A blow for federalism

The States make significant gains in the seventh meeting of the Inter-State Council.

WITH a coalition ruling at the Centre and with different political parties and sometimes coalitions of different persuasions in power in the States, maintaining federal relations on an even keel has become a challenging task. It is significant that against this background the National Democratic Alliance government treated with deference the concerns and aspirations of the States at the seventh meeting of the Inter-State Council (ISC) in New Delhi on November 15. Perhaps it was stung by the criticism that it had not consulted the States before promulgating the Prevention of Terrorism Ordinance (POTO).

Established by the V.P. Singh government in 1990 under Article 263 of the Constitution, the ISC consists of the Prime Minister, senior Union Ministers and the Chief Ministers of States and Union Territories. It serves as a forum for exchange of views between the Centre and the States on issues of common interest and for evolving a consensus on matters with national implications. Its standing committee, which consists of the Union Home Minister and four other Union Ministers, and six Chief Ministers, meets at least twice a year and finalises issues that need to be placed before the ISC.

The latest ISC meeting took several far-reaching decisions. It was chaired by Prime Minister Atal Behari Vajpayee and attended by the Union Ministers of Home, Defence, Law and Human Resource Development, and the Chief Ministers of most States and Union Territories. Its most significant decision was to transfer all the residuary powers of legislation under the Constitution from the Union List to the Concurrent List.

The framers of the Constitution placed matters of national concern in the Union List and those of purely State or local significance in the State List. Matters that are of common interest to the States and the Union were placed in the Concurrent List, in order to ensure uniformity in legislation with due regard to the country's diversity. Parliament and the State legislatures have exclusive powers to legislate on items in the Union List and the State List respectively. Both can legislate on items in the Concurrent List. However, foreseeing the possibility of a situation in which legislation might be required on matters that are not mentioned in any of the three Lists, the Founding Fathers made residuary provisions in Article 248 of the Constitution and Entry 97 of the Union List. The residuary powers of legislation are vested in Parliament. Article 248 (2) says that these include the power to make any law that seeks to impose a tax that is not mentioned in either the Concurrent List or the State List. This was done keeping in view the framework of the Constitution, which envisaged a federation with a strong Centre.

The Sarkaria Commission on Centre-State relations, which submitted its report in 1988, rejected the suggestion that the residuary powers should be vested in the States, even though it endorsed the Supreme Court's interpretation that these powers cannot be so expansively interpreted as to whittle down the power of the State legislatures. The Commission, however, backed the suggestion to transfer Entry 97 from the Union List to the Concurrent List.

The Sarkaria Commission recommended that the residuary power of legislation in regard to taxation remain with Parliament because, it said, the Constitution-makers did not include any entry relating to taxation in the Concurrent List so as to avoid Union-State frictions, double taxation and frustrating litigation. The Commission said that the power to tax might be used not only to raise resources but also to regulate economic activity, and warned that there might be situations in which a State, in the garb of introducing a new subject of taxation, may legislate in a manner prejudicial to national interest. But it justified the transfer of other residuary powers to the Concurrent List because, it felt, the exercise of such power by the States would be subject to the rules of Union supremacy that have been built into the scheme of the Constitution, particularly Articles 246 and 254.

At the ISC meeting, the Left-led governments of West Bengal and Tripura and various other governments led by regional parties demanded that the residuary powers, including those of taxation, be vested in the States. Jammu and Kashmir and Manipur (which is now under President's Rule) wanted the taxation powers to remain with Parliament. Although the Centre rejected their demand for the transfer of residuary powers to the State List, most States agreed to their transfer to the Concurrent List on the grounds that it was a small step forward. In defence of its decision to transfer the residuary powers to the Concurrent List rather than to the States List, the Centre pointed to the strong unitary bias of the country's federal structure.

The Centre did not exclude taxation from the residuary powers as advised by the Sarkaria Commission. The States argued that they needed taxation powers in order to mobilise resources to meet their developmental needs. The scope for mobilising additional resources through taxes had nearly been exhausted over the years, they pointed out. The States contended that they neither had within their jurisdiction many items that could be taxed nor could raise the rate of tax on existing items.

The ISC accepted the Sarkaria Commission's recommendation that laws in respect of subjects in the Concurrent List should be made, as a matter of convention, only after active consultation with the State governments except in cases of extreme urgency. This is because laws enacted by the Union, particularly those relating to matters in the Concurrent List, are enforced through the machinery of the States and consultation is essential to secure uniformity. The governments of West Bengal and Tripura, which demanded a review of the Concurrent List in the light of the need to decentralise powers, welcomed this decision as a step forward.

The ISC also accepted the Sarkaria recommendations relating to the qualification and role of a Governor. It agreed that the Governor should be an eminent personality who is not connected with the politics of the State concerned and that persons belonging to the minority communities should also be considered for gubernatorial posts. It accepted the Sarkaria recommendation that the Centre-State consultation process in the matter of appointing Governors should be made obligatory through a Constitution amendment.

Although Home Minister L.K. Advani claimed that the Centre had taken the Chief Ministers concerned into confidence while appointing Governors in the past three years, there are doubts whether such consultation was effective. According to the Sarkaria Commission, 'consultation' in this context means ascertaining the views of the person consulted on the suitability of the person proposed for appointment. The Centre, the Commission says, could reject a Chief Minister's objections if it finds them frivolous or manifestly untenable.

West Bengal Chief Minister Buddhadeb Bhattacharjee proposed that the President select the Governor from a panel of three eminent persons submitted by a State government. Only the Tamil Nadu government backed his proposal. Buddhadeb also suggested that the ISC be consulted before a Governor is removed from office in case of any sharp difference of opinion between the Centre and the State on the question.

Tamil Nadu Chief Minister O. Panneerselvam proposed that a Governor's tenure be terminated by the Centre only if the State legislature concerned passed a resolution to that effect.

Buddhadeb said that a Governor, as the Chancellor of the universities in the State, should be guided by the advice of the Council of Ministers. Andhra Pradesh Chief Minister N. Chandrababu Naidu supported this suggestion.

Madhya Pradesh Chief Minister Digvijay Singh suggested that a time-limit be set for a Governor to decide on giving assent to pending Bills. Although the ISC took a decision on this matter last year, the Centre has not made any move to implement it by amending the Constitution.

The ISC agreed that the Governor, as a matter of convention, should not return to active partisan politics after relinquishing office, even though he or she would be eligible for a second term or for election to the office of Vice-President or President of India. This was necessary to ensure the functioning of a Governor in an independent and impartial manner. But the ISC did not seem to have considered it necessary to support the Sarkaria recommendation that politicians from the ruling party at the Centre should not be appointed Governors in States that are ruled by parties other than the ruling party at the Centre. The NDA government has made several appointments of this type.

The ISC recommended that appropriate safeguards be incorporated in the Commissions of Inquiry Act to prevent its misuse by the Centre when it sets up a commission against any Minister of a State government. Although there have been only two instances of the Centre instituting such inquiries - against the Punjab government in the early 1960s and against the M. Karunanidhi government in Tamil Nadu in the 1970s - the ISC's recommendation only indicates the States' assertion of their rights.

Of the 247 recommendations made by the Sarkaria Commission, the ISC had taken decisions on 171. On November 15, it took decisions on 59 more recommendations. The ISC's Secretariat closely monitors the implementation of its decisions by various Ministries.