively discussed regarding reduction of union list entry by entry,
and all such suggestions were turned down by the commission.
• Demand for consultation with state governments before undertaking legislations under concurrent list- To
secure uniformity on the basic issues of national policy with respect to the subject of a proposed legislation,
collective consultation with the representatives of the State Governments at the forum of the proposed
Inter-Governmental Council will also be necessary. But, making this process of consultation as a
constitutional obligation will make the process needlessly rigid.

4. • While examining suggestions by the state government to transfer the entries in the concurrent list to the state list, most of
the suggestions were turned down by the commission. Regarding entry 25, List III- The commission recommended that the
best and the most feasible way of working the Union-States relations in the sphere of education, would be that norms and
standards of performance are determined by the Union and its agencies like the U.G.C. set up for this purpose under Central
statutes, but the actual implementation is left to the States. By the same token, a system of monitoring would have to be
established by the Union.
• Regarding entry 45 of the List III- (inquiries) The commission concluded that There is a potential for misuse by the two
levels of government of the powers available by virtue of Entry 45 of List III. However, the mere fact that this power is
capable of being misused, is no ground for amending the Constitution. There is a case for providing appropriate safeguards
against the misuse of this power, in the Commissions of Inquiry Act, itself.
• Regarding Art. 254, The commission recommended that ordinarily the Union should occupy only that much field of a
Concurrent subject on which uniformity of policy and action is essential in the larger interest of the nation, leaving the rest
and the details for State action within the broad framework of the policy laid down in the Union Law. Further, whenever the
Union proposes to undertake legislation with respect to a matter in the Concurrent List, there should be prior consultation
not only with the State Governments, individually, but also, collectively, with the Inter-Governmental Council which, as we
have recommended should be established under Article 263.
• Regarding Art. 247, The commission denied that in addition to the requisite resolution of Rajya Sabha, the prior approval of
the Inter-Governmental Council should also be a condition for authorizing Parliament to legislate on a matter in the State
List. In our view, it would operate as a clog on the speedy and effective use of the Article in extraordinary situations,
requiring urgent action.

5. • Regarding Art. 252- The modifications suggested by the commission are-
(i) Clause (2) of Article 252 may be substituted by a new clause providing that an Act passed by Parliament under
clause (1), may be amended or replaced either by Parliament in the manner provided in clause (1), or also by the Legislature of the
State to which it applies, provided no such amending or repealing legislation of the State Legislature shall take effect unless,
having been reserved for the consideration of the President, it has received his assent.
(ii) Any law passed by Parliament with respect to a matter in List II under clause (1) of Article 252, should not be of
perpetual duration but should remain in force for a specific term, not exceeding three years. The Act itself should contain
provisions requiring its periodic review before the expiry of its term. If, after such review, it is considered necessary to re-enact
the law in its original or modified form, it may be done for a period not exceeding the original term, by following the same
procedure as specified in clause (1) of the Article.
• Regarding Art. 169, the commission suggested that- When a Resolution passed by the Legislative Assembly of a State for
abolition or creation of a Legislative Council in the State is received, the President shall cause the Resolution to be placed,
within a reasonable time, before Parliament together with the comments of the Union Government. Parliament may
thereupon accept or reject the request contained in the Resolution. If the Resolution is so adopted by Parliament, the Union
Government shall introduce the necessary legislation in Parliament for implementation of the same. Because, It is clear that
the word “may” imports a discretion to accept or reject the resolution of the Legislative Assembly. But this discretionary power
belongs to Parliament and not to the Union Executive. It is, therefore, not proper for the Union Government to withhold
presentation of such a resolution to Parliament and reject or decline it at their own level.
• In case of states aggrieved on account of taxes imposed by the Union under Art. 289, adequate consultation should be held
with the State Governments or the National Economic and Development Council proposed by us, and action taken to afford
relief in terms of clause (3) of Article 289.

6. Administrative Relations: Recommendations
• Articles 256, 257 and 365 are wholesome provisions, designed to secure
coordination between the Union and the States for effective implementation
of Union laws and the national policies indicated therein. Nonetheless, a
direction under Articles 256 and 257 and the application of the sanction
under Article 365 in the event of its non-compliance, is a measure of last
resort. Before issue of directions to a State or application of sanction under
Article 365, utmost caution should be exercised and all possibilities explored
for setting points of conflict by all other available means.
• Federalism is more a functional arrangement for cooperative action, than a
static institutional concept. Article 258 provides a tool, by the liberal use of
which, co-operative federalism can be substantially realized in the working of
the system. A more extensive and generous use of this tool should be made,
than has hitherto been done, for progressive decentralization or powers to the
Governments of the States and/or their officers and authorities.

