1036 Co-operative Federalism [Chap XIV comparative advantage in dealing with various matters in their respective spheres, should continue”. Some co-ordination between the two Commissions has however been achieved. The five-year period for which the Finance Commission makes its rec- ommendations now coincides with the period of the five-year plan and so it is easy for the Planning Commission to make necessary adjustments in the plan grants in the light of the recommendations of the Finance Commission. Further, a member of the Planning Commission is now nominated to the Finance Commis- sion. H. CAN THE INDIAN CONSTITUTION BE CHARACTERISED AS FEDERAL? An academic question raised time and again is whether the Indian Constitution can be characterised as federal. Some scholars hesitate to consider the Indian Constitution as ‘truly’ federal and they use such epithets for it as ‘quasi-federal’, “unitary with federal features’ or “federal with unitary features."”* According to WHEARE, the Constitution of India is ‘quasi-federal,’ and not ‘strictly federal’.” WHEARE'S view is that federalism involves that the general and regional gov- emments should each, within a sphere, be ‘co-ordinate’ and ‘independent.’ JENNINGS has characterised it as a “federation with a strong centralizing ten- dency.” A few scholars, however, accept it as a federal constitution,” Austin describes it as a co-operative federation." How has the judiciary characterised’ the Constitution? The attitude of the Su- preme Court towards the federal portion of the Constitution has been rather two- FAMRISIGGHIS: bet en WAtyeAdinih atttfn individual (and most of the cases haye been of this type), the Court has invariably given an expansive interpreta- tion to the government's legislative power (whether of the Central or the State Government) and has upheld the law.” On the other hand, in contests between the Centre and a State, the court has shown its strong predilection for a strong Centre and has, consequently, underplayed the federal aspects of the Constitu- tion. The Court adopted this strategy to counter the exaggerated claims of the States regarding their position, status and powers vis-a-vis the Centre. For instance, in West Bengal v. India,® the Supreme Court projected the traditional view of fed- eralism and characterised the Indian Constitution as not being “true to any tradi- tional pattern of federation.” The Court said so to counter the State claim for sov- ereignty and applying the doctrine of immunity of instrumentalities to the fullest 76. Supra, Ch 1, See. E(). Also see, P.K. TRIPATHI, FEDERALISM, THE REALITY AND THE MytH, (1974) Jl. Bar Council of India, 251 77. WHARE, FEDERAL GOVERNMENT, 27-8 (1964); 48 All LI 21. 78. WHEARE, ibid., 10, 33. WHEARE, MODERN GOVERNMENT, 18 (1971). 79. SOME CHARACTERISTICS OF THE INDIAN CONSTITUTION, i. 80. NicHoLAS, The Constitution of India, 23 Australian LI 639; ALEXANDROWICZ, CONST TUTIONAL DEVELOPMENTS IN INDIA, 155-70; GLEDHILL, REPUBLIC OF INDIA, CoMM. SERIES, 74 (1964). ‘THE INDIAN CoNSTITUTION—CORNERSTONE OF A NATION, 187. Supra, Ch X, Sec. Gti). | Supra, Ch. XI, Sec. JGi)(@).Syn H] Can the Indian Constitution be Characterised as Federal? 1037 extent in their favour and against the Centre. The Court could have possibly reached the same result, e.g., upholding the validity of the impugned Central Act by taking the prevailing balanced view of federalism as explained below. On the other hand, SUBBA RAO, J., in his bid to bolster the position of the States against the Centre, took recourse to the extreme view of competitive and dual federalism which has long been discarded in the older federations. In State of Rajasthan v. Union of India,* BEG, C.J., sought to judge the Indian federalism by the yardstick propounded by WHEARE (which is not generally ac- cepted now) and characterised the Constitution as “more unitary than federal,” and having the ‘appearances’ of a federal structure. He also went on to say: “In a sense, therefore, the Indian Union is federal. But, the extent of federal- ism in it is largely watered down by the needs of progress and development of a country which has to be nationally integrated, politically and economically co-ordinated, and socially, intellectually, and spiritually uplifted.” These observations were made to justify the exercise of Central powers under Art. 356. And, again, in Karnataka v. Union of India,“® BEG, C.J., said: “Our Constitution has, despite whatever federalism may be found in its structure, so strongly unitary features also in it...." This argument was adopted to counter the State argument that insti by the Centre into the conduct of State ministers violated the federal principle. In Bommai,’” several Judges have characterised the Indian Federalism in dif- ferent ways. The case concerned the exercise of the power of the Central Gov- emment under Art. 356. AHMADI, J., described the Indian Constitution, following K.C. WHEARE, as “guasi-federal” because “it is a mixture of the federal and uni- tary elements, leaning more towards the Tater”. But other Judges have ex- pressed a more balanced view, Thus, SAWANT, J., has observed: “Democracy and federalism are essential features of our Constitution and are part of its basie structure.” JEEVAN REDDY, J., has observed:”” “The fact that under the scheme of our Con: on, greater power is con- ferred upon the Centre vis-a-vis the States do not mean that States are mere ap- pendages of the Centre. Within the sphere allotted to them, States are supreme. ‘The Centre cannot tamper with their powers. More particularly, the courts should not adopt an approach, an interpretation, which has the effect of or tends to have the effect of whittling down the power reserved to the States.” Federalism in India ‘is not a matter of administrative convenience, but one of principle’. Accordingly, as already discussed earlier, in Bommai, the Supreme Court has developed a more balanced approach to Art. 356.” 84. Supra, Ch. XII, Sees. C & D. ‘Also see, Ch. IV, See. C(iii\b). 85. AIR 1977 SC at 1382 : (197) 3 SCC 592. 86. Supra, Ch. XIII, Sec. C. 87. S.R. Bommai v, Union of India, AIR 1994 SC 1918 : (1994) 3 SC 88. Ibid. 1951 89. Thid, 1977. 