Dey / Cooperative Federalism: A Cherished Value of Constitution for 21st Century Governance in India

COOPERATIVE FEDERALISM: A CHERISHED VALUE OF CONSTITUTION FOR 21ST CENTURY GOVERNANCE IN INDIA Pritam Dey1

ABSTRACT Federalism excludes absolute power of majority. It demarcates strict division of powers, functions and area of competence of different units of federation. Traditionally, this Constitutional process has facilitated in furtherance of decentralization of decision making and promotion of multi-level governance. But for a country like India, a synergised, unison and mutually inclusive relation between state and centre is required rather the exclusivity of power as propounded by classical theorist of federalism. Hence, the need of “Cooperative federalism”, which can be defined as “a relationship where the National Government and the States are mutually complementary parts of a single government mechanism all of whose powers are intended to realize the current purposes of government according to their applicability to the problem in hand”. This paper critically assesses and analyses the evolvement of the idea of Cooperative federalism in India by traversing different era’s. It studies four overreaching themes i.e. legislative, administrative, financial and institutional relation to comprehend the nature of cooperation between centre-states and also to find out the grey areas where harmony is required. The paper ascertains the impediments that plagues the furtherance of decentralization and multi-level governance in India and provides for measures to strengthen the harmony between centre and state in light of the notion of “cooperative federalism”. The study has been conducted by appraising recent developments like 14th Finance Commission recommendations, Niti-Aayog, functioning of intelligence agencies, district mineral foundation, formation of new states etc. The paper aims to suggest an ‘idea of India’ where units of federation work together to realize the cherished values and goals of the nation.

KEYWORDS: Cooperative Federalism, Harmony between Centre and State, Institutional Relation 1

Pritam Dey, LLM (II Year), Rajiv Gandhi School of Intellectual Property Law, IIT Kharagpur, Phone: 8296116302, Email: [email protected]

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INTRODUCTION “Federalism is the best curb on democracy. It assigns limited powers to the central government. Thereby all powers are limited. It excludes absolute power of the majority”2. Federalism in classical sense encapsulate strict division of function between the Centre and the units in a federation, it also demarcates the respective areas of competence of each constituent. In the three older Federations i.e. U.S.A, Canada and Australia, in the formative years of their development, the dominant operative concept was ‘Dual Federalism’, where state and centre enjoys equal power and status. It ultimately gave rise to another strong feature i.e. ‘competitive federalism’ which denoted the spirit of competition and rivalry between centre and state. But an academic question raised time and again is whether various governments can work in water tight compartments or can there be absolute federation. It would be incorrect to assume that the state and central governments can work in isolation, as the governments works side by side many instrumentalities to promote inter-governmental cooperation come into existence. With the growing exigencies for war where national effort takes precedence and the changing role of state from police state to welfare state, the nature of relation between various constituents of a federation also got altered. With the passage of time the concept of ‘competitive federalism’ slowly pave way to ‘cooperative federalism’. “The concept of ‘cooperative federalism’, helps the federal system, to act in unison, it minimises friction and promotes cooperation among the various constituents of the government so that they can pool their resources for achieving desired national goals”3. The term ‘cooperative federalism’ can be defined as “a relationship where the National Government and the States are mutually complementary parts of a single government mechanism all of whose powers are intended to realize the current purposes of government according to their applicability to the problem in hand.”4. “In a strict sense, it would appear that the word `cooperative’ is redundant as it is the basic postulate in political theory of federalism that two or more sovereigns surrender part of their sovereignty to work together for common good. Cooperative federalism envisages that national and state agencies undertake government functions jointly rather than exclusively. The nation and states would share power without power 2

Lord Acton, Acton Institute for the Study of Religion and Liberty, available at http://www.acton.org/research/lord-actonquote-archive (Last visited on May 25, 2016). 3 M.P. Jain, Indian Constitutional Law 772, LexisNexis Butterworths Wadhwa (6th ed. 2010) 4 Corwin, The Constitution of the U.S.A, SENATE DOC, 14 (1953)

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being concentrated at any government level or in any agency”5. The concept of cooperative federalism was not important in India at the dawn of Indian Independence but with the changed political, social and economic scenario of the country, unison between centre and states has become paramount. It is now being realised that the various governments in a federation are interdependent to each other and they should act together in cohesion and not be at cross-roads to each other. The cooperation among state and centre has become much more significant due to the presence of diverse and sometimes diametrically opposite ideological based governments in different states and centre. It has given rise to fractured polity which robes the country of much needed consensus in national interest matters leading to avoidable expenditure of energy, finance and time. In the contemporary world, where the classical definition of communication, tax, business, security, finance, foreign policy etc. are changing a synergised, unison and mutually inclusive relation between state and centre is required to give effect to them and to fulfil the desired goals and objectives of the nation. The advantage of this system is that distribution of responsibilities gives people and groups access to many avenues of influence which may otherwise be inaccessible, the cooperation among states and centre creates an ambience for the citizen to have a dignified life, so that they don’t become subjects of tug of war between states and centre. So, it has been rightly said that the “Federalism isn’t about state rights only, it’s about dividing power to better protect individual liberty” 6 . J. Beg in State of Rajasthan v. Union of India 7 called Constitution as an amphibian, in the sense that it can move in either direction i.e. unitary or federal depending upon the circumstances which seminally means cooperation among the state and centre. The time has come for the titans to shake hands and work for the national interest. In India the term cooperative federalism is not a myth but a reality, the term may not be a Constitutional doctrine but it is sine qua non for the governance of the country. In a diverse country like India where each state has its own topography, culture, economic and social condition cooperation among the centre and state is necessary in all spheres of government in order to achieve desired national goals. The centre and state through 5

Arghya Sengupta & Others, Cooperative Federalism from Rhetoric to Reality, Vidhi Centre for Legal Policy (2015) 6 Elizabeth Price Foley and David Rivkin, The Originalism Blog, October 10, 2012, http:// originalismblog.typepad.com/theoriginalism-blog/2012/10/elizabeth-price-foley-and-davidrivkin-on-federalismmichael-ramsey.html (last visited on June 1 2016) 7 AIR 1977 SC 1361

