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GS Paper: Federalism

  • Outsiders can now buy land in Jammu and Kashmir

    People, as well as investors outside Jammu and Kashmir, can now purchase land in the Union Territory (UT) as the Centre has notified new land laws for the region.

    What is the new criterion?

    • Under the newly introduced J&K Development Act, the term “permanent resident of the State” as a criterion has been “omitted”, paving the way for investors outside J&K to invest in the UT.
    • Under the ‘transfer of land for the purpose of promotion of healthcare or education’, the government may now allow the transfer of land.
    • According to amendments made to “The Jammu & Kashmir Land Revenue Act, Samvat, 1996”, only agriculturists of J&K can purchase agricultural land.
    • No sale, gift, exchange, or mortgage of the land shall be valid in favour of a person who is not an agriculturist.
    • No land used for agriculture purposes shall be used for any non-agricultural purposes except with the permission of the district collector.
    • Under a new provision, an Army officer not below the rank of Corps Commander can declare an area as “Strategic Area” within a local area, only for direct operational and training requirements.

    Note: These laws do not apply to the UT of Ladakh. The Centre is likely to notify separate land laws for the UT of Ladakh soon.

    Criticisms of the move

    • Political parties have opposed the move citing the sale of the state.
    • With these new laws in place, tokenism of the domicile certificate has been done away with, as purchasing non-agricultural land has been made easier.

  • Assam-Mizoram Boundary Dispute

    The Ministry of Home Affairs (MHA) has asked Assam and Mizoram to maintain peace and display “no aggressive posturing” after violent clashes took place at the border between the two States on Saturday night.

    Can you recall the chronology of reorganization of the entire North-East region?

    What is the issue?

    • Assam has had a boundary dispute with Mizoram for decades and several rounds of talks have been held since 1994-95 to solve the issue.
    • Till 1972, Mizoram was a part of Assam and acquired full statehood in 1987.
    • The 164.6 km-long border between the States runs along with Cachar, Hailakandi and Karimganj districts in Assam and Kolasib, Mamit and Aizawl districts in Mizoram.
    • There are several border areas where violence have been reported.

    How complex is this dispute?

    • In the Northeast’s complex boundary equations, showdowns between Assam and Mizoram residents are less frequent than they are.
    • The boundary between present-day Assam and Mizoram, 165 km long today, dates back to the colonial era when Mizoram was known as Lushai Hills, a district of Assam.
    • The dispute stems from a notification of 1875 that differentiated Lushai Hills from the plains of Cachar, and another of 1933 that demarcates a boundary between Lushai Hills and Manipur.
    • Mizoram believes the boundary should be demarcated on the basis of the 1875 notification, which is derived from the Bengal Eastern Frontier Regulation (BEFR) Act, 1873.
    • Mizo leaders have argued in the past argued against the demarcation notified in 1933 because Mizo society was not consulted.

    Other boundary disputes in North-East

    During British rule, Assam included present-day Nagaland, Arunachal Pradesh and Meghalaya besides Mizoram, which became separate state one by one. Today, Assam has boundary problems with each of them.

    • Nagaland shares a 500-km boundary with Assam.
    • In two major incidents of violence in 1979 and 1985, at least 100 persons were killed. The boundary dispute is now in the Supreme Court
    • On the Assam-Arunachal Pradesh boundary (over 800 km), clashes were first reported in 1992, according to the same research paper.
    • Since then, there have been several accusations of illegal encroachment from both sides, and intermittent clashes. This boundary issue is being heard by the Supreme Court.
    • The 884-km Assam-Meghalaya boundary, too, witnesses flare-ups frequently. As per Meghalaya government statements, today there are 12 areas of dispute between the two states.

  • Issues related to the Office of Governor

    The article deals with the role of Governor in the state and issue of misuse of discretionary power vested in him.

    Constitutional provision related to Governor

    • Various Raj Bhavans have become embroiled in controversies over the decade.
    • This is partly because the Constitution of India does allow a certain discretion to the Governor.
    • And a discretion invariably does get abused.
    • The framers of the Constitution had rejected an elected Governor because they were unambiguously clear that political power would only be vested with elected executives.
    • Yet, they were not inclined to put in a formal Instrument of Instructions for the Governors and were content to believe that political decencies and correctness would be observed both by the Governor and the Chief Minister.