90. Ibid., 2053, 91. Supra, Ch. XII, Sec. D.1038 Co-operative Federalism [Chap XIV therefore, worthwhile to consider the nature of the Indian Constitution is the other federal constitutions and to see how far the views expressed above are justified. The U.S. Constitution has been regarded as the epitome of the classical feder- alism, America started on its federal career with a weak Centre and an accent on States’ rights. The reason was that the U.S. Constitution came into being as a re- sult of a voluntary compact among the pre-existing States which conceded rather limited powers to the Centre, Naturally, the Centre born of such a historical proc- ess could only get limited powers. A similar process occurred in Australia. Also, the U.S. Constitution was the product of the /aissez faire era which signified minimum government and maximum private enterprise. In course of time, how- ever, things have changed. The powers of the Centre have expanded phenome- nally since 1787 and correspondingly the powers of the States have shrunk. This has been achieved without any explicit amendment of the Constitution but through ingenious legislative devices and judicial tolerance thereof and also through judicial activism. The courts have interpreted the constitutional provisions liberally in favour of, the Centre, The judicial activism in the USA has played a sterling role in the ex- pansion of the Centre’s powers over time. The courts through their liberal inter- pretation of the Constitution have helped in substantial extension of the legisla- tive power into fields which were originally regarded as belonging to the States. The courts have played the significant role as the balance wheel for harmonious adjustment of Centre-State relations ‘The Céntre’s vast financial resources have) led-to the emergence-6f the system of grants-in-aid; centripetal forces have been generated and the Centre has be- come very powerful.” Today it can not plausibly be asserted that the States in the U.S.A. are co-ordinate with the Central Government as their position is defi- nitely weaker vis-a-vis the Centre. The process has been aided by such factors as tense international situation, wars, vast economic and technological develop- ments, replacement of the laissez. faire by the social welfare era, etc. This trend may be strikingly illustrated by referring to an interesting case. As a result of the Depression during the 30s, the U.S. Government desired to intro- duce a scheme of unemployment compensation. The U.S. Constitution confers no legislative power on the Centre for the purpose. What the Centre, therefore, did ‘was to impose a tax on the pay rolls of the employers, granting a credit up to 90% if a State imposed a similar tax; provision was also made for grants to the States for assisting them to administer the scheme of unemployment compensation, The fund to be collected by the States was to be used for affording unemployment compensation. The Centre, thus, placed enormous economic pressure on the States to adopt the scheme.” The truth is that overtime there has been a continuous expansion of the func- tional role of the Federal Government. This has completely altered the balance of powers in favour of the Central Government. No longer can it be asserted that the States have a coordinate status with the Centre, It is the Central Government which play a dominant role in the governance of the country so much so that a 92. Supra, Ch. XI, Sees. K(b); M. 93. Steward Machine Co. v. Davis, 301 US 548 (1937); Also, Helvering v. Davis, 301 US 619 (1937),Syn H] — Can the Indian Constitution be Characterised as Federal? 1039 constitutional scholar has suggested that the “surge” in the USA is towards ‘or- ganic federalism’ “similar to the surge towards cooperative federalism” of the late 1930s”. He characterises ‘organic federalism’ as “federalism in which the Centre has such extensive powers, and gives such a strong lead to Regions in the most important areas of their individual as well as their cooperative activities, that the political taxonomist may hesitate to describe the result as federal at all.”! The Canadian Constitution, to start with, definitely laid an accent on the Cen- tte. In course of time, however, the Privy Council, by its process of interpretation weakened the Centre and exalted the Provinces.’ This was the result of the asser- tion of bilinguism and bi-culturism by Quebec—a French majority Province. The Central power to veto provincial legislation has also come to be used sparingly as a result of growth of conventions. On the whole, therefore, the Provinces in Canada have greater freedom of action than the units in other Federations, and this has at times been inconvenient and embarrassing to the Centre, primarily in the area of foreign relations and economic matters. During the war, however, the Centre acquires vast powers as a result of a lib- eral interpretation of the general clause. A system of conditional grants-in-aid is now emerging and other expedients of Central-Provincial collaboration are being created. Frequent Central-Provincial Conferences are held to discuss issues per- taining to their relations inter se. In the wake of the demise of the laissez faire era, the powers of the Central Government have been strengthened. By a consti- tutional amendment in 1940, the Centre was given power to provide unemploy- ment insurance; and, in 1950, old age pension was made.a-subject of concurrent jurisdiction: ‘The Australian Constitution although characterised judicially as a true federa- tion, as in the beginning the Centre’s powers were limited and the accent was on the States, has, in course of time, undergone a significant metamorphosis and has moved towards centralization. The Centre has become very powerful as a result of the process of judicial interpretation of its powers,’ conditional grants-in- fiscal need grants to the deficit States on the recommendation of the Grants Commission,’ emergence of the financial agreement amongst the Centre and the States under which the Centre has assumed extensive financial powers. Borrow- ing powers of the States are controlled through the Loan Council.” The enormous Central power was manifested in 1942 when the Centre unilater- ally excluded the States, without their consent, from the field of income-tax. Un- der the Constitution, both can levy the tax.° During the war, the Centre desired the States to vacate the field in liew ofgrants. The States did not agree. There- upon, the Centre passed a number of statutes imposing a very high rate of in- come-tax (18 s. in the £); Central tax dues were given a priority over State taxes; grants were to be given to those States which desisted from levying the income- tax; and the Centre requisitioned the State income-tax staff. The States found it impossible to levy the tax and so they had to vacate the field.” The war-time 1. SAWER, MODERN FEDERALISM, 125-126. 2. Supra, Ch. X, Sec. L. 3. Ibid. 4. Supra, Ch. XI, 5S. Supra, Ch. XI. 6 Supra, Ch. XI, Sec. L . South Australia v. The Commonwealth, 65 CLR 373 (1942).1040 Co-operative Federalism [Chap XIV scheme has now become a permanent feature in Austraila and has been judicially sanctioned in peace-time.