Inter-state water disputes:
Article 262 of the Constitution provides for the adjudication of inter-state water disputes.
Only Parliament is authorized to make law on Inter-state water distribution.
Neither the Supreme Court nor any other court is to exercise jurisdiction in respect of any such dispute.
A river board is established by the Central government on the request of the state governments concerned to advise them.
Using this provision Parliament inacted Inter-state water dispute act (1956) and created separate ad-hoc tribunals for adjudication of various water disputes.
Central government to set up an ad hoc tribunal for the adjudication of a dispute.
Decision of the tribunal would be final and binding on the parties to the dispute.
So how SC intervene in such water disputes?
Special leave petition is a power of Supreme Court of India granted by Constitution Article 136.
This article says that Supreme Court may, in its discretion, grant special leave to appeal from any judgment, decree, determination, sentence or order in any cause or matter passed or made by any court or tribunal in the territory of India.
Does SC interference Justified?
Yes: Judiciary is impartial and respected.
No: Water have Socio-Economic-Political dimension should not be judged on narrow legal interpretation.
Limitation of 1956 act:
Nine tribunals were set up only, four gave final awards.
The Ravi and Beas River Waters Tribunal was set up in 1986, final order is still pending.
Politicization; complication+ stalemate: judicial interference.
Formation of multiple tribunals; duplication+ red-tapism.
The Inter-State River Water Disputes Amendment Bill, 2019
A permanent tribunal with exclusive benches for each dispute + A Disputes Resolution Committee (DRC) + technical agency for a data bank.
Positives of the Bill:
Reconcile political issues with legal + A permanent tribunal mechanism + use of mediation+ spirit of cooperative federalism+ adjudication on technical and rational grounds.
Limitation of the Bill:
Issue of tussle between Legislative and Judicial wing of state remain unaddressed. Ex. Supreme Court in February 2018 modified the allocations of the Cauvery Water Disputes Tribunal Final award of 2007.
Lack of state’s participation in selection panel of Tribunal members.
Question on efficacy and neutrality of data bank agency.
Question on effective mediation in DRC.
Inter-state councils:
Article 263
Constitutional Body.
Purpose: Inter state/ Centre- State Coordination.
Who can form? President nor Parliament.
Recommendation:
• Sarkaria Commission recommended for such permanent Council .
• Janata Dal Government in 1990 established such council for first time.
Note:
• Only advisory not Binding decision.
• Now permanent body post 1990.
Structure: PM+ CM+ Administrator of UTs+ 6 Cabinet minister from Union Government.(Including MoHA).
Functioning: examining, discussing and deliberating+ all questions are decided by consensus+ recommendatory body + assisted by a secretariat + Joint secretariat for Zonal Council.
Zonal Councils:
Zonal Councils are the statutory (and not the constitutional) bodies.
Established by an Act of the Parliament, that is, States Reorganisation Act of 1956.
Five zones (Northern, Central, Eastern, Western and Southern).
North-Eastern Council was created later.
Factors of zone formation:
Natural divisions + Cultural+ economic development + security and law and order
Members: Home minister of Central government + Chief ministers of all the States in the zone + Two other ministers from each state in the zone + Administrator of each union territory in the zone.
Purpose: Emotional integration + Arrest regionalism + removing the after-effects of separation + Cooperation. + Balanced regional growth.
Inter-state trade and commerce
Article 301 declares that trade, commerce and intercourse throughout the territory of India shall be free.
Object of this provision is to create single market by breaking border barrier.
Include both Inter state and intra state.
Parliament can impose restrictions on the freedom of trade, commerce and intercourse between the states.
State legislature can also do it but only with prior approval of President.
State can’t put discriminatory barriers.
Committees-Commission related to centre-state relations
Rajamannar Committee
Background: In 1969, the Tamil Nadu Government (DMK) appointed a three-member committee, chaired by Dr. P.V. Rajamannar, to investigate the entire issue of Centre-state relations.
It wanted the committee to propose constitutional amendments to ensure the states' maximum autonomy.
In 1971, the committee delivered its report to the Tamil Nadu government.
Recommendations:
Immediate constitution of Interstate council, and all major decision affecting Federal structure shall be taken in its consultation.
Residuary list shall be transferred to state legislature.
The Finance Commission should be made permanent.