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legislative mechanism and administrative decision has started to cooperate in various spheres of governance. The most concrete mechanism developed till now by which centre and state coordinate is the greater devolution of financial resources through Constitutional mechanism like Finance Commission and Non-Constitutional bodies like Planning Commission. But finance is not the only issue which need cooperation among the various constituents of the federation, it also encapsulates cooperation among various tiers of government, institutional cooperation, administrative and legislative cooperation, security and public policy cooperation, ownership of natural resources and their consequent benefits along with it host of other issues. Although some formative steps have taken to iron out the differences among the various constituent of federation on various, there are some grey areas where the cooperation between the centre and state need to be strengthened. The article analyses the historical development of the concept of cooperative federalism in some select countries. It also analyses some of the existing mechanism of cooperation between centre and state in India and also provides measures to strengthen harmony between centre and state in light of recent developments like Fourteenth Finance Commission recommendations, abolition of Planning Commission, role of Niti-Aayog etc. The article focused on specific practices of the Indian federation to try and arrive at a position to determine the cooperation between various constituents of a nation. It looks at issues of contemporary relevance across four themes derived from constitutional values. HISTORICAL DEVELOPMENT OF COOPERATIVE FEDERATION IN SELECT COUNTRIES The Constitution of Canada, U.S.A and Australia are the classic examples of federation, where the powers of the constituent unit is earmarked. But with the passage of time all these federal Constitution moved from Dual Federalism to Cooperative Federalism. In the U.S.A., the intergovernmental co-operation has been built mostly around the system of conditional central grants to the states for centrally-sponsored schemes.8 Canada has also developed some form of cooperative federalism which includes distribution of grants to provinces, delegation of power by the centre to the state and to some other subordinate agencies9. In Australia, the concept of cooperative federalism has been given impetus through 8

People of the State of New York v. O’Neill, 11 N.Y.2d 148 (N.Y. 1962) M.P. Jain, Indian Constitutional Law 713-716, LexisNexis Butterworths Wadhwa (6th ed. 2010) 9

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Government established bodies like Commonwealth Grants Commission and Australian Loan Council10 to coordinate the borrowing programme of the Centre and States. The arrangement reduced the competition between the Centre and State governments for funds and has increased intergovernment cooperation. All these Constitutions were drafted in the era of laissez faire where the role of the state was minimal and commanding heights of the economy was dominated by the private enterprises. But the shift in the political and economic philosophy of the state necessitated change in the corresponding adjustment of the Constitution norms, which gave rise to the concept of strong centre and maximalist state intervention11. The latter half of twentieth century is marked by changing dynamics of society which has necessitated a constitutional framework which can provide necessary flexibility and resilience in the governance structure. It was identified that in order to support and promote pluralism and multiculturalism in a society, cohesion between states and centre is sine qua non. U.S.A The concept of cooperative federalism first gained attention in America. The U.S Constitution has been regarded as the epitome of federalism where the division between centre and state power is clearly demarcated. It started with a weak centre and strong states as the Constitution is the result of voluntary compact between the states. But through ingenious legislative devices and judicial activism, the power of centre have expanded phenomenally particularly in nineteenth century. The centre vast financial resources have led to the emergence of the system of grant-in aid, this have been accentuated through war, economic depression, emergence of social welfare policy. The judiciary has also interpreted the Constitution in favour of strong centre, in Steward Machine Co. v. Davis10, the court upheld the Social Security Act, 1935, the act had put enormous pressure on the state to follow an economic scheme, under U.S Constitution Congress is not authorised to legislate on social security issues, but the court upheld the law. All these developments altered the balance of power in favour of central government. But after Second world war the role of state in national development was again given a special attention, the idea of organic federalism and cooperative federalism altered the governance structure. The federalising of corporate law for the growth of industry 12 , the separate 10

M.P. Jain, Indian Constitutional LAW, 707 (6th ed. 2010) U.S. 548 (1937) 12 Delaware General Corporation Law (Title 8, Chapter 1 of the Delaware Code) 11

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minimum wages policy of each state 13 and fiscal independence given to states have increased inter-government cooperation among the states. The judiciary also started giving parity to centre and state vis-à-vis various programmes and legislation. In Printz v. United States13, the court held that national government cannot force the state law enforcement agencies to conduct background check under Brady Fire Arms Regulation14. In cases like King v. Smith15 and Schaffer v. Weist 16 , the court has supported the federal programs built on cooperative model. The U.S.A has come a long way from a dual federal state to a competitive federal state and finally to a cooperative federation state which also supports cooperative legislation17. Canada The Canadian Constitution basically promotes strong centre, it derives its power through British North America Act, 1867. The BNA Act was intended to establish strong centre but through judicial pronouncements and interpretation of the act by Privy Council and Canadian Supreme Court, the powers of the centre were usurped. Only in situation of national emergency he centre has relatively greater autonomy and power than the provinces18. In Attorney General of Canada v. Attorney General of Ontario19 also known as ‘weekly rest case’, the Privy Council took away the power of the centre to make laws on labour issues. In another seminal case Attorney General for British Colombia v. Attorney General of Canada 20 , the Privy Council denied the centre the power to regulate the supply and marketing of essential commodities. However, after a Constitutional Amendment in 1940, a strong cooperative tendency among constituents of the federation can be envisaged, with increasing financial resources with the centre, the system of grant for centrally-sponsored scheme was developed, the centre was given power to provide unemployment insurance, old age pension was made part of concurrent jurisdiction, many powers of the centre was delegated to various

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United States v. Darby Lumber Co., 312 U.S. 100 (1941) had upheld the Fair Labour Standards Act, 1938, many states passed its own minimum wage laws like Fair Minimum Wage Act, 2007 etc. 14 Brady Handgun Violence Prevention Act, 18 U.S.C Pub.L. 103–159, 107 Stat. 1536, (1993) 15 U.S. 309 (1968) 16 U.S. 49 (2005) 17 United States v Bekins, 58 S.Ci 811 (1938) 18 Russel v. The Queen (1882) 7 AC 829 19 AC 326 20 AC 377

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instrumentalities of the state. Canadian federation moved from strong centre to strong provinces and finally to cooperative federations. Australia The Australian Constitution although judicially characterised as truly federal as in the beginning centre’s power were limited and accent was of state power. But with time there has been significant mobility towards centralization 21 . The centre has become powerful as a result of judicial pronouncement, conditional grant in aid and emergence of financial agreement between state and centre. The enormous power wielded by centre was manifested in 1942 where state unilaterally excluded states from the field of income-tax. In Victoria and New South Wales v. The Commonwealth22, judiciary gave sanction to the centre scheme. In the landmark ‘Pharmaceutical benefits case’ i.e. Attorney General of Victoria v. The Commonwealth23, the scheme to provide free medicines to people was invalidated by the court, this led to amendment in the Constitution empowering parliament to make laws for social security. The rise of social welfare legislation also increased the power of centre. But with the formation of government institution like Australian Loan Council24, the competitive nature between state and centre for fund started to diminish, it transformed into a relation of inter-state cooperation. The development of Commonwealth Grant Commission25 Australia today is now a model state of cooperative federation, with its finances and administrative powers equally divided among its constituent.