® Afier the demise of laisser faire era, the powers of the Centre increased because of the needs to provide social weltare to the people. For example, in the Pharmaceutical Benefits case,” a Central scheme to provide free pharmaceutical benefits to the people was judicially invalidated. This led to the amendment of the Constitution empoweritig Parliament to provide a number of social services to the people. From the above brief description of the developments in the three federations, it becomes clear that the classical concept of a federation envisaging two parallel governments of coordinate jurisdiction, operating in water-tight compartments is nowhere a functional reality now. There is no fixed, static or immutable format of a federal constitution. Each country adapts and moulds the federal idea to its peculiar circumstances, conditions and needs. It is thus clear from the above discussion that all the older federations have also exhibited centalising and centripetal tendencies and the constituent units do not enjoy a co-equal status with the Centre. In each of these federations, in course of time, the Centre has assumed a very dominant position. During the last several decades, an inevitable trend the world over has been the strengthening of the Central Government. Undoubtedly the accent of the Indian Constitution is on the Centre which has been made more powerful vis-a-vis the States. This has been done for some very good indigenous reasons First, there jis the historical background.-In India, the historical process to ere até the federal system was different from what happened in the other federations as stated above. For long, before 1935, British-India had been administered on a unitary basis. There existed a unitary system. In 1935, the unitary system was. replaced by a federal system. The present federal system was built on the foun- dation of the 1935 system. It was therefore inevitable that because of its lineage the federal system had a unitary bias. The Indian federalism was not a result of a compact between several sovereign units but a result of conversion of a unitary system into a federal system. Here the movement has been from unity to union, from unitarism to federalism, unlike other countries where the historical process has been for separate units to come together to form the federal union." In India, it was rather the reverse process, viz. to convert a unitary Constitution into a federal Constitution. In West Bengal ¥. Union of India, the Supreme Court took note of this process and rejected the claim of the States that they shared sovereignty with the Centre.'! Secondly, the past history of India conclusively establishes that in the absence of a strong Central Government, the country soon disintegrates. This belief was 8. Victoria and New South Wales v. The Commonweatth, 99 CIR S75 (1957) 9. Attorney General for Victoria v. The Commonwealth, T1 CUR 223 40. “Until the pansage of the Government of Inia Act. 193, Bris Inia formed completely lnitary government and the Provinces derived their powers from the Central Government The Act of 1935 then provided fora federal structure, but this part of the Act did never really function, Because of the Second World War, India was governed more as a unitary State rather than a federal State. So far as the pre-Constitution princely States are concemed, the process has been one of integration by agreement: Supra, Ch LL Supra, Ch. XI, See. JGi)(d.SynH] — Can the Indian Constitution be Characterised as Federal? 1041 strengthened by the recent partition of the country. Therefore, adequate precau- tions have to be taken against any such future contingency by making the Centre strong. Owing to its vastness of territory and variety of people, India could not be governed efficiently as a unitary state and so a unitary Constitution was out of question. The second best alternative, therefore, before the framers of the Con- stitution was to adopt the federal principle with'a strong Centre. Their approach was not theoretical or that of constitutional puritanism but pragmatic and was conditioned by considerations of unity and welfare of the country as the guiding objectives. India had already undergone one partition on the eve of the Constitu- tion-making and its memories were very fresh in their minds and, therefore, they put a great stress on promoting unity in the country so as to ensure that fissiparous ten- dencies were kept in check. In this connection, the following observation of the Sarka be taken note of: “The primary lesson of India’s history is that, in this vast country, only that polity or system can endure and protect its unity, integrity and sovereignty against external aggression and internal disruption, which ensures a strong Centre with paramount powers, accommodating, at the same time, its traditional diversities. This lesson of history did not go unnoticed by the framers of the Con- stitution. Being aware that, notwithstanding the common cultural heritage with- out political cohesion, the country would disintegrate under the pressure of fis- siparous forces they accorded the highest priority to the ensurance of the unity and integrity of the country” Thirdly, being an underdeveloped country, India had to force the pace of eco- nomic development in order torcompress into decades the progress of the centu- ries. This could be achieved by mobilising and judiciously using the national re- sources and this could be done best only under Central direction and leadership. Lastly, a common feature of all the modem federations is an accent on the iscussed above, such countries as Australia and America, which federal career with an emphasis on the States, the Centre waving been assigned a limited role, have seen the transformation of the Centre becoming very powerful and the States having relatively gone down, Need has been felt in these federations for a strong Centre so that the defence, and com- plex socio-economic problems of an industrialised society, may be tackled effec- tively. Each of the three federations, in varying degrees, has exhibited this ten- dency, and this provides a justification to make the Centre strong in India. There has been a continuous expansion of the functional role of the Central Government, Such expansion has completely altered the federal balance of pow- ers in favour of the national government. The framers of the Indian Constitution took due note of these changing concepts and functional realities in other federa- tions, They consciously designed the federal portion of the Indian Constitution with a strong Centre partly because of the experiences of the other federal systems and partly because of the needs of the country, viz., security and development. The framers did not adopt a doctrinaire approach based on the out-moded con- cept of