    As the distinguished constitutional expert, Nani A. Palkhivala explained it “the Constitution intended that the Governor should be the instrument to maintain the fundamental equilibrium of the people of the State and to ensure that the mandates of the Constitution are respected in the State”. 

    Misuse of ‘discretion’ by Governors

    • As an appointee of the Union Government, the Governors have been prone to act on the instructions by ruling party at the Centre.
    • Inevitably the “discretion” in choosing a Chief Minister, or requiring a Chief Minister to prove his/her majority, or dismissing a Chief Minister, dissolving the legislature, recommending President’s Rule — came to be tainted with partisan political considerations.
    • More often than not, the governor’s discretion was abused, sometimes absurdly, even whimsically.
    • In the S.R. Bommai case, the Supreme Court did try through its judgment to prevent the misuse of power.

    Conclusion

    The guidelines given in the S.R. Bommai case should be adhered to by the Governor and should avoid conflict with the elected governments in the States.

  • Federalism, now a partisan internal dialogue

    Against the backdrop of the ongoing tussle between the states and the Centre over the issue of GST compensation, the article analyses the evolution of federalism and power-sharing in India.

    GST and federalism

    • At the first sign of stress, the nation unified in a singular system of taxation (GST) turned into a policy of every-state-for-itself.
    • Evidence of seriously miscued revenue estimates without pragmatic tax rate, was accumulating at an alarming pace.
    • The Comptroller and Auditor-General of India (CAG) recently revealed how a cess meant to remedy shortfalls in GST yields, was retained in central government revenues, in violation of all applicable norms.
    • This revelation does little to build trust between the Centre and the States at a time when the States’ facing lack of resource and the central government is advising them to borrow.
    • Some states believe that the onus of borrowing should rest with the central government.

    Higher borrowing limit for states with conditions

    • The central government sanctioned a higher borrowing limit for States through the current year.
    • In the bargain, it imposed conditionalities:
    • 1) Enforcing a singular standard for the implementation of policies across a vast and diverse country.
    • 2) Improving India’s ranking as a place for “doing business”.
    • States will have unconditional access to borrowings equivalent to half a percentage point of their gross output.
    • But, subsequently, every tranche of a quarter point will be premised on progress in implementing the “one nation, one ration card” scheme, and improvements in the “ease of doing business”.

    Federalism in India

    • Aside from the contents and definitions sections, the word “federal” occurs in only one operational article of the Indian Constitution, in reference to the apex judicial body created in colonial times.
    • When this body was transformed into the Supreme Court at the moment the Constitution came into force, the word seemingly lost all operative value.
    • The distribution of powers and responsibilities between various tiers of the governmental system, was achieved without explicit recognition of federalism as a governing principle.
    • In actual operational terms, the relationship of Centre and States followed different paradigms through various phases of politics.
    •  At the time of Independence, the distribution of powers between Centre and States was transformed into an internal discussion of the Congress.

    Evolution of power-sharing and politics

    • The “Congress system”, as the political scientist Rajni Kothari called it, was seen at one time to have sufficient internal flexibility and resilience to absorb all factional pressures.
    • The first challenge came from the cultural terrain, compelling a reluctant national leadership to accept linguistic reorganisation of States.
    • And then, as ambitions of nation-building through rapid industrialisation resulted in the possibility of a non-Congress politics.
    • The Congress lost power in a number of key States in 1967.
    • The polity moved into a new phase when politics was about “waves” at the national or state level either in favour of, or against the Congress.
    • From 1989 onwards, politics settled into another distinct phase, when outcomes at the national level were the resultant of very separate State-level results.

    Conclusion

    Though federal structure could not be free from Centre-State power struggle, that struggle should not come into the development of the nation. In this context, it is the responsibility of the Centre to address the issues facing the state amid pandemic.

  • The federalism test

    The GST has been hailed as the grand bargain and the success story of the federalism. But the economic disruption caused by the pandemic has put it to test. The article deals with the issue of GST compensation.