7. Recommendations on Financial Relations-
• Periodical revision of duties imposed under art. 268 in consultation with state government.
• Taxation of agricultural produce is a sensitive matter and would require in depth consultation and consultation
in the National Economic Development council.
• By an appropriate Amendment in the Constitution, The net proceeds of the corporation tax may be made
permissibly shareable with t he state, if and as Parliament may by law so provide.
• If net proceeds of corporation tax becomes shareable with the states, the shares of the state in income tax and
Union Excise Duties can be suitably reduced.
• The Surcharge on Income Tax should not be levied by the Union Government except for a specific purpose and
for a strictly limited period only.
• It is necessary that a comprehensive paper on direct, indirect and cross-subsidies, covering both Union and
State Governments, is prepared by the Planning Commission every year and brought up before NEDC for
discussion, since the increasing burden of subsidies has a direct relevance to the availability of resources for the
execution of the Plan.
• As a part of Harmony between Finance commission and Planning commission, a cell/division of finance
commission to be constituted in the Planning Commission.
• Any consultation to be meaningful should be adequate. However, there is no advantage in formalizing the
same through a change in the Constitutional provisions which would introduce undue rigidity. Nonetheless, it
is desirable that this healthy practice of informal consultation with the States in this matter should continue.
• Consideration of adequate flow of funds to the backward regions in the States would necessitate creation of
expert bodies, like the Finance Commission, at State level also.

8. • While the recommendations of the Finance Commission are not binding on the Union Government in a
technical sense, the expectation is that, as far as possible, these would not be departed from without
compelling reason.
• As much of the information gathered by the Finance Commission, as well as the detailed methodology
followed by it, is of public interest, it should be got published, say within six months of the publication of the
Report, to enable informed discussion and responsible research in the relevant spheres and better
appreciation by the State Governments.
• Legislation on consignment tax to be made as early as possible.
• The Constitution should be suitably amended to add the subject of taxation of 'advertisement broadcast by
radio or television' to the present Entry 92, List I and Article 269(1)(f).
• The reviews of royalty rates on minerals, petroleum and natural gas should be made every two years and well
in time, as and when they fall due.
• In the event of a natural calamity, relief must be given immediately. A procedure which enables States to
expeditiously provide necessary succor and relief to the affected people should be evolved, in consultation
with the States, along with suitable norms in regard to the scale of relief. Formulation of standard formats for
submission of memoranda by the States will greatly help the Union in dealing with requests of various States
urgently and on a uniform basis.
• The Union Government should give its consent freely to States for borrowing from banks and financial
institutions for periods less than one year under Clause (4) of Article 293.

9. Recommendations on Deployment of forces of the Union in the states.
• Each State Government may work out, in consultation with the Union Government, short-term and long-term arrangements for strengthening its
Armed Police. The objective will be to become largely self-reliant in the matter of Armed Police so that the assistance of the Union armed forces will
be necessary only in cases of very severe disturbances.
• While advising and, if necessary, assisting a State Government in strengthening its Armed Police force, the Union Government may take into
account the following factors:
(i) the degree of confidence that the people of the State have in the State police, armed and unarmed;
(ii) If large-scale public disorders are frequent, the causes and the steps (Mere strengthening of police may not achieve the objective);
(iii) the inadvisability of a State expanding its Armed Police, if it cannot be fully utilized throughout the year; and
(iv) the feasibility of more efficient utilization of the State Police.
• A group of neighboring States may, by consensus, have a standing arrangement for the use of the Armed Police of one another in case of need. The
Zonal Council would be the best forum for achieving consensus of the States within a zone for devising such an arrangement.
• Recommendations of National Police commission’s 7th report shall be considered & implemented.
• There should be a system of interchange of the officers of the State Armed Police Forces with those of the Central Reserve Police Force, the Border
Security Force and other Union armed forces. They should also have common regional training centers, so as to facilitate better exchange of
techniques and information and a more integrated system of operations when the Union armed forces are deployed in aid of the civil power in a
State.
• Adequate finance will be needed by State Governments for augmenting and strengthening (by way of better equipment, more vehicles, etc.) their
Armed Police Battalions. The Union Government may, therefore, examine immediately the question of financial assistance to State Governments for
this purpose, after taking into account the grants that are already being made available to them for the modernization of their police forces.