classical federalism but adopted a functional approach and devised a sys- tem in tune with the peculiar needs, traditions and aspirations of the Indian peo- ple. Indian federalism is a sui generis system, In devising the federal system, the Commission may 2. PORT, 7.1042 Co-operative Federalism [Chap XIV framers of the Constitution sought to ensure its vitality as well as its adaptability to the changing needs of a dynamic society. Merely because the Centre enjoys predominance over the States to some ex- tent, the Indian Constitution does not cease to be federal. Federal form of gov- ernment has no fixed connotation. No two federal constitutions are alike. Each federal government has its own distinct character. Each is the culmination of certain historical processes. One basic feature of each federation however is that there is a division of powers between the Centre and the regional units by the Constitution itself. If the essence of federalism is the existence of units and a Centre, with a division of functions between them by the sanction of the Consti- tution, then these elements are present in India. In normal times, the States in In- dia have a large amount of autonomy and independence of action. The Indian federal scheme seeks to reconcile the imperatives of a strong Centre with the need for State autonomy. The States have substantial legislative powers and have control over most of the nation-bi ilding a ° They have a full-fledged parliamentary form of ‘At no time are they regarded as delegates or agents of the Centre They subsist not at the sufferance of the Centre but derive their sanction and powers from the same Constitution from which the Centre draws its sanction and powers. In course of time, many conventions have been evolved making the States more autonomous in practice than what it looks to be in theory. An inde- pendent judiciary acts as an umpire between the Centre and the States. The proc- ess of amending the Constitution is not unilateral so far ay the federal portion is concerned, and at least half the States: must agree before a proposed amendment can become effective:!* Within the sphere assigned to the States by the Constitution, the State Legi: latures have plenary power. No fetter or limitation can be read on the legislative power of a State Legislature outside the Constitution.'® The States have inde- pendent and substantial sources of revenue;"” they have executive power in the exclusive field (List I) and in the Concurrent field." On the whole, the Indian Union is never so closely knit as a unitary polity, nor, it is so loose as a confed- eration. What are the provisions in the Constitution which are supposed to go against the principle of federalism? Parliament has power to re-organise the States but here also the States are to be consulted and, further, India being a Union of States, the States have to exist as component units.” The existence of several inter-State boundary disputes for long, as between Mysore and Maharashtra, or Punjab and Haryana, prove that Parliament does not act unilaterally in such mat- ters but only after consensus has been reached between the contending par 13. Supra, Ch. X, Secs. E and F 14, Supra, Chs, VI and Vil 1S. Infra, Ch, XL. 16. ‘The State Legislature's competence to legislate on an entry in List Il is plenary and it cannot be circumscribed by any assurances given by the government: Umeg v. Bombay. AIR. 1955 SC 540 : (1955) 2 SCR 164; State of Kerala v. Gwalior Rayon Silk Mfg. Co., AIR 1973 SC 2734 : (1973) 2 SCC 713; supra, Ch Il, Sec. M. 47, Supra, Ch, XI, Sec. D. 18, Supra, Ch. XIi, See. A. 19. Supra, Ch. VSynH] — Can the Indian Constitution be Characterised as Federal? 1043 themselves. In actual practice, today, the power to re-organise the States is prov- ing to be a source of embarrassment rather than of strength to the Central Gov- ernment. Then, there is the provision relating to the appointment of the Governor by the Centre. But here a convention has grown to consult the State Chief Min- ister There are the provisions in the Constitution requiring in some cases Central assent to State legislation. But whatever the letter of the Constitution, in practice, by and large, Central assent is accorded to State legislation as a formality and there are not many instances of the Centre vetoing the State legislation. The one conspicuous example of this has been that of the Kerala Education Bill, over which public sentiment in the State ran high, but here also the Centre obtained the advisory opinion of the Supreme Court before remitting it back to the State Legislature for suitable amendments in the light of the Court’ opinion.” ‘The Central financial support to the States, as already pointed out, is provided largely under the Constitution and through the Finance Commission, an inde- pendent body, and this does not compromise State autonomy.” The aid given by the Centre to the States for fulfilment of the plans is on the advice of the Planning Commission,, and the National Development Council in which all the States are represented.”’ Further, provision of Federal grants-in-aid to the units is now a common feature of every federation and India is no exception to this trend.”* The emergency provisions of the Constitution have at times been held as con- stituting a major deviation from pure federalism.” These provisions are designed for temporary use only; by their Very nature they cannot be of normal occurrence. Art, 352 is to be invoked only when its need is demonstrable,*” and this is much more so now after the 44th Amendment. Further, inan emergency, the behaviour of each federal Constitution is very different from that in peace-time.” Article 356, as has already been discussed,” is meant to be used only when constitutional machinery is not functioning properly in a State, and that is an ex- ceptional, not a normal, situation. It may be hoped that with the passage of time people will get the necessary training, outlook and discipline to work democrat institutions, and then the States will have stable Ministries and the provision will fall into desuetude. In Bommai.” the Supreme Court has now spelled out a few restrictions on the invocation of Art. 356. Further, the composition of the two Houses presently is such, that it is not possible to invoke Art. 356 in relation to a State unless there is national consensus to do so.” On the whole, the Central power has weakened in this respect. Under Art. 252, which introduces a kind of flexibility in the distribution of powers, the States come into picture as the Centre cannot take over the State 20. Supra, Ch. VII, See. A(i). 21. AIR 1958 SC 956 - 1959 SCR 995; Supra, Ch. IV, Sec. F(c). 22. Supra, Ch. XI, Sec. L. 23. Supra, Sec. G: this Chapter. 