Administrative Reforms Commission

      In 1966, the Central government established a six-member Administrative Reforms Commission (ARC) chaired by Morarji Desai, followed by K. Hanumanthayya. One of its objectives was to examine Centre-state relations. To delve into the complex issues surrounding these relations, the ARC formed a study team led by M.C. Setalvad. Based on the team’s findings, the ARC prepared its report, submitted to the Central government in 1969, which presented 22 recommendations aimed at improving Centre-state relations. Notable recommendations included:

• • Establishing an Inter-State Council under Article 263 of the Constitution.
  • Appointing governors with extensive administrative experience and non-partisan attitudes.
  • Delegating substantial powers to the states.
  • Increasing financial resources transferred to the states to lessen their reliance on the Centre.
  • Ensuring that Central armed forces are deployed in states only upon request.

Despite these recommendations, no actions were taken by the Central government to implement the suggestions of the ARC.

Rajamannar Committee

       In 1969, the Tamil Nadu Government, led by the DMK, established a three-member committee chaired by Dr. P.V. Rajamannar to review Centre-state relations and recommend constitutional amendments aimed at enhancing state autonomy. The committee submitted its report in 1971, identifying several factors contributing to the prevailing unitary trends, or centralization, in the country, including:

1. 1. Certain constitutional provisions granting special powers to the Centre.
   2. One-party dominance at both the Centre and in the states.
   3. Inadequate fiscal resources for states, leading to dependency on Central financial assistance.
   4. The role of Central planning and the Planning Commission.

Key recommendations from the Rajamannar Committee included:

1. 1. The immediate establishment of an Inter-State Council.
   2. Making the Finance Commission a permanent body.
   3. Disbanding the Planning Commission and replacing it with a statutory body.
   4. Omission of Articles 356, 357, and 365, which govern President’s Rule.
   5. Removing the provision that allows the state ministry to hold office at the Governor’s pleasure.
   6. Transferring certain subjects from the Union List and the Concurrent List to the State List.
   7. Allocating residuary powers to the states.
   8. Abolishing all-India services (IAS, IPS, and IFS).

Despite the significance of these recommendations, the Central government ignored the Rajamannar Committee’s proposals.

Anandpur Sahib Resolution

       In 1973, the Akali Dal adopted the Anandpur Sahib Resolution, which articulated both political and religious demands during a meeting in Punjab. The resolution called for a limitation of the Centre’s jurisdiction to matters of defense, foreign affairs, communications, and currency, proposing that all residuary powers should be vested in the states. It emphasized the need for the Constitution to be genuinely federal, ensuring equal authority and representation for all states at the Centre.

West Bengal Memorandum

In 1977, the West Bengal Government, led by the Communists, submitted a memorandum to the Central government proposing several changes to Centre-state relations. The memorandum recommended that:

1. 1. The term “union” in the Constitution should be replaced with “federal.”
   2. The Centre’s jurisdiction should be limited to defense, foreign affairs, currency, communications, and economic coordination.
   3. All other subjects, including residuary powers, should be allocated to the states.
   4. Articles 356, 357 (regarding President’s Rule), and 360 (financial emergency) should be repealed.
   5. States’ consent should be mandatory for the formation of new states or the reorganization of existing ones.
   6. Seventy-five percent of the total revenue collected by the Centre should be distributed to the states.
   7. The Rajya Sabha should have equal powers with the Lok Sabha.
   8. Only Central and state services should be maintained, abolishing all-India services.

Despite these proposals, the Central government did not act on the memorandum’s demands.

Sarkaria Commission

      In 1983, the Central government established a three-member Sarkaria Commission on Centre-state relations, chaired by former Supreme Court judge R.S. Sarkaria. The Commission was tasked with reviewing the existing arrangements between the Centre and states and proposing necessary changes. Although initially given one year to complete its work, its term was extended four times, and the report was submitted in 1988.

     The Commission did not advocate structural changes, believing that the existing constitutional arrangements were fundamentally sound. However, it emphasized the need for operational improvements and rejected calls to limit Central powers, arguing that a strong Centre is essential for maintaining national unity and integrity in the face of fragmentation. It noted that excessive centralization could lead to inefficiencies.