    Compensating the loss of GST revenue: 2 options

    • In the 41st meeting of the GST Council, the Union government had presented the states with two options.
    • The Centre had estimated the states’ total loss of GST revenue at Rs 3 lakh crore, of which, Rs 65,000 crore was expected to accrue from the compensation cess.
    • Of the remaining Rs 2.35 lakh crore, the loss due to the pandemic was estimated at Rs 1.28 lakh crore.
    • The first option was to provide states a special window to borrow Rs 97,000 crore from the RBI, which was later revised to Rs 1.1 lakh crore.
    • Under this option, both the interest payments and the repayments would be made from future collections of the compensation cess.
    • In the second option, the entire shortfall of Rs 2.35 lakh crore could be borrowed from the market and the states would have to bear the interest costs, but the repayments would be adjusted against future collections of the cess.
    • 10 states have rejected both the options and have stated that it is the Centre’s responsibility to compensate the states, and therefore, it should borrow.

    Commitment of the Centre

    • The minutes of the 7th and 8th GST Council meeting show that most of the states wanted the Centre to commit on paying compensation from the Consolidated Fund of India (CFI).
    • On that demand the Union Finance Minister had stated that in case the amount in the GST compensation fund falls short of the compensation payable in any bi-monthly period, the GST Council shall decide the mode of raising additional resources including borrowing from the market which could be repaid by the collection of cess in the sixth year or further subsequent years.
    • Thus, there was a clear commitment of the Centre on the issue of compensation and the method of recouping the loss.

    Impact on the Centre-State relations

    • The payment of compensation has plunged the Union-state relationship to a new low.
    • First, not recognising the Centre’s commitment will make states wary of any future reforms involving an agreement with the Centre.
    • Second, giving selective press statements to pressurise the states into accepting one or the other option does not infuse confidence.
    • Third, there was a statement by the Union finance ministry officials that the GST Council does not have jurisdiction over-borrowing and borrowing is an individual state and Centre’s decision under Article 293 of the Constitution.
    • If so, why were the two borrowing options presented to the states in the meeting of the Council?

    Way forward

    • It is the Centre’s commitment to find the compensation mechanism and borrowing is one of the options — that must be discussed in the Council.
    • Furthermore, if the commitment of the Centre is recognised as admitted by the finance minister in the 7th GST council meeting, the Centre should take the responsibility to borrow.
    • Both interest payments and repayment of the principal liability can be met from future collections from the cess.

    Conclusion

    This issue is of immense significance for the future of Centre-state relations. But pressuring states on the basis of political strength will have adverse consequences for the country’s federal structure.

  • Explained: Farm Acts and federalism

    The President has finally given assent to the controversial farm Bills passed by Parliament last week. Amid protests by farmers’ organisations across the country, questions are being raised about the anti-federal nature of these ‘Acts’.

    Here we shall only discuss its constitutionality and federal nature. Tap to read more about the theme at:

    What is the question over the constitutionality of these laws?

    • These are some of the questions that will be raised in the petitions challenging the constitutionality of the Acts.
    • As per Union of India v H.S.Dhillon (1972), the constitutionality of parliamentary laws can be challenged only on two grounds — that the subject is in the State List, or that it violates fundamental rights.
    • As per Ram Krishna Dalmia v Justice S R Tendolkar (1958) and other judgments, the Supreme Court will begin hearings after presuming the constitutionality of these laws.
    • The bills (now Acts as they have got the President’s assent) do not mention, in the Statement of Objects & Reasons, the constitutional provisions under which Parliament has the power to legislate on the subjects covered.

    Where does the question of federalism come in?

    What is federalism, first?

    • Federalism is the system of government in which sovereignty is constitutionally divided between a central governing authority and constituent political units.
    • It is based upon democratic rules and institutions in which the power to govern is shared between national and state governments, creating a federation.
    • It essentially means both the Centre and states have the freedom to operate in their allotted spheres of power, in coordination with each other.

    Try this PYQ:

    Q.Which of the following federal principles are not found in Indian federation?