24, Supra, Ch, XI. Secs. K(i) and (ii); M. 25. Supra, Ch. XIil, Secs. A and B. 26. Thid. 27. Supra, Ch. X, See. L. 28. Supra, Ch. Xill, Sec. D. 29. Supra, Ch. XIII, Sec. E(b). 30. Supra, Ch. I1044, Co-operative Federalism [Chap XIV matter without their co-operation and initiative." Only under Art, 249, the Centre acts unilaterally, but it is for an extremely short period and in national interest,” and if the theory that the Rajya Sabha represents the States is tenable,” then even in this case it can be said that the States’ consent is there, if not directly at least indirectly. In any case, so far, this provision has been used very sparingly. The States Re-organisation Commission has put the matter in the right per- spective. “These special provisions”, observes the Commission, “however, are primarily remedial in character and’are meant to prevent a breakdown in the States and to safeguard the powers of the Union within its own sphere. They do not detract from the fact that under the Constitution the States constitute corner- stones of the political and administrative structure of the country with a real measure of autonomy.” As regards the Centre-State administrative relationship, it has already been pointed out that the Centre depends too much on the States for administrative purposes, The Constitution introduces mechanism for intergovernmental cooperation. Many more bodies have emerged for this purpose through legislation and ad- ministrative orders and practices. It may also not be out of place to mention here that a good deal of what is ex- plicitly stated in the Indian Constitution in the area of the Centre-State relations is found to be implicit in other federal constitutions. For example, the mechanism of conditional grants mentioned. in Art. 282 has come into vogue in all federa- tions although not stated explicitly in the constitutions. In the U.S.A, and Austra- lia, the system is based-on. the Centre's spending power."* The concept of emer- gency is expressly mentioned in the Indian Constitution in Art. 352. By and large, the same effect is achieved in the USA and Australia under their war power and in Canada under the general power. "7 Art. 355 has its parallel in the USA in Art. IV, Sec. IV. Thus, considering the whole of the constitutional process—not only the letter of the Constitution but the practices and conventions that have grown thereun- der—the Indian Constitution can justifiably be called federal. It is not necessary to use such an inarticulate term as ‘quasi-federal’ to characterise it. The term “quasi-federal’ is extremely vague as it does not denote how powerful the Centre is, how much deviation there is from the pure federal model, or what kind of spe- cial position a particular quasi-federation occupies between a unitary State and a federation proper? The fundamental principle of federalism is that the legislative and executive authority is partitioned between the Centre and the States not by means of an or- dinary law passed by the Centre, but by something more enduring, vic., the Con- 3A. Supra, Ch. X, See. He). 32. Supra, Ch. X, Sec: Ka). 33. Supra, Ch. II, Sec. B. 34. Report, 42 35. Supra, Ch. XI, 36. Supra, Ch. XI, See. M. 37. Supra, Chs. X, Sec: Land XIII, Sec. A. 38. Supra, Ch. XIII, Sec. C.Syn H] Can the Indian Constitution be Characterised as Federal? 1045 stitution.” That is what the Indian Constitution does. The States do not depend upon the Centre, for in normal times, the Centre cannot intrude in their domain. It may be that the Centre has been assigned a larger role than the States, but that by itself does not detract from the federal nature of the Constitution, for it is not the essence of federalism to say that only so much, and no more, power is to be given to the Centre. There is also no immutable line of demarcation in any other fed- eration between the Centre and the States, and the balance of power has always been shifting in favour of the Centre as has been pointed out above. The concept of ‘dual federalism’, viz., that, in a federation, the general and re- gional governments are ‘co-ordinate and independent’ and competitors for power, is based on a reading of the 18th century version of the U.S. Constitution. In its Operation today, this Constitution is very different from what it was in the past. Similar is the case in Australia. The truth is that the old orthodox theory of “dual federalism’, as propounded by WHEARE, does not accord with contempo- rary realities and is no longer tenable or viable.” It is extremely difficult to sus- tain the argument, in the light of the evolution of the so-called true federal con- stitutions, that federalism must necessarily accord with a fixed, standard or im- mutable mould. There is nothing static about the federal concept. Today there is no country which may be said to have ‘pure’ federalism in the sense of there being a com- plete dichotomy of functions, or a complete equality of status, between the Cen- tre and the States." In fact, in all federations, as pointed out above, the modern accent is on “co-operation” between the Centre and the States, rather than on ‘in- dependence’ of the States." And for successful working of a “co-operative feder- alism’, it is necessary that the Central Government/be in a position to provide leadership to the regional governments, to-co-ordinate their activities, to guide them, to help them and, perhaps, on occasions to pressurize them to act in a particular direction if the national interest so demands. An appraisal of the whole constitutional process including the latest develop- ments in the field of Federal-State financial relations in the U.S.A., Australia and Canada, will make it clear that each of these countries is Centre-oriented today, and the centre of gravity has definitely moved in favour of the Centre. So is the 39. SAWER, MODERN FEDERALISM, 127, suggests that the most important feature of federalism ‘is the creation of an area of guaranteed autonomy of each unit of the system. Since the secular trend is towards the increase of authority of the Centre, the question of federalism or no federalism becomes in practice whether the area of autonomy is sufficient to be worth considering and whether the guarantee is sufficiently effective.” 40, WHEARE, MODERN GOVERNMENT, 18 (1971). ‘As SCHWARTZ points out, the doctrine of dual federalism was based upon the notion of two mutually exclusive, reciprocally limiting fields of power, the governmental occupants of which confronted each other as absolute equals: AMERICAN CONSTITUTIONAL LAW, 42; also, 163, 184-185 (1955). 