COOPERATIVE FEDERALISM IN INDIA A pertinent question always arises that whether Indian Constitution can be characterised as truly federal or not. Some scholars use the epithets for it as ‘quasi-federal’, ‘unitary with strong federation’ or ‘federal with strong unitary feature’. It is to be noted that the Indian federalism was not a result of a compact between sovereign units but a conversion of a unitary system into federal system. In West Bengal v. Union of India26, the Supreme Court 21

South Australia v. The Commonwealth, (1942) 65 CLR 373 (1957) 99 CLR 575 23 (1945) 71 CLR 237 24 Supra 9 25 The commission is a statutory body in Australia that advises Australian Government on financial assistance to the state and territories of Australia. 26 AIR 1963 SC 1241 22

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took note of this process and rejected the clam of the states that they shared sovereignty with the centre. Due to past history of the country, underdevelopment and volatile social and political condition, the Constitutional makers found it prudent to provide for a strong centre. But that doesn’t mean states are subservient to the centre, due to unique socio-economic condition of the country the makers of the Constitution seek to reconcile the imperatives of strong centre with the need for state autonomy. India represents diverse cultural, ethnic, social and economic beliefs which changes from state to regions, they cannot be accommodated only in federal structure but need cooperative and constructive federalism. In Indian Constitutional context the term ‘cooperative federalism’ is extremely vague, although the centre and state claims to work together but the fracture polity robs the citizen of consensus based nation building 27 . Although it is doubtful whether we can consider the term ‘cooperative federalism’ as constitutional doctrine nevertheless it has gained much attention in recent decades. Since the ancient period the concept of cooperation among the centre and vassal states was followed, there was a stated policy of non-intervention in the local affairs of the states. The great rulers of Mauryan, Gupta and Mughal dynasty were able to hold their power because of their respect and belief in demarcation of power between centre and state. The development of Cooperative federalism in India can be analysed through understanding political evolution and Constitutional development. A. PRE- INDEPENDENCE ERA In the earlier stage of British rule, the colonial administration kept an arm’s distance from the Indian Subjects. The British Government through Regulating Act, 177328, Piit’s India 178429 and various Charter Acts used to supervise Indian Subjects. The continuous interference of British in affairs of Indian subject led to the first war of independence. After the war, it became a stated policy of the British of not interfering in the local affairs. Through the Montague- Chelmsford Reforms in 191930 and the Government

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Arghya Sengupta & Others, Cooperative Federalism from Rhetoric to Reality, Vidhi Centre for Legal Policy (2015) 28 13 Geo. 3 c. 64 29 24 Geo. 3 Sess. 2 c. 25 30 9 & 10 Geo. 5 c. 101

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of India Act, 193531, some form of provincial autonomy was granted. The scheme of distribution of power between states and centre can be understood from this backdrop. B. POST-INDEPENDENCE ERA Indian Constitution created an effective mechanism of distribution of power among the centre and states but with a biasness towards unitary power. The presence of Seventh Schedule of Constitution, authority of the centre to make legislation for two or more states, decentralisation of power through municipalities and panchayats is a testament of our Constitution incorporation of cooperative federalism. But single citizenship, alteration of boundaries of states, All- India Services, power of parliament to legislate in states subjects give a biasness towards union. But the philosophy of the term Cooperative Federalism was not of much significance for India when there was one party rule in centre and state. In the first two decades, the scope of conflict between state and centre was minimal, as both the government were run by same parry, but the conflict arises when centre and state governments changed and a competing demand of resources started. Ingenious legislative method and judicial interpretation were developed to promote cooperation among the governments. The development of cooperative federation in India in post-independent scenario can be analysed through following stages1950-1970–As stated earlier the formative years of Indian Constitution didn’t provide much significance to the term cooperative federalism owing to the presence of one party in centre and state. In spite of this, seeds of cooperation were embedded in India through institutional development. The division of states on the basis of language through State Reorganisation Act,1955 and development of five Zonal Councils32 to cooperate between the centre and state in conflict situation were first steps in this regard. To democratise planning and development Planning Commission and National Development Council was established. The first Administrative Reform Commission33 also gave recommendation on inter-state cooperation for the 31

26 Geo. 5 & 1 Edw. 8 c. 2 The idea of Zonal Councils was mooted by Pt. Jawaharlal Nehru during the course on debate on State Reorganisation Commission. The idea was to create a ‘Advisory Councils’ for each zone to promote cooperation between the states in the area of governance and policy making. 33 The first ARC was constituted by the Ministry of Home Affairs under Government of India by resolution no. 40/3/65-AR(P) dated 5 January 1966, Chaired by K. Hanumanthaiah. 32

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effective functioning of government machinery, it called for the effective functioning of Inter-State Council under Art. 26334of the Constitution. The era also saw centre effectively coordinating with the states in the development model. The top down approach of the economy was supported by nearly all the states. The period of 1960’s was marred by war so a strong centre was needed, use of state emergency provision of the Constitution was also minimal due to one party rule in the country. But Indian federal system was soon besieged with lot of challenges and the subsequent decades marked the test for Indian federalism. 1970- 1990- The era marked the conflict between state and centre in nearly all spheres of governance. The increasing number of opposition ruled state. provided for fractured polity and calls for redefining centre- state relation. In 1971, Rajmannar Committee35 also gave recommendation for the effective functioning of the Inter-State council under Art.263 36 and to make a permanent secretariat for the council which will be a permanent body to look after the centre-state relation. It asked for every bill which shall effect state power be reviewed by this body. The increasing use of President rule to overthrow opposition governments 37 , discriminatory financial arrangements and assault on federal system of the country also led Supreme Court to pass several landmark judgements on federal issues. The Supreme Court in it magnum opus judgement of Kesavananda Bharati v. State of Kerala 38 clearly held that the federal character is the basic structure of Indian Constitution and hence cannot be changed according to the whims and fancies of the governments.

