Centre–State Relations in India: Legislative, Administrative and Financial (UPSC Notes + PYQs)

Background

The Constitution divides power between the Union and the States in three fields: law-making, administration and money. The scheme borrows heavily from the Government of India Act, 1935, including its three lists of subjects, but tilts the balance towards the Centre. The framers had just seen Partition and wanted a Union strong enough to hold the country together. Over the decades, coalition politics, regional parties, economic liberalisation and GST have repeatedly shifted that balance, which is why Centre-State relations remain one of the most asked themes in GS Paper II.

Legislative relations (Articles 245–255)

The Seventh Schedule divides subjects into Union, State and Concurrent Lists (Art. 246). Residuary power is with Parliament (Art. 248). Parliament can make laws on a State List subject:

• Art. 249: if the Rajya Sabha resolves, by two-thirds of members present and voting, that it is in the national interest (valid one year, renewable).
• Art. 250: during a National Emergency.
• Art. 252: if two or more State legislatures request it (the law applies to those States and others that adopt it).
• Art. 253: to implement international treaties.

In a Concurrent List conflict, Union law prevails (Art. 254), unless a State law reserved for and assented to by the President. The 42nd Amendment (1976) moved five subjects, including education and forests, from the State to the Concurrent List.

Administrative relations (Articles 256–263)

States must exercise executive power so as to comply with Union laws (Art. 256). The Union can direct States on matters such as communications of national importance and protection of railways (Art. 257). Art. 262 lets Parliament provide for adjudicating inter-State river water disputes. Art. 263 provides for the Inter-State Council, set up in 1990 on the Sarkaria Commission’s recommendation. All India Services (Art. 312) also link the two levels.

Financial relations (Articles 268–293)

The Union has the more buoyant taxes; States have bigger spending responsibilities, a “vertical fiscal imbalance”. The fix is constitutional sharing: Union taxes are shared with States (Art. 270) on the recommendation of the Finance Commission (Art. 280, every five years). States also receive statutory grants-in-aid (Art. 275) and discretionary grants (Art. 282). Since 2017, the GST Council (Art. 279A) jointly decides GST rates. State borrowing is governed by Art. 293.

Commissions on Centre–State relations

How Centre–State relations changed after 1990

Coalition governments at the Centre from 1989, economic liberalisation from 1991, and the Bommai judgment (1994) curbing misuse of Art. 356 increased the weight of States. The 73rd and 74th Amendments (1992) added a third tier. The GST (2017) pooled sovereignty in a shared council. Recent friction points include Governors and State Bills, use of central agencies, divisible-pool size, and cesses and surcharges that are not shared with States.

The three lists

The 42nd Amendment (1976) moved five subjects from the State List to the Concurrent List: education, forests, weights and measures, protection of wild animals and birds, and administration of justice (constitution of courts other than the Supreme Court and High Courts). On a conflict in a Concurrent subject, Union law prevails (Article 254), unless a State law reserved for the President has received assent.

When Parliament can legislate on State subjects

• Article 249: Rajya Sabha resolution, by two-thirds of members present and voting, in the national interest (valid one year, renewable).
• Article 250: during a National Emergency.
• Article 252: when two or more State legislatures request it.
• Article 253: to implement international treaties and agreements.
• Article 356: during President’s Rule in a State.

Flashpoints today

• Governors: delays in assent to Bills and disputes over government formation.
• Central agencies: several States have withdrawn general consent for the CBI, which works under the Delhi Special Police Establishment Act, 1946.
• Money: rising cesses and surcharges that stay outside the divisible pool, and conditions attached to centrally sponsored schemes.
• Borrowing: Article 293 requires States indebted to the Centre to get its consent before borrowing.
• All India Services: disputes over deputation of IAS and IPS officers.

Way forward

The Sarkaria and Punchhi reports already contain a workable agenda: regular meetings of the Inter-State Council, consultation with States before legislating on Concurrent subjects, sparing use of Article 356, and a larger untied share of revenue. Bodies such as the GST Council and the Governing Council of NITI Aayog show that joint decision-making can work when it is institutionalised rather than left to political goodwill.

Centre-state Relations: UPSC angle

Centre-state Relations UPSC PYQs (Prelims)

Questions UPSC has actually asked, from the official papers. Pick an option to check yourself.

Mains PYQs on this topic

Questions from the official UPSC Mains papers (2023-2026 in the Battle IAS Mains bank), newest first. Each links to a model answer.

1. UPSC Mains 2025 · GS Paper II · Q14 · 15 marks

   Examine the evolving pattern of Centre-State financial relations in the context of planned development in India. How far have the recent reforms impacted the fiscal federalism in India?

   Model answer and approach

2. UPSC Mains 2024 · GS Paper II · Q13 · 15 marks

   What changes has the Union Government recently introduced in the domain of Centre-State relations? Suggest measures to be adopted to build the trust between the Centre and the States and for strengthening federalism.

   Model answer and approach

3. UPSC Mains 2023 · GS Paper II · Q13 · 15 marks

   Account for the legal and political factors responsible for the reduced frequency of using Article 356 by the Union Governments since mid 1990s.

   Model answer and approach

Quick quiz

FAQs

Study next: Federalism · Governor · Emergency provisions · Fundamental Rights

Spotted an error? Tell us. We correct within 48 hours.

Image: Prime Minister's Office, Government of India, Wikimedia Commons, GODL-India