41. According to FRIEDRICH, federalism should not be seen “only asa static pattern or design, but defined in “dynamic” terms, “Federal relations are fluctuating relation inthe very nature of things.” Federalism is 1 “process, an evolving patter of changing relationships rather than a static design regulated by firm and unalterable rues.” He maintains that “dual federalism’ is no longer “a realistic description of the actual working of American federalism in which co-operation has replaced competition to a consider- able extent.” “More and more, the States appear as administrative subdivisions of the nation, govern- ‘ment survivals of another day which must be supported by grants-in-aid, supervised and co-ordinated by ‘growing federal bureauer CARLJ. FRIEDRICH, TRENDS OF FEDERALISM IN THEORY AND PRACTICE, 7 42. Supra, Sec. A, this Chapter. 173, (1968),1046 Co-operative Federalism [Chap XIV case in India. Although the accent on the Centre appears to be more pronounced, yet this is mainly because, being the latest member of the federal family, much of What happens elsewhere underneath the surface of the Constitution, has been ex- plicitly incorporated in its fabric. It may, however, be noted that the centralising trends in other federations have not yet ceased or been contained; they continue to operate and are bound to change the constitutional complexion further in course of time. In India itself, apart from the constitutional provisions the centralising tenden- cies were also accentuated by the fact that one national party held sway both at the Centre and in the States. But now the State Governments belong to different political parties. The monopoly of power by the Congress Party was broken in 1967 and this has become accentuated since then. This development has thrown an apple of discord in the Central-State relationship. Within the last few years, a significant change has occurred in the complexion of the Central Government itself. The Central Government to-day is not cons tuted by a single all India political party; it is now a coalition of several political parties-national as well as regional parties. Accordingly, the policies evolved by the Central Government is the product of the balance of national and regional aspirations and perceptions. Demands have been raised from time to time for re-ordering of the Indian fed- eralism. This trend became pronounced as various political parties came on the scene and the Centre and the States fell under the sway of several political parties rather than remain under a single party. It is ineyitable, therefore, that in course of time, the States gain in stature and improve their bargaining position vis-a-vis the Centre. Itis interesting to note in this connection that the Government of Tamil Nadu, dissatisfied with the Constitution, appointed a Committee in 1969, known as the Rajamannar Committee, “to examine the entire question regarding the relation- ship that should subsist between the Centre and the States in a federal set up, with reference to the provisions of the Constitution of India, and to suggest suitable amendments to the Constitution so as to secure to the States the utmost auton- omy.” ‘The Committee in its report issued in 1971 criticised certain aspects of the In- dian Constitution because they were not reconcilable, in the opinion of the Committee, with the standard set by it, vic., co-ordinate and dual federalism.” But the Committee accepted the position that the power vested in the Centre “does not reduce the status of the States to that of administrative units in a uni- tary government as in the days of the British Rule." The Committee suggested some modifications in the Constitutional provisions relating to the distribution of legislative and taxing powers, emergency, etc. While no harm is done by raising a public debate on the issues involved, and by making necessary adjustments in the Constitution, if found necessary, the point remains that the theoretical, a priori, criticism of the Constitution by in- 43. Report, 16. 44. M.CJ.Kacz1, A Critique of the Rajamannar Committee Report, in LL.L., CONSTITUTIONAL DEVELOPMENTS SINCE INDEPENDENCE, 255 (1975). Also, M.P. JAIN, Background Paper, supra, note 1 on 690.Syn H] = Can the Indian Constitution be Characterised as Federal? 1047 voking the orthodox concept of “dual federalism’ is not tenable as that concept is no longer valid in modem federalism. Amendments in the Constitution can only be justified if they better serve, and promote, public interest and welfare, and not merely because of any theoretical considerations. It will be necessary to evaluate any proposed amendment from the point of view of its impact on other States as well. The proposals made by the Rajamannar Committee suffer from an extreme over-statement of the case for State autonomy. These proposals did not evoke much public enthusiasm and were endorsed neither by any State Government nor by any All India political party, and the report became a dead letter. The matrix of Centre-State relationship was also considered by the Adminis- trative Reforms Commission. In its report issued in 1969, the Commission came to the conclusion that “the basic Constitutional fabric of ours is quite sound and must remain intact.” Further, in the opinion of the Commission: “No constitu- tional amendment is necessary for ensuring proper and harmonious relations between the Centre and the States, inasmuch as the provisions of the Constitution governing Centre-State relations are adequate for the purpose of meeting any Situation or resolving any problems that may arise in this field.” The Commission rightly observed that the Constitution was flexible enough to ensure its successful working irrespective of whichever party may be in power, provided that those who are in power mean to work it and not wreck it.” The Government of India agreed with this view of the Commission."* These exercises did not give a quietus to the demand for revising the-Central- State relationship. The demand for the same has been. made’from time to time.“” The demand became more voiceferous withthe emergence of several State gov- erments (Tamil Nadu; Karnataka, Andhra: Pradesh, West Bengal and Jammu and Kashmir) belonging to the regional political parties other than the national political party in power at the Centre. In 1983, in response to an insistent demand to review the Centre-State rela- tions, the Central Government appointed the Sarkaria Commission under the Chairmanship of Justice R.S. SARKARIA, a retired Judge of the Supreme Court, with the following terms of reference: to examine and review the working of the existing arrangements between the Union and States in regard to powers, func- tions and responsibilities in all spheres and recommend such changes or other measures as may be appropriate keeping in view “the social and economic devel- opments that have taken place over the years and have due regard to the scheme and framework of the Constitution which the founding fathers have so sedulously designed to protect the independence and ensure the unity and integrity of the country which is of paramount importance for promoting the welfare of the peo- ple.” Thus, the terms of reference for the Commission specifically laid emphasis that the Commission would in making its recommendations give due regard to the need for maintaining the unity and integrity of the country. The Commission presented its report in 1988. In its report while the Commis- jon suggested some adjustment in the Centre-State relationship in several ways, 45. ARC Rep 7. Also see, SETALVAD, Union-State Relations, 226-236 (1974). 