The Planning Commission should be disbanded and replaced by a statutory body.
All-India services such as IAS, IPS, and IFS should be phased out.
Anandpur Sahib Resolution
Anandpur Sahib Resolution adopted in 1973 by Akali Dal demanded that the Centre’s jurisdiction should be restricted only to defence, foreign affairs, communications, and currency and the entire residuary powers should be vested in the states.
Punchhi Commission
Background: Constituted by the Government of India in 2007 as a Commission on Centre-State relations. It was chaired by Justice Madan Mohan Punchhi who was formerly the Chief Justice of India.
Major recommendations
Centre should consult states before introducing bills on items in the concurrent list.
There should be time limit (within 6 months) for President to act upon any state bill reserved for President by Governor.
Involvement of states concerned while union signing any treaty with foreign nation/entity.
There should be clear guidelines for the appointment of chief ministers, so that there is sort of regulation on discretionary power of Governor.
With respect to appointement of Governor: concerned state CM should be consulted + he/she should be an outsider + should not be in active politics + impeachment process for removal + tenurial security + doctrine of pleasure should end.
State emergency:
art 355 and 356 should be amended and instead of bringing whole of state under president rule, localized emergency should be brough in like declaring
president rule only for some specific disturbed states.
Formation of national integration council.
Commission upheld deployment of military and para-military by the union without state’s consent in case of outbreak of violence and breakdown of constitutional machinery.
However, such deployment should only be for a week and post-facto consent should be taken from the state.
Sarkaria commission
Background: In 1983, the Central government appointed a three-member Commission on Centre-state relations under the chairmanship of R.S. Sarkaria, a retired judge of the Supreme Court.
Major recommendations:
- Setting a permanent Inter-State Council.
- Creation of more AIS.
- Resuiduary powers should be placed in the Concurrent List.
When the president withholds his assent to the state bills, the reasons should be communicated to the state government.
The Centre should consult the states before making a law on a subject of the Concurrent List.
WRT Governor: consultation of CM in appointment + he should be outsider + not an active politician + tenurial security of 5 years + inform state government in case of removal.
Regarding the use of Article 356: use it very sparingly as last resort + issue warning first +
centre should produce material grounds for removal + Governor’s report must be a
‘speaking document’ and it should be given wide publicity.
West Bengal Memorandum
In December 1977, the Communist government in West Bengal published a memorandum called the West Bengal memorandum, which made the following recommendations:
The word ‘union’ in the constitution should be replaced by the word ‘federal’
The centre’s jurisdiction to be restricted to only defence, foreign affairs, communications, and economic coordination
Deletion of articles 356, 357 and 360
Rajya Sabha to have equal powers with that of the Lok Sabha
Abolition of All-India services
75 percent of the revenue raised by the centre should be allocated to the states.
Financial relationship
Finance commission:
Constitutional Body (Art 280)+ Constituted by President every 5 year+ Non-Permanent body.
Composition:
Chairman and four other members to be appointed by the president.
They are eligible for reappointment.
Constitution authorises the Parliament to determine the qualifications of members of the commission and the manner in which they should be selected.
So , qualification to be eligible for FC member is determined by Parliament.
Functions:
Distribution of the net proceeds of taxes to be shared between the Centre and the states.
Principles that should govern the grants-in-aid to the states by the Centre.
Measures to be adopted to improve CFS.
Measures needed to improve fiscal health of Local bodies.
Note:
The commission submits its report to the president.
He lays it before both the Houses of Parliament along with an explanatory memorandum as to the action taken on its recommendations.
Recommendation, non-binding
Role of Finance Commission:
Balancing wheel of Fiscal Federalism.
It has all the powers of the Civil Court as per the Code of Civil Procedure, 1908.
It can call any witness, or can ask for the production of any public record or document from any court or office.
It can ask any person to give information or document on matters as it may feel to be useful or relevant. It can function as a civil court in discharging its duties.
It also helps states to augment CFS and thus, improve fiscal autonomy of Local bodies.
Money is distributed among Centre and states in two ways:
- Grants-in-Aid to the States.
- Division of net proceeds of the tax.
1. Grants-in-Aid to the States:
There are two types of grants-in-aid, viz, statutory grants and discretionary grants:
Statutory Grants Article 275:
Empowers the Parliament to make grants to the states which are in need of financial assistance and not to every state.