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Art. 263- If at any time it appears to the President that the public interests would be served by the establishment of a Council charged with the duty of— inquiring into and advising upon disputes which may have arisen between States; investigating and discussing subjects in which some or all of the States, or the Union and one or more of the States, have a common interest; or making recommendations upon any such subject and, in particular, recommendations for the better coordination of policy and action with respect to that subject, it shall be lawful for the President by order to establish such a Council, and to define the nature of the duties to be performed by it and its organisation and procedure. 35 The Centre-State Relations Inquiry Committee was set up by the Government of Tamil Nadu on 2 September, 1969 under the Chairmanship of Dr. P.V. Rajamanar to consider the entire question regarding relationship that should subsist between the Centre and the States in a federal set up. The other two members of the committee were Dr. A. Lakshmanaswami Mudaliar and Mr. P. Chandra Reddy. 36 Supra 36 37 Smt. Indira Gandhi used the power of President rule over 39 times between 1966-1977. Similarly, Janata Party Government after coming to power in 1977, dismissed 9 Congress ruled states. 38 (1973) 4 SCC 225

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The court in State of Rajasthan v. Union of India 39 quoted that Indian Constitution was perhaps the first constituent body to embrace from the start the value of cooperative federalism. The court in S.R. Bommai v. Union of India40, used the term ‘pragmatic federalism’, to define legislative relation between state and centre. Due to increasing conflict between state and centre the era marked the establishment of Justice R.S Sarkaria Commission41 in 1983 for the study of centre and state relation. It gave more than 247 recommendations among which the appointment of governor was significant. It asked the centre to deliberately use Art.248 42 for the effective running of the nation. It maintained that it is necessary to keep Art. 36543 but it should be used with great caution. It rejected the demand for repeal of Art.356 44 and the merger of finance commission. Many of its recommendation were accepted and implemented by the governments. In this period the courts also interpreted Constitution in light of cooperative federalism. In Dabur India Ltd v. State of Uttar Pradesh 45 , the court recommended that the centre should consider the feasibility of establishing inter-state council under Art.263, which shall be a permanent body to resolve disputes between centre and state. In D.C Wadhwa v. State of Bihar 46 , although constitutional validity of repeated promulgation of ordinance was upheld, the court emphasized that it cannot be a tool to serve political interest. 1990-till present- Post 1990’s era was a coalition era led by regional parties, the accent of state leaders in national scenario and the central government 39

AIR 1977 SC 1361 AIR 1994 SC 1918 41 To review the working of the existing arrangements between the Union and the States in the changed socioeconomic scenario, the Government constituted a Commission vide Ministry of Home Affairs Notification No.IV/11017/1/83-CSR dated June 9, 1983 under the Chairmanship of Justice R.S. Sarkaria with Shri B. Sivaraman and Dr. S.R. Sen as its members. 42 248. (1) Parliament has exclusive power to make any law with respect to any matter not enumerated in the Concurrent List or State List. (2) Such power shall include the power of making any law imposing a tax not mentioned in either of those Lists. 43 Art. 365- Where any State has failed to comply with, or to give effect to, any directions given in the exercise of the executive power of the Union under any of the provisions of this Constitution, it shall be lawful for the President to hold that a situation has arisen in which the Government of the State cannot be carried on in accordance with the provisions of this Constitution. 44 Art.355-It shall be the duty of the Union to protect every State against external aggression and internal disturbance and to ensure that the Government of every State is carried on in accordance with the provisions of this Constitution 45 AIR 1990 SC 1814 46 AIR 1987 SC 579 40

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dependence on state parties led to a situation where the rules of convergence between centre and state needed to be redefined. The increasing clout of state satraps have increased the conflict between broader national issues and regional issues which needed a change in centre-state relations. In 1999, the Government of India appointed the National Commission to Review the Working of the Constitution (NCRWC), which recommended that there was need for the institutionalization of consultative process between centre and state. It considered Art.263 to be in tune with the spirit of cooperative federalism and suggested that the Inter-State Council order, 1990 should clearly specify under sec.4(b) of the order of subjects that can be consulted between state and centre in the council. It also recommended that Art. 139A47 of the Constitution of India be amended so that the council can withdraw cases to itself from any court and start a consultative process on that, further it also recommended for the formation of Inter-State Trade Commission. The Second Administrative Reforms Commission48 with a term of reference that included to review the working of centre and state. In the contemporary world the rules of engagement between state and centre has undergone lot of changes, the big-brother attitude of centre has transformed into a cooperative attitude. In every sphere of governance be it public policy, security, foreign policy, economy no government can work in isolation, the time of cooperative federalism has come. The Supreme Court has also reiterated its stand on federalism vis-à-vis cooperative federalism, in Kuldip Nayar v. Union of India51, the court while interpreting the word domicile under Representation of People Act, 1951 47

(1) Where cases involving the same or substantially the same questions of law are pending before the Supreme Court and one or more High Courts or before two or more High Courts and the Supreme Court is satisfied on its own motion or on an application made by the Attorney-General of India or by a party to any such case that such questions are substantial questions of general importance, the Supreme Court may withdraw the case or cases pending before the High Court or the High Courts and dispose of all the cases itself: Provided that the Supreme Court may after determining the said questions of law return any case so withdrawn together with a copy of its judgment on such questions to the High Court from which the case has been withdrawn, and the High Court shall on receipt thereof, proceed to dispose of the case in conformity with such judgment. (2) The Supreme Court may, if it deems it expedient so to do for the ends of justice, transfer any case, appeal or other proceedings pending before any High Court to any other High Court.] 48 The Second ARC was set up with a resolution no. K-11022/9/2004-RC of the Government of India as a committee of inquiry to prepare a detailed blueprint for revamping the public administration system. It was headed by Shri Veerappa Moily and four other members. 51 AIR 2006 SC 3127