    1. Bifurcation of the judiciary between the Federal and State Governments
    2. Equality of representation of the states in the upper house of the Federal Legislature
    3. The Union cannot be destroyed by any state seceding from the Union at its will
    4. Federal Government can redraw the map of the Indian Union by forming new States

    Select the correct answer using the codes given below:

    a) 1, 2 and 3

    b) 2, 3 and 4

    c) 1 and 2

    d) 3 and 4

    Federalism in India

    • The Seventh Schedule of the Constitution contains three lists that distribute power between the Centre and states.
    • There are 97 subjects in the Union List, on which Parliament has exclusive power to legislate (Article 246); the State List has 66 items on which states alone can legislate.
    • The Concurrent List has 47 subjects on which both the Centre and states can legislate, but in case of a conflict, the law made by Parliament prevails (Article 254).
    • Parliament can legislate on an item in the State List under certain specific circumstances laid down in the Constitution.

    Concretization of the idea

    • Federalism, like constitutionalism and separation of powers, is not mentioned in the Constitution. But it is the very essence of our constitutional scheme.
    • In the State of West Bengal v Union of India (1962), the Supreme Court held that the Indian Constitution is not federal.
    • But in SR Bommai v Union of India (1994), a nine-judge Bench held federalism as part of the basic structure of the Constitution.
    • Neither the relative importance of the legislative entries in Schedule VII, Lists I and II of the Constitution, nor the fiscal control by the Union per se is decisive to conclude the Constitution is unitary.
    • The respective legislative powers are traceable to Articles 245 to 254… The State qua the Constitution is federal in structure and independent in its exercise of legislative and executive power,” it said.

    Where is agriculture in the scheme of legislative powers?

    Terms relating to agriculture occur at 15 places in the Seventh Schedule.

    1. Entries 82, 86, 87, and 88 in the Union List mention taxes and duties on income and assets, specifically excluding those in respect of agriculture.
    2. In the State List, eight entries contain terms relating to agriculture: Entry 14 (agricultural education and research, pests, plant diseases); 18 (rights in or over land, land tenures, rents, transfer agricultural land, agricultural loans, etc.); 28 (markets and fairs); 30 (agricultural indebtedness); 45 (land revenue, land records, etc.); 46 (taxes on agricultural income); 47 (succession of agricultural land); and 48 (estate duty in respect of agricultural land).
    3. In the Concurrent List, Entry 6 mentions the transfer of property other than agricultural land; 7 is about various contracts not relating to agricultural land; and 41 deals with evacuee property, including agricultural land.
    • It is clear that the Union List and Concurrent List put matters relating to agriculture outside Parliament’s jurisdiction, and give state legislatures exclusive power.
    • No entry in respect of agriculture in the State List is subject to any entry in the Union or Concurrent Lists.

    What about Entry 27 of the State List that is subject to Entry 33 of List III (Concurrent)?

    • Entry 33 of the Concurrent List mentions trade and commerce, production, supply and distribution of domestic and imported products of an industry over which Parliament has control in the public interest.
    • This includes foodstuffs, including oilseeds and oils; cattle fodder; raw cotton and jute.
    • The Centre could, therefore, argue that it is within its powers to pass laws on contract farming and intra- and inter-state trade, and prohibit states from imposing fees/cesses outside APMC areas.
    • However, like education, farming is an occupation, not trade or commerce.
    • If foodstuffs are considered synonymous with agriculture, then all the powers of states in respect of agriculture, listed so elaborately in the Constitution, shall become redundant.

    So what happens in case of legislation that covers entries in two Lists?

    • In cases such as State of Rajasthan v G Chawla (1959), courts have used the doctrine of “pith and substance” to determine the character of legislation that overlaps between entries.
    • The constitutionality of legislation is upheld if it is largely covered by one list and touches upon the other list only incidentally.
    • But the two new farm Acts go beyond that — they impinge on entries in the State List.
    • In interpreting the lists, the Supreme Court in State of Bihar v Kameshwar Singh (1952) invoked the doctrine of colourable legislation, which means you cannot do indirectly what you cannot do directly.

    What is the Doctrine of Colorable Legislation?

    • This doctrine refers to the question of competency of the legislature while enacting a provision of law.
    • If a legislature is prohibited from doing something, it may not be permitted to do this under the guise or pretence of doing something while acting within its lawful jurisdiction and this prohibition is an implied result of the maxim “what cannot be done directly, cannot be done indirectly”
    • This doctrine is a tool used to determine the legislative competence of laws enacted by various legislatures.
    • Therefore, it is a means to implement the separation of powers and impose judicial accountability.