46. Tae TiMees oF INDIA, dated April 18, 1975. 47. See, ALICE JACOB, New Pressures on Indian Federalism: Demand for State Autonomy in ILI, INDIAN ConstrruTIOn: TRENDS & ISSUES, 370.1048 Co-operative Federalism [Chap XIV it did not make any suggestion for any fundamental change in the structure of the constitutional provisions relating to federalism. Several problems have become apparent in the practical working of the Indian Federalism over the years. The crucial fact that has emerged is that there is an imbalance between the functions and resources at the State level. Their tax re- sources have proved to be inelastic while all the money-consuming social serv- ices fall within their purview. It is also true that not all States utilize their taxing powers fully because of political pressures. Economic conditions vary from State to State, While the tax raising capacity of the poor States is low, their fiscal needs are very high. There exist vast differences in the scale of social services from State to State. In some States, the expenditure on social services is pitifully low. Then there occur national calamities like famines and floods from time to time taxing the resources of the States. The States are being kept solvent because of the massive transfer of funds from the Centre by way of tax-sharing, grants and loans. The fact also remains that most of the States do not use their financial re- sources prudently. Some of the opposition-ruled States want more powers and more autonomy. They want more legislative powers. One drastic suggestion made in this connec- tion is that the Centre should confine itself only to four subjects, viz., defence, external affairs, communications and currency, and leave all the rest of the func- tions (including the residuary) to the States. The States are clamouring for more taxing powers and more central assistance. They want funds to flow-to them through the Finance Commission instead of the Planning Commission because the former funds are non-discretionary and untied and the latter funds are disere- tionary and tied to specific purposes, and some States have a feeling that there is discrimination against them in.allocation of such funds. They want a share in the corporation tax which isnon-sharable at present; they want full autonomy to use the power to levy sales tax and do not like the scheme of levying additional ex- cise in lieu of sales tax on selected commodities.” It is being suggested that the Finance Commission be made a permanent body instead of being appointed, as at present, after five years. Another suggestion is that the role of the Finance Com- mission be enlarged so as to enable it to deal both with the plan and the non-plan expenditure as well as with total central assistance to the States. It is being ar- gued that the States should get the bulk of funds from the Centre under Art. 275 and that Art. 282 should only play a residuary role unlike the present situation when bulk of the funds for planning purposes pass to the States from the Centre under Art, 282.” Some States want greater economic freedom to develop the States faster and criticise the expansive use made by the Centre of its power under entry 52, List I. They would like the Centre to confine itself only to such industries as may be vital to national development The opposition-ruled States have a grievance that the ruling party at the Centre misuses the institution of Governor to further its own political interests in the ."" No healthy precedents have been set so far as to how the Governor 48. Supra, Ch. XI, Sec. L. 49. Supra, Ch. XI, Sec. L- $0. Supra, Ch. VIi, Sees. A and C.SynH] — Can the Indian Constitution be Characterised as Federal? 1049 should conduct himself in different situations." It is being suggested that the po- sition of the Governor should not be different from that of the President. The States do not like Art. 356 which hangs on their heads as the democle’s sword. It is being said that the Central government uses Art. 356 at times to fur- ther its own political interests by removing governments of different political complexion from office. It is also being claimed that over the years, the Planning Commission has just become an appendage of the Central government and to introduce objectivity in planning, it should be made an autonomous body, that the State planning ma- chinery be strengthened and that an inter-State Council consisting of the Prime Minister and the Chief Ministers be established under Art. 263.’ Itis true that during the last fifty years, strong centralising tendencies emerged in India. To a great extent, this was due to the fact that for long one political party, the Congress Party, was in power at the Centre as well as in all the States. The dominance of one political party for long did inevitably generate centralising trends. But now things have changed. The Congress Party has lost its pre-eminent position; it has lost its monopoly of power. Many political parties having re- gional, rather than national, perspective have emerged having different political ideologies and some of them have assumed power in some of the States. Further, even the Central Government is composed of a coalition of several political par- 's. This political development has checked the generation of centripetal forces. The States to-day are in a much stronger position to assert themselves, to exert pressure on, and to bargain with, the Centre: This is resulting in the emergence of a more balanced federal system in India. The Supreme Court has also helped this, process through its decision in, Bammai by-patting some restraints upon the exer- cise of its power under Art. 356.” The Court has declared federalism as the basic feature of the Constitution.