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upheld the election of non-resident of place in Rajya Sabha. The court in order to promote cooperation among the states gave this provision a widest possible interpretation. The election of a new government in 2014 has given a new meaning to the term ‘cooperative federalism’, the formation of NITI-Aayog, the devolution of more funds to the state under the recommendation of fourteenth finance commission and the acceptance of an economic model that is bottom up approach rather than a top down approach. All these developments have given a new approach to India’s federalism. Indian Constitution has provided a federal structure with a strong centralizing tendency. The powers vested upon the centre tramples states’ rights especially in financial matters and during the time of emergency. Although Indian Constitution have definite features of federalism it is still called a quasi-federal Constitution. Perusing the Constitutional debates one can understand the importance given to centre by the Constitutional makers. Although federalism was a dominant discourse in Constitution making process, there was unanimous consent of all the members of the Constituent Assembly of having a strong Centre, the brutality of British rule and the consequent horrors of partition had convinced the framers of the Constitution that a strong centre can only keep ‘Unity and Integrity of the Nation’. But the framers of the Constitution had given full autonomy to states in their respective areas, although we have strong centre the state is not subservient to the centre. One of the fundamental aspects of federalism is the independence of federal/provincial government in their own area of influence. But there can be situation where the strict rigidity of the separation of power need to be diluted for the public interest. In order to understand the India’s cooperative model of governance system, we have to analyse some of the distinct features of Indian Constitution and Laws. It will also give us the grey area in which we need to work to develop an effective system of governance between states and centre. A. LEGISLATIVE RELATIONS One of the most fundamental features of a federal constitution is the division powers and functions between the centre and the states. The Constitution under Seventh Schedule have demarcated the areas of law making between centre and state. Art. 245- Art. 255 provides for the legislative relation between the union and the states. Indian Constitution gives an elaborate scheme of distribution of legislative powers between centre and the state through Union List, State List and Concurrent List. Only the parliament is empowered to legislate under the entries given under the Union List, the state legislatures are empowered to legislate under State list and the both the

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governments can make laws under Concurrent List. The power of legislation and taxation has been clearly demarcated in the Constitution. In Union List Entry 1 to 81 deals with topics of legislation, 82 to 93B deals with power of taxation. In State List Entry 1 to 44 deals with reference to legislation and Entries 45 to 63 deals with taxation. The power of residuary power is also vested on the Centre under Entry 97 of the Union list. This section analyses some specific provisions under Constitution of India that signifies Cooperative Federalism and the grey areas which need further reforms. Concurrent List One of the most important and enduring features of the Indian Constitution is the presence of Concurrent List. The list contains 47 subjects in which both state and the centre can legislate. Entries like Criminal Law, Marriage, Divorce, preventive detention, environment, civil procedure etc. The true basis for the presence of such a list is the increasing complexity in socioeconomic matters, intertwined issues of trade and commerce and growing dependence between various federation of the states49. The Entries in the list are not “powers of legislature” but “fields of legislature”. The underlying features of this list is that nation building cannot be done in isolation, there can be various subjects where coordination between the centre and the state becomes necessary. The Concurrent List in the true spirit of cooperative federalism provides a harmonious legislative route on issues in which both centre and the state are equal stakeholders. But sometimes the issues get so intermingled that the centre and the state make separate laws for the same subject area. To reduce the conflict in the area of Concurrent List recommendation of the Sarkaria Commission is useful wherein a need of holding of consultation and convention has been envisaged to reduce the conflict between constituent of a state 50 . Moreover, for developing the spirit of the cooperation between states only the residuary power of taxation should remain with Union List and rest should be transferred to Concurrent List51. The Constitution should be suitably amended for giving the effect. Cooperative Legislation Cooperation in the legislative sphere is necessary for achieving the goals of nation. Art 252 of the Constitution of India provides for ‘cooperative legislation’ where the states through resolution empowers the central 49

M.C. Setalvad, Union and State Relations in the Constitution 57, Eastern Law House (1974) 50 Sarkaria Commission Report, Part 1, pp.49 to 51. 51 Id. 54

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government to make laws on state subject The provision has few parallels among the federal Constitutions. The need for cooperative legislation arises for better governance of a state. There can be various situation where the state is unable to deal with problem on its own or it is not possible to make laws on the subject without having uniform laws throughout the country. The Bombay High Court judgement in RMD Chamarbaugwala v. State of Bombay 52 , which struck down the regulation on lotteries and prize competition, obviate the need to make a central to regulate lotteries and other speculative games. Unable to regulate the activity, several state legislatures passed the resolution authorizing centre to make law on the subject which ultimately led to passing of Prize Competition Act, 1955. The states also realised that there should be uniformity of laws on certain subjects which are in state list Urban Land (Ceiling and Regulation) Act, 1976 where uniformity of laws was necessary for proper implementation. After independence centre has passed plethora of laws on state subject owing to difficulties faced by state due to lack of resources like Estate Duty Act,1954, National Capital Region Planning Board Act, 1985, Human Organ Transplant Act, 1994, Seeds Act, 1966 etc. In a diverse country like India, legislation cannot be made through water tight compartments, there has to be certain flexibility to meet unforeseen circumstances. Provision like Art. 252 promotes inter-state and centre union relations. Intelligence Gathering and Terror Investigation One of the biggest obstacles in centre-state relation is the intelligence gathering, terror investigation and the role of police. Unlike in many federal countries Indian Constitution doesn’t provide for any federal offences. Under our Constitutional scheme ‘criminal law’ is under ‘concurrent list’53, ‘public order and police’ is under ‘state list’ 54 , this unique features sometimes create fissures among centre and state. The most glaring situation when such fissures arises is the investigation of terror offences which involves inter-country investigation and sometimes may also require foreign agencies help. In such situation, only federal agencies like National Investigation Agency (NIA), Central Bureau of Investigation, Narcotics Bureau etc. are called for investigation. The NIA mandate to investigate all terror incidents in the country sometimes

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AIR 1957 BOM. 669 Entry 59 of List III of Seventh Schedule 54 Entry 2A of List II of Seventh Schedule 53