  • Power, problems and potential of federalism

    The article analyses the issues of distribution of powers under the Constitution and the issues linked with it.

    Debate on the role of Centre and states

    • There is an argument for the need to re-examine the distribution of powers under the Seventh Schedule so as to rationalise the Centrally Sponsored Schemes (CSSs).
    • Under the Centrally Sponsored SchemesCentre extends support in sectors pertaining to the State List.
    • Spending by the Centre on a state subject like health and need for states’ contribute to a Union subject like defence is considered.
    • However, the constitutional assignments between the Centre and subnational governments in federations, are done broadly on the basis of their respective comparative advantage.
    • That is why the provision of national public goods is in the federal domain and those with the state-level public service span are assigned to the states.

    3 settled issues in the debate

    • The debate seems to have settled on at least three counts.
    • One, the federal organisation of powers can be revisited and reframed.
    • Two, the CSSs must continue but they should be restructured.
    • Three, there is a need for an appropriate forum to discuss the complex and contentious issue of reviewing federal organisation of powers and restructuring of central transfers.

    Review of the subjects in lists

    • In spite of health being a state subject, the response to collective threats linked to the subject required some kind of organisation of federal responsibilities on a functional basis.
    • A typical response is to recommend shifting subjects to the Concurrent List to enable an active role for the Centre.
    • The High-Level Group, constituted by the 15th Finance Commission, recommended shifting health from the State to the Concurrent List.
    • A similar recommendation was made earlier by the Ashok Chawla Committee for water.

    Challenges

    • Shifting of subjects from the State to Concurrent List in times of acute sub-nationalism, deep territorialisation and competitive federalism is going to be challenging.

    Way forward

    • The most collective threats and the challenges of coping with emerging risks of sustainability are linked to either the State List subjects or require actions by states — water, agriculture, biodiversity, pollution, climate change.
    • This extended role of ensuring security against threats to sustainability of resources forms a new layer of considerations.
    • This should define the contours of a coordinated response between the Centre and States — as it happened during the pandemic.
    • In fact, such threats and challenges require the states to play a dominant role.
    • At the same time, the Centre must expand its role beyond the mitigation of inter-state externalities and address the challenges of security and sustainability.

    Consider the question “The federal organisation of powers under the Constitution’s Seventh Schedule needs review. In light of this, examine the problems faced by the distribution and suggest the challenge the review would face.”

    Conclusion

    The ongoing friction between the Centre and the states over GST reforms tells us that consensus-building is not a one-time exercise. It has to allow sustained dialogue and deliberation. Perhaps it is time to revisit the proposal for an elevated and empowered Inter-State Council.

  • Nationalism and the crisis of federalism

    The article analyses the challenges federalism in India faces and the important role played by the division of states based on the languages.

    Three conceptions of nationalism in India

    • Following three conceptions of nationalism were prevalent in India before independence.
    • The first, the idea that a community with a strongly unified culture must have a single state of its own.
    • The second saw the nation as defined by a common culture whose adherents must have a state of their own.
    • But this common culture was not ethno-religious.
    •  It conceives common culture in terms of a strong idea of unity that marginalises or excludes other particular identities.
    • A third nationalism accepts that communities nourished by distinct, territorially concentrated regional cultures have the capacity to design states of their own as also educational, legal, economic, and other institutions.
    • This may be called a coalescent nationalism consistent with a fairly strong linguistic federalism.
    • The central state associated with it is not multi-national.
    • At best, it is a multi-national state without labels, one that does not call itself so; a self-effacing multi-national state.

    Suspicion of linguistic identities

    • After Partition, the Indian ruling class began to view with suspicion the political expression of even linguistic identities.
    •  It was feared that federation structured along ethno-linguistic lines might tempt politicians to mobilise permanently on the basis of language.
    • The second fear was about an increase in the likelihood of inter-ethnic violence, encourage separatism and eventually lead to India’s break up.
    • Thus, when the Constitution came into force in 1950, India adopted unitary, civic nationalism as its official ideology.