10. Recommendations on All India Services
• The All India Services should be further strengthened and greater emphasis given on the
role expected to be played by them. This can be achieved through well-planned
improvements in selection, training, deployment, development and promotion policies
and methods. There should be greater coordination and periodical dialogue between the
authorities in the Union and the State Government who are responsible for the
management of these services.
• To constitute New All India Services in sectors like agriculture, cooperation, industry, etc.
• There should be regular consultations on the management of All India Services between
the Union and the State Governments. For this purpose, an Advisory Council for
Personnel Administration of the All India Services under the Union Department of
Personnel & Training, may be set up.
• Every All India Service officer, whether he is a direct recruit or a promoted officer, should
be required to put in a minimum period under the Union Government and, for this
purpose, the minimum number of spells of Union deputation should be laid down for
direct recruits and promoted officers, separately.

11. Inter governmental council
• A permanent Inter-State Council called the Inter-Governmental Council (IGC) should be set up under Article 263. The
IGC should be charged with the duties set out in clauses (b) and (c) of Article 263, other than socio-economic planning
and development.
• Composition- (b) The General Body will consist of:
1. Prime Minister — Chairman
2. All Chief Ministers — Members
3. All Union Cabinet Ministers(or Union Ministers dealing with subjects of common interest to the
Unions and States). — Members
(c) The Standing Committee will consist of:—
1. Prime Minister — Chairman
2. Six Chief Ministers, one from each zone selected annually. — Members
3. Six Union Cabinet Ministers to be nominated by the Prime Minister. — Members
• The separate identity of the National Development Council should be maintained. However, its status should be
formalized and duties reaffirmed through a Presidential order passed under Article 263 and it should be renamed as
the National Economic and Development Council.

12. Economic and Social Planning- NEDC- Recommendations
• NEDC should be involved in the formulation of the Plans right from the
beginning. Selection of studies and setting up of various Working Groups should
be done under the guidance of the Standing Committee of the NEDC.
• The Secretary of the Planning Commission shall act as Secretary to the National
Economic and Development Council and the Planning Commission shall provide
such administrative or other assistance for the work of the Council as may be
needed.
• A Standing Committee of the NEDC should be constituted consisting of the Prime
Minister, Finance Minister, three other Union Ministers nominated by the Prime
Minister, Deputy Chairman of the Planning Commission and Governor, Reserve
Bank of India and six Chief Ministers, one from each zone selected by rotation or
consensus. This Standing Committee should also be constituted under Article 263
along with NEDC.

13. • As the different components of central assistance for the State plans got incorporated at different
points of time, a review is over-due. In view of acute overall constraint of resources, a system will have
to be evolved which, while ensuring a measure of equity, would at the same time encourage efficiency
in the mobilization and use of resources. The NEDC is the most appropriate forum where such matters
should be discussed and national consensus arrived at.
• The number of Centrally Sponsored Schemes should be kept to the minimum. In this regard, the
criteria laid down by the Ramamurti Committee should be adhered to. The need for the Union
Government initiating pilot projects even in regard to subjects in the States' sphere, having an inter-
State, regional or over-all countrywide significance but carrying high national priority, is recognized.
But these should be formulated in prior consultation with the States.
• If the Planning Commission is re-constituted by the statute giving it an autonomous status, divorced
from the political executive of the Union, its working will be stymied by legalism, rigidities and
technicalities which are inherent in inflexible statutes.
• It is necessary to evolve a mechanism like Finance Commission at the State level to enable the State
Government take an objective view of resources to be devolved or transferred to the Districts.

14. • A preparatory meeting should be held by the Planning Commission, with all Deputy Chairmen and/or
Secretaries of the State Development Boards two weeks prior to the NEDC to consider the Approach
Paper/Draft Five Year Plan for identifying the main issues and firming up the agenda for the meeting of the
NEDC.
• Relating to submission of state plan to the planning commission for the purpose of five year plan and annual
plans- The practice of States submitting plan proposals aggregating to much higher plan size than that
warranted by resources estimated by the Resources Working Group, should be firmly discouraged by the
Planning Commission. The meeting between the Deputy Chairman, Planning Commission and State Chief
Ministers should concentrate on evaluating the progress made, identification of bottlenecks, review of
deviations from plan priorities and the implementation of the programme for the ensuing year.

15. Thank you

16. Reference
• Sarkaria Commission Report
(Report of the Sarkaria Commission | ISCS (interstatecouncil.nic.in))