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encroaches on state rights, the provision of NIA ACT, 2008 like Sec. 6(3)55 and 6(5)56 completely obviates the need for state consent. The states are reluctant to order NIA investigation due to fear of violation of state rights and encroaching on states power. The NIA Act should be modelled around the Delhi Special Police Establishment Act, 1946 which have established the Central Bureau of Investigation. The states attempt to legislate involving terror offences like Maharashtra Control of Organised Crime Act, 1999 and Gujarat Control of Terrorism and Organised Crime Act, 2015 can be characterised as encroachment on centre power. One of the reason for the President to repeatedly shying away from giving consent to Gujrat Anti-terror law is that it is not in consonance with the central law. The domestic intelligence agency of the country is ‘Intelligence Bureau’, which has the responsibility to collect and disseminate information among police. The working of IB is again one of the examples of centre’s regulation over state. The IB as an organisation doesn’t have any legislative sanction, it’s legality is based on an executive decision taken by British government in 1885 57 . IB maintains large number of field units and subsidiary intelligence office in various parts of the country. It takes help of state police in its day to day functioning but the problem is regarding its accountability and its mandate to work throughout the country even without state consent. IB has all the powers of police like search, arrest, seizure, it can work in part of the country, even keeping state police in dark. The terms of reference of IB is quite vague and loosely worded and there is substantial allegation of political espionage against personnel of Intelligence. That is the reason all states governments are averse to the working of Intelligence Bureau. The fear of states against the central agencies like IB, NIA is also effecting India’s fight against terror, the non- cooperation of states is also holding up important reforms like NCTC (National Counter Terror Centre) and 55

Sec.6(3) On receipt of report from the State Government, the Central Government shall determine on the basis of information made available by the State Government or received from other sources, within fifteen days from the date of receipt of the report, whether the offence is a Scheduled Offence or not and also whether, having regard to the gravity of the offence and other relevant factors, it is a fit case to be investigated by the Agency. 56 Sec. 6(5) Notwithstanding anything contained in this section, if the Central Government is of the opinion that a Scheduled Offence has been committed which is required to be investigated under this Act, it may, suo moto, direct the Agency to investigate the said offence 57 In 1885, Major General Sir Charles MacGregor was appointed Quartermaster General and head of the Intelligence Department for the British Indian Army at Shimla. The objective then was to monitor Russian troop deployments in Afghanistan, fearing a Russian invasion of British India through the North-West during the late 19th century.

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NATGRID (National Intelligence Grid). It doesn’t bode well for effective coordination and intelligence sharing among the various agencies of the country which is repeatedly coming into limelight during various terrorist attacks. So the question arises is cooperative federalism a way forward? In the contemporary era the need for effective coordination between centre and state for terror investigation and intelligence gathering is sine-qua no for India’s unity and integrity. An amendment under Concurrent List providing for an Entry ‘terror offences’ or ‘offences effecting security and stability of the state’ can go long way in harmonizing centre-state relation58. Change in the functioning of NIA and IB by making state part of decision- making process will remove the scepticism involving central agencies. International Treaties Entry 14 of the Union List confers Union Parliament exclusive power to make laws with respect to “entering into treaties and agreements with foreign countries and implementing of treaties, agreements and conventions with foreign countries” Art. 25359 of the Constitution of India provides that all the international treaties have to be ratified by the parliament before it becomes the law. But it is not only the centre but also the state that has to follow the law. The question arises where is the consent of state? The state being equal participant in nation building process have the right to give its opinion on any law that may affect its right. For e.g. India has given an ‘Intended Nationally Determined Contribution’ under its climate change obligation for its being signatory of UNFCCC. Before taking this decision does the consent of state was taken because for fulfilling the commitment states will have equal responsibility. In Agreements Related on Trade-Related Aspects of Intellectual Property Rights60, the India has committed to comply it Intellectual Property regime with the world, this has seriously affected the pharmaceutical industry of the country by escalating the cost of medicines. This has serious repercussion on access to health and right of health of the citizens of the country. The 58

Arghya Sengupta & Others, Cooperative Federalism from Rhetoric to Reality, Vidhi Centre for Legal Policy (2015) 59 Art. 258: Notwithstanding anything in the foregoing provisions of this Chapter, Parliament has power to make any law for the whole or any part of the territory of India for implementing any treaty, agreement or convention with any other country or countries or any decision made at any international conference, association or other body 60 The detail agreement can be accessed at https://www.wto.org/english/tratop_e /trips_e/trips_ e.htm (last visited on 15 February, 2016)

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Public health61 is under the state list of the Constitution but international obligation of India has trampled this states’ rights and obviated the states consent in such matters. This doesn’t bode well for the effective cooperation among the centre and state. Although foreign policy is the central subject and India’s commitment on treaties is a sovereign commitment by Government of India, still policy should not be made in isolation. An amendment should be made under Art.253, where consultation with states should be made mandatory while implementing treaties when such treaty have a bearing on states subject area. This will incentivize centre and state to cooperate on vital issues of national interest. Federalizing Land Acquisition Legislation Land is one of the most important constituent for the economic development of the country. It is one of the most productive assets of the nation but in India the land acquisition law is in complete conundrum. The lengthy time required to complete the process of acquisition along with it the complicated nature of law have completely vitiated the economic development of the country. The Centre’s latest move in the political logjam around the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (the Central Act), has been to look to the States to amend the law. Land Acquisition62 is in Concurrent List under Indian Constitution so legally state have the right to amend it after getting president’s consent63. Making state specific laws for land acquisition is the best way to promote cooperation and harmony for the economic development of the country. It will cater to the need of specific states vis-àvis land acquisition64. B. ADMINISTRATIVE RELATION Indian Constitution provides state its area of influence and power, where it is independent of the union. To ensure that a state government by its actions or inactions doesn’t interfere with the legislative and administrative policies of the union, certain powers of administrative control over the states have been given to the central government. The administrative relations between union and the state are governed under Art. 256-263 of the Constitution. It is an obligation on the state to ensure the legislation made by the parliament

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Entry VI of State List under Seventh Schedule. Entry 42 63 Art. 254 64 Arghya Sengupta & Others, Cooperative Federalism from Rhetoric to Reality, Vidhi Centre for Legal Policy (2015) 62