    Formation of states on linguistic basis and its implications

    • A unitary mindset shaped by the experience of a centralised colonial state was resurrected.
    • The second tier of government was justified in functional terms, not on ethical grounds of the recognition of group cultures.
    • Following the Committee’s recommendations, States were reorganised in 1956.
    • India slowly became a coalescent nation-state, moving from the ‘holding together’ variety to what is called the ‘coming together’ form of (linguistic) federalism.
    • This meant that regional parties were stronger than earlier in their own regions and at the centre.
    • This let to more durable centre because it was grounded more on the consent and participation of regional groups that, at another level, were also self-governing.
    • Indian federalism also attempted to remove its rigidities by incorporating asymmetries in the relation between the Centre and different States.
    • Treating all States as equals required the acknowledgement of their specific needs and according them differential treatment.

    Conclusion

    Coalescent nationalism has served India well, benefiting several groups in India. True, it has not worked as well in India’s border areas such as the North-east and Kashmir. But their problems can only be resolved by deepening not abandoning coalescent nationalism.

  • New Bill on powers of Delhi government, Lieutenant Governor

    The Ministry of Home Affairs (MHA) is likely to introduce legislation in the ongoing Parliament session to amend a 1991 Act pertaining to the powers and function of the Delhi government and the Lieutenant Governor.

    Try this PYQ:

    Q. Consider the following statements

    1. Union territories are not represented in the Rajya Sabha.
    2. It is within the purview of the Chief Election Commissioner to adjudicate the election disputes.
    3. According to the constitution of India, the Parliament consists of the Lok Sabha and the Rajya Sabha only.

    Which of the statement(s) given above is/are correct?

    (a) Only 1

    (b) 2 and 3

    (c) 1 and 3 only

    (d) None

    Key propositions of the Bill

    • The Bill proposes to clearly spell out the functions of the Council of Ministers and the Lieutenant-Governor (L-G) by giving more discretionary powers to the L-G.
    • As per the Bill, the L-G could act in his discretion in any matter that is beyond the purview of the powers of the Legislative Assembly of Delhi in matters related to the All India (Civil) Services and the Anti Corruption Branch.
    • It will also give more teeth to the L-G, and the validity of any decision taken as per such discretion shall not be questioned.

    Back2Basics: Special provisions for New Delhi

    • The Union Territory of Delhi with a Legislative Assembly came into being in 1991 under Article 239AA of the Constitution inserted by ‘the Constitution (Sixty-ninth Amendment) Act, 1991’.
    • It said that the UT of Delhi shall be called the National Capital Territory of Delhi.
    • The administrator thereof appointed under Article 239 shall be designated as the Lieutenant-Governor.
    • According to the existing Act, the Legislative Assembly of Delhi has the power to make laws in all matters except public order, police, and land.

  • Kalasa-Banduri Dam Project

    India is on the brink of an acute water crisis, which has, to an extent, fabricated a looming threat of trans-boundary water conflicts. The conflict on the Mandovi / Mahadayi River— flowing through Goa, Karnataka and Maharashtra— is one such example.

    Try this PYQ:

    What is common to the places known as Aliyar, Isapur and Kangsabati?

    (a) Recently discovered uranium deposits

    (b) Tropical rain forests

    (c) Underground cave systems

    (d) Water reservoirs

    Kalasa-Banduri Project

    • The project undertaken by the Karnataka government proposes to divert Mandovi river water from Kalasa and Banduri canals into the Malaprabha river in the state.
    • The project received clearance from the Centre in 2002. It aims to construct a total of 11 dams on the river Mandovi.
    • The diversion of water from Kalasa and Banduri nullahs, however, has been the point of contention between Karnataka and Goa, with the latter claiming it would strip the state of its flora and fauna.

    The conflict

    • The Mandovi originates from Karnataka’s Belgaum district.
    • The Mandovi river basin falls into the states of Goa, Karnataka and Maharashtra.
    • The river is 81 kilometres (km) in length; 35 km of which flows in Karnataka, 1 km in Maharashtra and 45 km in Goa.
    • The seeds of the conflict were sowed over 40 years ago: In 1985, Karnataka initially explored a 350 megawatt-hydro-electric project to divert 50 per cent of the Mandovi river water in Karnataka for irrigation.
    • The plan was also to allow a steady flow of water from the power project’s storage dam after using the water for irrigation purposes in Karnataka.
    • This would have served to drinking water and irrigation purposes in Goa as well.