Federalism, Centre-State Relations and Local Government · UPSC Civil Services

What the official syllabus says

Main Examination, Paper III: General Studies II (Governance, Constitution, Polity, Social Justice and International relations):

Functions and responsibilities of the Union and the States, issues and challenges pertaining to the federal structure, devolution of powers and finances up to local levels and challenges therein.

Topics in detail

Nature of Indian federalism

Federal and unitary features; “Union of States” (Article 1) and the indestructible Union, destructible states (Article 3)
Quasi-federal, cooperative, competitive and bargaining federalism; asymmetric federalism (Article 371, Fifth and Sixth Schedules, Union territories)
Federalism as part of the basic structure: S. R. Bommai (1994)

Legislative relations

Seventh Schedule: Union, State and Concurrent Lists; transfers by the 42nd Amendment (education, forests and others)
Residuary powers with Parliament (Article 248)
Parliament legislating on State subjects: Rajya Sabha resolution (Article 249), emergency (Article 250), consent of states (Article 252), international agreements (Article 253)
Repugnancy (Article 254); reservation of state bills for the President (Articles 200 and 201)

Administrative relations

Obligations of states and directions by the Union (Articles 256, 257 and 365)
All India Services (Article 312); deputation of officers; central armed police forces in states
Role of the Governor: appointment, discretion, assent to bills, reports under Article 356; debates and court rulings on the office
President’s Rule (Article 356): grounds, misuse, the S. R. Bommai guidelines

Financial relations and devolution of finances

Taxing powers of the Union and states; distribution of revenues between them (Articles 268 to 270)
Finance Commission (Article 280): vertical and horizontal devolution, criteria, grants to local bodies
Grants-in-aid (Articles 275 and 282); centrally sponsored schemes and their conditions
Goods and Services Tax: 101st Amendment, GST Council (Article 279A), compensation to states, issues of fiscal autonomy
Borrowing by states (Article 293); cesses and surcharges outside the divisible pool

Institutions and commissions for Centre-State relations

Inter-State Council (Article 263) and Zonal Councils (States Reorganisation Act, 1956)
NITI Aayog (2015) and its Governing Council compared with the former Planning Commission and National Development Council
Rajamannar Committee (1969), Sarkaria Commission (report 1988), Punchhi Commission (report 2010)
Inter-state disputes: river waters (Article 262 and the Inter-State River Water Disputes Act, 1956), boundaries, resource sharing
Demands for new states and for greater state autonomy

Devolution up to local levels: Panchayati Raj

Article 40; Balwant Rai Mehta (1957), Ashok Mehta (1978), G. V. K. Rao (1985) and L. M. Singhvi (1986) committees
73rd Amendment, 1992: Part IX, Gram Sabha, three tiers, reservation for SCs, STs and women, five-year term
State Election Commission (Article 243K) and State Finance Commission (Article 243-I); Eleventh Schedule (29 subjects)
Panchayats (Extension to the Scheduled Areas) Act, 1996

Devolution up to local levels: urban local bodies

74th Amendment, 1992: Part IXA, municipal corporations, municipal councils and nagar panchayats; ward committees
Twelfth Schedule (18 subjects); District Planning Committee (Article 243ZD) and Metropolitan Planning Committee (Article 243ZE)
Municipal finances: property tax, user charges, grants, municipal bonds

Challenges therein

Inadequate transfer of funds, functions and functionaries; dependence on grants
Parallel bodies and parastatals; delayed elections and state finance commissions
Proxy representation of elected women; capacity of local functionaries; urban governance and planning gaps

Overlaps

General Studies III: “Government Budgeting” and inclusive growth bring in fiscal transfers and GST from the economic side.
Prelims General Studies Paper I names Panchayati Raj in its polity line.