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are enforced in the state, along with it the executive power of the state shall be exercised so as not to impede with the executive power of the union. The term ‘State’ cannot be held to apply merely to a geographical entity or territory. A direction can only be given to a legal entity and not a geographical or territorial entity. Hence directions to the State must necessarily means direction to states as legal entities which must have legal representatives. 65 The administrative relation provides for cooperation between centre and state for national interest. Protection of railways and communication critical for military or national interest under state jurisdiction have to be protected by the state. The adjudication of riverdisputes66 and the formation of interstate council are the best examples of cooperative federalism under Indian Constitution. Inter-State Council and Other Central Bodies Art. 26367 of the Constitution refers to the establishment of an Inter-State Council. It aims at providing an inter-governmental machinery which shall deliberate on the problems of inter-state relation and Union-State Relation. The Administrative Reforms Commission 68 and Supreme Court had also recommended the formation of an organisation that shall cooperate and coordinate between the states and the union. provides for the creation of a body for solving problems arising out of the inter-state rivers. The development of National Development Commission and Planning Commission is also in consonance to the cooperative spirit of the nation. Failure to comply with direction of centre Art. 35569 of the Constitution provides a duty on the Union to protect every state against external aggression and internal disturbance and to ensure that the government of every state is carried on in accordance with the provision of this Constitution. Art. 36570 of the Constitution provides for the effect in case of failure of the state to comply with directions of the government. 65

State of Karnataka v. Union of India, (1977) 4 SCC 608,657 Cauvery Water Disputes Tribunal, Re, 1993 Supp (1) SCC 96 67 Supra 36 68 A.R.C Report on Centre-State Relationship, pp- 32-35, 1969. 69 Art. 355- It shall be the duty of the Union to protect every State against external aggression and internal disturbance and to ensure that the Government of every State is carried on in accordance with the provisions of this Constitution. 70 Art.365-Where any State has failed to comply with, or to give effect to, any directions given in the exercise of the executive power of the Union under any of the provisions of this Constitution, it shall be lawful for the President to hold that a situation has arisen in which the Government of the State cannot be carried on in accordance with the provisions of this Constitution 66

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However, contrary to popular belief the provision like Art.355 promote cooperation among the states and centre, by making states accountable to the Constitutional principles. The Centre can dissolve a state government only if the government is being run contrary to constitutional principles. The provisions create an indirect responsibility on both centre and state to work closely keeping themselves within the Constitutional boundaries. All India Service One of the most interesting features of Indian bureaucracy is All India Services which are the continuation of Indian Civil Services, it is one of the best examples of cooperative federalism, where the bureaucracy serves for both centre and state. Art. 312 deals with the appointment of All India Services for both centre and states. The appointment of All India Service members in the government creates a link between centre and state. The term of their employment condition put them under the complete control of centre but states have also some rights over the officers. The presence of these officers in the government reduces interstate-centre fissures and help in effective governance of the nation. C. FINANCIAL RELATION One of the most concrete proposal of cooperative federalism ever given was the devolution of financial power to the various tiers of the government. The financial tussle between centre and state is the biggest obstacle for effective cooperation between centre and state. The history of financial relations can be traced back to the period of Lord Mayo and Lord Ripon who advocated for the proceeds to the centre. The Government of India Act, 1919 and the subsequent acceptance of Lord Meston Award for division of resources was one of the first legislative framework for the devolution of finances to states. The Government of India Act, 1935 also considered a flexible mechanism of distribution of resources. The Constitutional Assembly appointed SubCommittee on finances recommended the distribution of resources on the basis of Central Control for Consolidating and strengthening the unity of India. States are required to depend upon the Union for funds. This is a biggest obstacle in the development of cooperative spirit in the country. The proper devolution of resources among the states provides them with necessary flexibility to undertake their development activities. Cooperative federalism creates a long term solution for the problem. Devolution of financial power and role of Constitutional bodies Art. 265-282 deals financial relations between state and centre. Under Indian Constitutional scheme, the Union have huge financial resources

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which need to be equally distributed among the states for their development. In a federation state should be empowered to become financially independent. The centre must create a financial equilibrium where states get equal share of its revenue. The setting up of Finance Commission under Art. 280 has created a constitutional mechanism to distribute financial resources among the federation. The finance commission decides on distribution of revenue between centre and state and also panchayats. The fourteenth finance commission recommendation of providing state with 42% in untied funds have given states much leeway in terms of using their funds for their own development need. The working of the commission is one of the most enduring features of cooperative federalism in our country. The working of finance commission for effective distribution of resources among state and panchayat not only increases institutional capacity but promotes effective cooperation between states and centre. Grant-in Aid Another glaring examples of effective distribution of revenue by between centre and state is Grants-In-Aid. As the name suggest it is aid given to the state by the Parliament. Art. 275 provides for two types of grants fiscal aid grant and specific purpose grant. These grants are fixed by the Parliament every five years on the basis recommendation of the Finance Commission. They are given to state in their need and assistance. Some specific purpose grants can also be given to state to undertake any scheme of Central government for promoting the welfare of the scheduled tribes. There cannot be a better form of cooperative federalism other than grant-in-aid. Goods and Service Tax One of the biggest tax reforms being undertaken by the government in the post-independence area is the implementation of GST in India, to truly make India a uniform market. One of the biggest flaws of tax structure in our country is the presence of plethora of taxes which sometimes have cascading effect on country’s economy. GST aims to bring uniformity in indirect taxation structure in the country, it will subsume all other indirect tax like central sale tax, octroi tax, sales tax etc. GST is the most glaring example of cooperative federalism, where states and centre are cooperating to develop a common and uniform taxation system in the country. The GST Council comprising of Union finance minister and State finance matter makes an effective team for the implementation of the act. The GST Act is the true example of Team India where all its constituent meet for the development of the country.

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D. INSTITUTIONAL FRAMEWORK Cooperative Federalism in India cannot be achieved unless institutions play an important role in it. They play an important role in incentivizing centre and state relation. Inter-State Council and Other Central Bodies Art. 263 provides that the president may by order appoint Inter-State Council if it appears to him that public interest would be served by its establishment. The main purpose of the council includes advising upon disputes which may arise between states and making recommendation upon subject of disputes between the state and for better co-ordination of policy and action with respect to that subject. The role of the council is complimentary to the Supreme Court jurisdiction under Art. 131 to decide a legal controversy between the governments. The council plays both horizontal and vertical intergovernmental coordination and cooperation. Under Art. 263 four regional council have been set up, in four zones of the country headed by an under-secretary to the government of India. The recommendation of the council is not binding in nature. But the provision under Art. 263 is the least used provision of our Constitution. The central government generally undermine its value by keeping it as an ad-hoc body. One of the recommendation of the Administrative Reforms Commission is to make Inter-State Council a permanent body. The provision under Art. 263 is the best way to promote centre-state harmony and to incentivize cooperation among the governments. The recommendation of various committees for Inter-State Council should be given due thought. The Constitution provides for other central bodies like Art. 30771 provides for the creation of an inter-state commerce body. An Inter-State Transport Commission has been established under Motor Vehicles Act. Zonal Council In between Centre and States, Zonal Councils have been introduced in India by the State Reorganisation Act,1956. Great heat and passion was generated when the country was organised on the linguistic basis which effected the unity of the country. Therefore, Zonal Council were created as instruments of inter-governmental coordination and co-operation mainly in socioeconomic fields. There exist five zonal councils consisting of Union ministers to be nominated by the central government and the Chief Minister and two other minister from each state to be nominated by the state 71