Are given to the states on the recommendation of the Finance Commission. (Based on Some formula)
Discretionary Grants: Article 282
These grants are also known as discretionary grants, the reason being that the Centre is under no obligation to give these grants and the matter lies within its discretion.
Not decided by FC.
2. Division of net proceeds of the tax:
a) Vertical devolution of funds from Centre states
b) Horizontal distribution of funds among states.
Criteria used by Finance Commission for horizontal distribution:
1. Population: The 14th Finance Commission used the 2011 population data, in addition to the 1971 data. The 15th Finance Commission has been mandated to use data from the 2011 Census.
2. Area: used as a criterion as a state with larger area has to incur additional administrative costs to deliver services.
3. Income Distance: Income distance is the distance of the Gross State Domestic Product (GSDP) of a particular state from the state with the highest GSDP. To maintain inter-state equity, the states with lower per capita income would be given a higher share.
4. Forest cover :indicates that states with large forest covers bear the cost of not having area available for other economic activities. Therefore, the rationale is that these states may be given a higher share.
5. Demographic Performance: It rewards efforts made by states in controlling their population. This criterion has been computed by using the reciprocal of the total fertility ratio of each state
6. Tax Effort: This criterion has been used to reward states with higher tax collection efficiency.
Borrowing by the Centre and the States:
The Central government can borrow either within India or outside upon the security of the Consolidated Fund of India or can give guarantees, but both within the limits fixed by the Parliament.
State government can borrow within India (and not abroad) upon the security of the Consolidated Fund of the State.
Central government can make loans to any state.
A state cannot raise any loan without the consent of the Centre.
14th FC:
1. Enhance state share of divisible pool from 32% - 42%. (12th FC - 30.5%, 13th FC - 32%).
2. Relative to the Thirteenth Finance Commission, the FFC has incorporated two new variables: 2011 population and forest cover; and excluded the fiscal discipline variable.
3. Introduction of performance based grants to local bodies. For panchayat Basic (fixed): performance based= 90:10 and for Municipal bodies it shall be 80:20.
15th FC:
Constituted by the President in November 2017
It is headed by N K Singh
Deliberation period from end of 2017 to end of October 2019
The recommendations would be applicable for the period from 2020-2025.
Terms of References:
The distribution of tax proceeds between the centre and states.
Principles governing grant in aid to the states.
Measures to be taken to augment the consolidated fund of states
Review the impact of the 14th Finance Commission recommendations on the fiscal position of the centre
Review the debt level of the centre and states, and recommend a roadmap
Study the impact of GST on the economy.
Recommend performance-based incentives for states based on their efforts to control
population, promote ease of doing business, and control expenditure on populist measures, among others
15th FC Issues:
Use of 2011 as TOR.
• Up till now 1971 was used as TOR for calculating Population and making fund devolution as per population of states.
Controversy:
• South Indian states are raising concern for reduction in fund allocation.
• South Indian states implemented Population control measures in much more effective manner leading to slowing down of their population.
• However, Northern states continue to add population.
• Thus, changing TOR from 1971 to 2011 will negatively award Southern states.
Argument in support of changing TOR:
• 1971 census data is too old to represent current reality.
• Southern states also have favourable geographical location like costal boundary.
• North –South divide is increasing. (Economic Survey report).
• FC has to ensure that the poorer states have adequate resources to promote socioeconomic development, critical infrastructure, balanced regional development etc
• Concept of demographic dividend will only lead to results if the population is given access to right education, nutrition, skilling etc and the larger states in terms of population will require this kind of assistance.
Argument against changing of TOR:
• Negative incentive for population control measures may defeat goals of National Population policy.
• More fiscal devolution not necessarily lead to faster growth.
• Against concept of Competitive federalism.
• Population growth rate has also reduced for Northern states, thus Southern states can’t claim that they were only who took population control measurement seriously.
Balanced approach:
• Including 1971+ 2011 census and subsequent reduction of 1971 weightage.
• Providing incentives to the states which have better performance in the population control reforms
• Equalization approach as in Australia and Canada wherein the financial resources are allocated so as to ensure that services are provided in each of the states at comparable levels provided the states make comparable efforts in raising the revenues. In case of India the FCs basically follow gap-filling approach dependent on the historical trends of expenditure and revenues.