®® Thus, whatever the constitutional provisions, the evolution of the Indian federalism for some time now has been towards a more balanced system with accent on State autonomy. While there may be a case for some re-adjustment in the Central-State rela- tionship in India, a drastic re-orientation of the Indian federalism is neither feasi- ble, nor desirable, nor called for. There are many practical reasons militating against too much devolution of power on the States, against too much decentrali- sation. For one, the economic conditions of all the States is not uniform. Whatever the scheme of division of taxing powers may be, while some States may benefit, oth- ers may lose and they will not be able to raise enough resources for themselves. The need for Central help to the States will thus continue. This is the experience of all other federations. This means that the Centre's financial capacity cannot be too much impaired. 51. See the White Paper on The office of the Governor issued by the Karnataka Government, ‘Tae Hinbu INT'L, Oct. 1, 83. ee, ILI, PRESIDENT'S RULE INTHE STATES, 176-81 52. 33. 54. For Bommai, see, supra, Ch, XIM, Sec. E(b) and (c), 38. Fordiscussion on this doctrine, see, Ch. XLI, infra,1050 Co-operative Federalism [Chap XIV ‘Two, national calamities will continue to arise from time to time needing mas- sive funds which only the Centre can manage. Three, the administrative infra- structure in the States is weak and is not capable of carrying a greater load unle: there is a wholesale effort made to improve it. As already pointed out, the Fi- nance Commission makes provision in its scheme of devolution of Central grants for funds to improve the State administrative machinery. Then, there are the de- mands of industry, trade and commerce which have national and not local dimen- sions. State taxing powers such as sales tax, octroi, tax on roads and motor vehi- cles come in the way of free flow of national trade and traffic and the business- men constantly make demands for abolition of octroi, integration of sales tax with excise and so on.” The States oppose these demands because it will reduce their capacity to raise revenue. Sales tax is the main source of revenue for the States. It may be of interest to note that over the years, efforts have been made to im- prove the financial capacity of the states in several ways. First, as already noted, the Finance Commissions have been progressively suggesting larger devolution of Central funds to the States. Two, the courts have progressively interpreted State taxing powers liberally. Three, the Centre has itself by amending the Con- stitution enhanced the State taxing powers, e.g., in the area of sales tax. Fourthly, devolution of large funds takes place from the Centre to the States through the medium of the Planning Commission. Many claims and demands have been made from time to time to re-orient In- dian Federalism, but most of them have been exaggerated and unrealistic. Many of these demands are politically-motivated rather than based on pragmatic con- siderations. The Sarkaria’ Commission hasrejected many of the claims made by the States in their favour for reordering the eAel rystern. The inherent sound- ness of the constitutional provisions concerning Centre-State relations has been vindicated by the Sarkaria Commission's report as no major amendment of any of these provisions has been suggested. Some of the major recommendations of the Commission are: (1) The Commission has rejected the suggestion that residuary powers be transferred from the Centre to the States.” (2) The Commission has emphasized that the rule of federal supremacy is indispensable for the successful functioning of any federal system. “It is the kingpin of the federal system.” (3) The Commission has rejected the demand for repeal of the most con- tentious provision in the Constitution, viz, Art. 356. The Commission has however suggested that Art. 356 should be used very sparingly.” (4) The Commission has rejected the demand for the merger of the Fi- nance Commission and the Planning Commission. 56. See S.N. JAIN & ALICE JACOB, Tax Rental Agreement: Replacement of Sales Tax by Addi- tional Duties of Excise in LL.L,, INDIAN CONSTITUTION: TRENDS & ISSUES, 379 (1978), Report, 31 Ibid., 28. Ibid, 177. 60. Ibid, 284. 2aSyn H] — Can the Indian Constitution be Characterised as Federal? 1051 (5) The Commission has maintained that it is necessary to retain Art. 365 though it should be used with great caution and invoked only in ex treme cases.” (6) The Commission has recommended the creation of the Intergovern- mental Council under Art, 263 The only touch-stone for any re-orientation of Central-State relationship can be the provision of better services to the people, improvement of socio-economic conditions and promotion of national unity, stability and integrity. No a priori, dogmatic or doctrinaire approach, no approach based on the old and discarded view of competitive federalism, can serve the purpose in the modern context. As has already been stated, such a view prevails in no modern federalism now. A strong Centre and strong States are not incompatible with each other. A strong Centre does not imply dat the States must necessarily be weuk. Both ought to be strong within the constitutional framework. Both are inter-dependent and the Centre could not be strong without strong States and vice versa ‘There is a lot which the States can do to help themselves and improve their strength and position. They can, for instance, improve their administrative infra- structure and make it more efficient; they can improve their financial position by improving their tax collecting machinery; the condition of such social services as education and health is pitiable in some of the States and they have to make up a lot of leeway in this area; they can improve the working of their electricity boards, road wansport services, public enterprises and-irrigation projects. The way these bodies ure functioning al presentin the Staley does not inspire con! dence hat things will be much better if-more powers were to devolve on the States.” Ibis very necessary to ensure that neither the federal set-up becomes unitary nor that it becomes too loose and weak affecting the unity of India. Federalism is not a static but a dynamic concept. It is always in the process of evolution and constant adjustments from time to time in the light of the contem- porary needs and the demands being made on it. Constant discussions and nego- tiations between, the Centre and the States in various fora can help in removing the frictions and difficulties in the area of inter-governmental co-operation and for sorting out these differences with a view to making the Indian Federalism a more robust and viable system so that India may successfully meet the great challenges of defence, external and internal security and socio-economic devel- opment. 61. Ibid, 107 62. Ibid, 237-240. 63, See the REPORT of the SE\ ENTH FINANCE COMMISSION.