Parliament may by law appoint such authority as it considers appropriate for carrying out the purposes of articles 301, 302, 303 and 304, and confer on the authority so appointed such powers and such duties as it thinks necessary.

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government. It generally gives recommendation to the government for promoting inter-states coordination. Although the zonal councils have not been quite successful and do not have spectacular achievement, they are still being important part of Indian Constitutional scheme for promoting interstate harmony. River Water Disputes India has number of inter-state rivers and river valleys. Indian Constitutional makers anticipated the disputes that may arise regarding sharing of rivers. The Constitution makes special provisions for creating a suitable machinery for resolving such dispute. Art. 262 72 empowers the parliament to provide by law for adjudication of any dispute or complaint with respect to the use, distributions or control of waters of any inter-state rivers or river valley. The River Boards Act, 1956 enacted by Parliament under Entry 56, List I provides for the establishment of river boards for the purpose of regulation and development of inter-state rivers and rivers valley. Water is a State Subject 73 , therefore primary responsibility for the development of water resources is on state, but due to conflict of interest among the states regarding the use of water the act was necessary. To facilitate adjudication in water disputes cases Inter-State Water Disputes Act, 1956 have been established, which facilitated the establishment of tribunal under the act. In the matter of Cauvery Water Disputes Tribunal74 constitutes an important judicial pronouncement in the area of Indian Federalism where court examined the Constitutional validity of tribunal and held that Parliament have the exclusive right to make law on the subject. Inter-State water boards is one of the most ingenious methods of promoting inter-state coordination and cooperation. National Development Council It is the apex body for deliberations and discussions on the development matters in India. It is presided by Prime Minister of India, where all the Chief Minister are equal stakeholders. It was established on 6th August 1952, to coordinate planning among the states, rapid development of the country and increase the spirit of cooperation among the states. The 72

(1) Parliament may by law provide for the adjudication of any dispute or complaint with respect to the use, distribution or control of the waters of, or in, any inter-State river or river valley. (2) Notwithstanding anything in this Constitution, Parliament may by law provide that neither the Supreme Court nor any other court shall exercise jurisdiction in respect of any such dispute or complaint as is referred to in clause (1). 73 Entry 17, List II 74 AIR 1992 SC 522

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institution is unique among the federal countries of the world. The council not only promotes cooperation among centre and state, but also inculcate the spirit of collective nation building. NITI-Aayog National Institution for Transforming India Aayog (Policy Commission) is an independent policy think tank of Government of India. It is the successor to erstwhile planning commission. The main goal of the Aayog is to foster a bottom down approach for policy issues and planning by involving states in decision making process. It is in complete contrast to the policy that was followed by Planning Commission in its functioning. The Aayog has given a new dimension to cooperative federalism in Indian polity, by advocating state equal status vis-à-vis centre, there has been absolute rejection of ‘one size fit for all’ concept. The subcommittees on various issues in NITIAayog is chaired by Chief Minister’s, the role of state in using untied funds have been further given impetus through Aayog. The institution can be considered a model framework to promote cooperation and foster harmony between centre and state. E. MISCELLANEOUS ISSUES Formation of New States Constitution of India has empowered Parliament to alter, add, make or divide any existing or new state75. The state can be formed through a simple amendment to the Constitution, although consent is taken from the state legislatures it doesn’t have any binding effect on the Parliament. The Constitution makers have given union all the rights over state boundaries because of the fractured polity and unique socio-political condition of the country at the time of independence. Even the Supreme Court has given very literal interpretation to the provision of Art.3. Although the First State Reorganising Commission76 has recommended that new state should be made only if there is any ‘balance of advantage’, but this term is very vague there is no fixed principle of advantage. It completely depends upon the whims and fancies of the Central government. The most evident example is the fracas that was associated with Andhra Pradesh Reorganisation Bill, 2013, when the bill was rejected of state assembly without even taking the people of the state into confidence the union government bulldozed the bill through the parliament. 75

Art. 4 First State Reorganization Commission was established in 1953. States Reorganisation Commission consisted of Fazal Ali, K. M. Panikkar and H. N. Kunzru 76

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This provision doesn’t bode well for harmonious cooperation among the states and centre. It is high time that a Constitutional Amendment be made in Art.3 of the Constitution to include ‘consent by state assembly’ a prerequisite for division of state, except in case of land involving foreign countries. Along with it a second State Reorganisation Commission be made to review the demands of new states.

CONCLUSION In the 21st century the cooperation between state and centre has come severe strain due to various factors. The increasing voices of separatism, division on the basis of language or creed tears the very fabric of national unity. The acrimonious separation of Telangana and Andhra Pradesh was a blot on our cooperative spirit. Terrorism, organised crime all attacks our diversity which forms the very basis of ‘idea of India’. So an effective mechanism that will take care of the of the problems of the constituents is the need of the hour. India is a beautiful melting of diversity which can only be preserved by way of effective cooperation between states and centre. The ‘idea of India’ needs to be valued and cherished and there is no better way to sustain it other than cooperative federalism. Equity in growth, balanced development and solidarity can only be achieved through Cooperative Federalism. In the words of Nani Palkhivala- WHO DIES IF INDIA LIVES AND WHO LIVES IF INDIA DIES…. people of several state sink or swam together and that in the long run, prosperity and innovation are in salvation not in division; mutuality not conflict; cooperation not competition77.

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Anusha Singh, Development of Cooperative Federalism in India, available at http:// www.legalserviceindia.com/article/l441-Cooperative-Federalsim-In-India.html (Last visited on June 23, 2016)

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