The Commission made 247 recommendations to enhance Centre-state relations, including:

1. 1. Establishing a permanent Inter-State Council, named the Inter-Governmental Council, under Article 263.
   2. Using Article 356 (President’s Rule) sparingly and only as a last resort.
   3. Strengthening the institution of All-India Services and creating additional services.
   4. Retaining residuary taxation powers with Parliament while allocating other residuary powers to the Concurrent List.
   5. Requiring the President to communicate reasons for withholding assent to state bills.
   6. Renaming and reconstituting the National Development Council as the National Economic and Development Council (NEDC).
   7. Reactivating zonal councils to promote federal spirit.
   8. Allowing the Centre to deploy armed forces without state consent, while still encouraging consultation.
   9. Consulting states before legislating on Concurrent List matters.
   10. Prescribing the consultation of the chief minister in the appointment of the state governor in the Constitution.
   11. Making net proceeds of corporation tax shareable with states.
   12. Ensuring the governor cannot dismiss the council of ministers if it holds a majority in the assembly.
   13. Preserving the governor’s five-year term barring compelling reasons for removal.
   14. Prohibiting commissions of inquiry against state ministers unless demanded by Parliament.
   15. Limiting surcharges on income tax by the Centre to specific purposes and durations.
   16. Maintaining the current division of responsibilities between the Finance Commission and the Planning Commission.
   17. Taking steps for the uniform implementation of the three-language formula.
   18. Maintaining centralized control over radio and television with operational decentralization.
   19. No changes to the Rajya Sabha’s role or the Centre’s power to reorganize states.
   20. Activating the commissioner for linguistic minorities.

The Central government has implemented 180 out of the 247 recommendations made by the Sarkaria Commission, with the establishment of the Inter-State Council in 1990 being one of the most significant actions taken.

Punchhi Commission

      In April 2007, the Government of India established the Punchhi Commission, headed by former Chief Justice Madan Mohan Punchhi, to examine Centre-state relations in light of significant political and economic changes since the Sarkaria Commission’s last review over two decades prior. The Commission’s terms of reference included:

1. Review Existing Arrangements: The Commission was tasked with analyzing the current arrangements between the Centre and states based on the Constitution, including legislative and administrative relations, the role of governors, emergency provisions, financial relations, economic planning, and resource sharing, particularly concerning inter-state river water.

2. Consider Social and Economic Developments: In making recommendations, the Commission was expected to consider social and economic advancements over the years, especially in the last two decades, and to focus on good governance, national unity, and strategies for enhancing economic growth to combat poverty and illiteracy.

3. Key Areas of Focus: The Commission was to specifically evaluate:

• • The Centre’s role during significant outbreaks of communal or caste violence.
  • The Centre’s responsibilities in major projects like inter-linking rivers that require state support.
  • Promoting effective devolution of powers to Panchayati Raj Institutions and Local Bodies.
  • Independent planning and budgeting at the district level.
  • Linking Central assistance to state performance.
  • Strategies for positive discrimination in favor of backward states.
  • The impact of Finance Commission recommendations on state finances.
  • The relevance of separate production and sales taxes following the introduction of the VAT regime.
  • The need to facilitate inter-state trade for a unified domestic market.
  • The necessity of a Central Law Enforcement Agency for serious interstate or international crimes affecting national security.
  • The feasibility of legislation under Article 355 for deploying Central forces in states as needed.

The Commission submitted its comprehensive report in April 2010, spanning 1,456 pages and seven volumes. In preparing its conclusions, the Commission drew extensively from the findings of the Sarkaria Commission, the National Commission to Review the Working of the Constitution, and the Second Administrative Reforms Commission. However, the Punchhi Commission diverged from several recommendations made by the Sarkaria Commission in various areas.

   The final conclusion of the Commission emphasized that “cooperative federalism” would be central to preserving India’s unity, integrity, and future social and economic development, suggesting that these principles should guide Indian polity and governance moving forward.

Punchhi Commission Recommendations

The Punchhi Commission, established to address Centre-state relations, made over 310 recommendations upon examining various issues. Here are some key recommendations:

1. 1. Legislative Cooperation: Prior to introducing legislation on Concurrent List subjects in Parliament, the Union and states should reach a broad agreement for effective implementation.
   2. Restraint on Parliamentary Supremacy: The Centre should exercise caution in asserting Parliamentary supremacy in state matters. More flexibility for states regarding subjects in the State List and Concurrent List is essential for improving relations.
   3. Necessity of Central Jurisdiction: The Centre should only legislate on subjects in shared jurisdiction when absolutely necessary for national uniformity.
   4. Inter-State Council: A continuing auditing role for the Inter-State Council should be established for managing concurrent or overlapping jurisdictions.
   5. Timely Decision on Bills: The six-month timeline in Article 201 for state legislatures to act on returned bills should apply equally to the President regarding his decision on state bills.
   6. Treaty Legislation: Parliament should create a law regarding treaty-making processes, ensuring they are consistent with India’s federal structure.
   7. Financial Implications of Treaties: Future Finance Commissions should consider the financial obligations arising from international treaties and agreements.
   8. Governorship Guidelines: The Centre should appoint governors following strict guidelines: they should be eminent individuals from outside the state, detached from local politics, and not recently active in politics.
   9. Fixed Tenure for Governors: Governors should have a fixed five-year term, with their removal from office not at the discretion of the Central government.
   10. Impeachment Procedure: The procedure for the impeachment of the President should similarly apply to governors.
   11. Governor’s Discretion: Article 163 should not grant governors general discretionary powers to act against the advice of their Council of Ministers, with discretion exercised only rationally and in good faith.
   12. Timely Decision on Assent: Governors should decide within six months whether to grant assent to bills passed by the state assembly.
   13. Guidelines for Chief Minister Appointments: Clear guidelines should dictate the Governor’s role in appointing a Chief Minister in a hung assembly, prioritizing the party or coalition with the most support.
   14. Majority Confirmation: Governors should require the Chief Minister to demonstrate a majority in the assembly before dismissing them.
   15. Prosecution of Ministers: Governors should have the right to permit prosecutions of state ministers against the Council’s advice if motivated by bias.
   16. Governor’s Roles: The dual role of governors as Chancellors of universities and in other statutory positions should cease, limiting their roles to constitutional provisions.
   17. Emergency Situations: In situations of external aggression or internal disturbances, all alternative measures under Article 355 should be exhausted before invoking Article 356, which should be strictly limited to restoring constitutional order.
   18. Guidelines for Article 356: Amendments are needed to clarify the use of Article 356 following the S.R. Bommai case, mitigating state concerns and enhancing Centre-state relations.
   19. Localized Emergencies: A constitutional framework should be developed for localized emergencies, allowing for Central intervention without fully resorting to Articles 352 and 356. This ensures state governance continues while providing specific mechanisms for Central response.
   20. Amendments to Article 263: The Commission proposed that Article 263 be amended to strengthen the Inter-State Council, making it a credible and effective mechanism for managing interstate and Centre-state differences.
   21. Zonal Councils: The Zonal Councils should convene at least twice yearly, with agendas suggested by the states to enhance coordination and harmonize policies on matters with interstate implications. The Inter-State Council Secretariat could also function as the Secretariat for the Zonal Councils.
   22. Empowered Committee of Finance Ministers: The successful experience of the Empowered Committee of Finance Ministers should be replicated in other sectors. A rotating forum of Chief Ministers should be formed to coordinate policies in key areas like energy, education, and health.
   23. New All-India Services: The creation of additional All-India Services in fields such as health, education, and engineering were recommended.
   24. Second Chamber Representation: The Commission suggested removing factors that inhibit the effective functioning of the Rajya Sabha as a representative forum for states. Adjustments may require constitutional amendments to allow equal representation for states regardless of population size.
   25. Devolution of Powers: Clear constitutional definitions for devolving powers to local bodies as self-governing institutions should be established through amendments.
   26. Cost Sharing in Central Legislation: Future Central laws affecting states should include provisions for cost sharing, similar to the Right to Education (RTE) Act, and existing laws should be amended accordingly to provide for this.
   27. Royalty Rates on Major Minerals: Royalty rates should be revised every three years, with states compensated for any delays beyond this period.
   28. Removal of Profession Tax Ceiling: The current ceiling on profession tax should be eliminated through a constitutional amendment.
   29. Revenue Generation from Article 268 Taxes: A renewed examination of potential revenue from taxes under Article 268 should be conducted, either by the next Finance Commission or by appointing an expert committee.
   30. Fiscal Legislation Accountability: All fiscal laws should mandate annual assessments by an independent body, with the findings presented to both Houses of Parliament and state legislatures.
   31. Finance Commission Terms of Reference: The considerations in the Finance Commission’s Terms of Reference should be balanced between the Centre and the states, with an effective mechanism ensuring state involvement in finalizing these terms.
   32. Review of Cesses and Surcharges: The Central government should evaluate all existing cesses and surcharges to reduce their share in overall tax revenue.
   33. Plan vs. Non-Plan Expenditure: An expert committee may be appointed to explore the distinction between plan and non-plan expenditures, given their interconnections.
   34. Better Coordination Between Finance and Planning Commissions: Improved synchronization between the Finance Commission and the Planning Commission, especially regarding their respective cycles, is essential for better coordination.
   35. Institutional Support for Finance Commission: The Finance Commission division in the Ministry of Finance should become a full-fledged department, acting as a permanent secretariat for the Finance Commissions.
   36. Role of Planning Commission: The Planning Commission should focus on coordination rather than micromanaging sectoral plans at both the Centre and state levels.
   37. Establishment of an Inter-State Trade and Commerce Commission: A new commission under Article 307 should be created with both advisory and executive authority, making decisions binding on the Centre and states. Aggrieved parties could appeal to the Supreme Court regarding the Commission’s decisions.

The Punchhi Commission’s report was shared with various stakeholders, including State Governments and Union Ministries, for their feedback on the recommendations. These comments are currently being considered by the Inter-State Council.

     The Central government implemented many of these recommendations, notably establishing the Inter-State Council in 1990.

Important Committees on Centre–State Relations