Centre-State Relations & Fiscal Federalism: previous-year questions

Answer: (C) India has a quasi-federal system with a strong Centre.

India's Constitution is federal in form with a strong unitary bias, which K.C. Wheare described as 'quasi-federal'; Article 1 calls India a 'Union of States'. Federal features: a written Constitution, division of powers through the Union, State and Concurrent Lists of the Seventh Schedule, an independent judiciary and a bicameral Parliament. Unitary features: single citizenship, an integrated judiciary, All-India Services, Governors appointed by the Centre, residuary powers with Parliament (Article 248), Parliament's power to alter state boundaries (Article 3) and the emergency provisions. So it is neither completely federal (A) nor completely unitary (B), and the States are not stronger than the Centre (D). In S.R. Bommai v. Union of India (1994) the Supreme Court held federalism to be part of the basic structure.

Answer: (B) Article 254.

Article 254 provides that where a State law on a Concurrent List subject is repugnant to a Union law, the Union law prevails, unless the State law has received the President's assent. Article 156 is about the Governor's term, Article 300 about suits by and against the Government, and Entry 42 of List III about acquisition of property.

Answer: (C) Article 275

Article 275 provides for statutory grants-in-aid from the Consolidated Fund of India to States in need of assistance. Article 270 covers taxes levied and distributed between the Union and States, Article 280 the Finance Commission, and Article 265 says no tax may be levied except by authority of law.

Answer: (B) Zonal council

Zonal Councils are statutory (not constitutional) bodies created by Part III of the States Reorganisation Act, 1956. There are five — Northern, Central, Eastern, Western and Southern — each chaired by the Union Home Minister, with the Chief Ministers acting as vice-chairman by rotation; the North Eastern Council was set up separately by a 1971 Act. The Inter-State Council comes from Article 263 and was set up in 1990 on the Sarkaria Commission's recommendation; the Sarkaria Commission itself (1983) examined Centre–State relations; and the Official Language Commission was appointed under Article 344. (The booklet prints "wide" for "vide".)

Answer: (B) the Consolidated Fund of India

All revenues, loans raised and loan repayments received by the Union form the Consolidated Fund of India (Article 266(1)), and no money can be withdrawn from it except under an Appropriation Act passed by Parliament (Article 114). The Public Account (Article 266(2)) holds money such as provident funds and small savings, for which the government acts as banker; payments from it need no parliamentary appropriation. The Contingency Fund (Article 267) is placed at the President's disposal to meet unforeseen expenditure, and Parliament's approval is obtained afterwards. Expenditure "charged" on the Consolidated Fund, such as the salaries of the President and judges, is discussed but not voted.

Answer: (C) Concurrent list

"Economic and social planning" is Entry 20 of the Concurrent List (List III) in the Seventh Schedule, so both Parliament and the State legislatures can make laws on it; if they conflict, the Central law generally prevails (Article 254). At present the Union List has 100 subjects (originally 97), the State List 61 (originally 66) and the Concurrent List 52 (originally 47). The 42nd Amendment (1976) moved five subjects, including education and forests, from the State List to the Concurrent List. There is no "Reserved list" in the Constitution; "reserved" and "transferred" subjects belonged to dyarchy under the Government of India Act, 1919. Residuary powers lie with Parliament (Article 248).

Answer: (B) the Consolidated Fund of India.

Article 266(1) says that all revenues received by the Government of India, all loans raised by it and all money received in repayment of loans form the Consolidated Fund of India. All other public money received by the government, such as provident fund deposits and small savings, goes into the Public Account (Article 266(2)). The Contingency Fund (Article 267) is an imprest at the President's disposal for unforeseen expenditure. Every State likewise has its own Consolidated Fund, Public Account and Contingency Fund, and the accounts are audited by the Comptroller and Auditor General.

Answer: (A) Corporation Tax

Corporation Tax (tax on profits of companies) is a Central Government tax levied under List I (Union List) of the Seventh Schedule. Professional Tax and Land Revenue are State subjects. Excise duty on alcoholic liquors is also a State subject (states collect this revenue).

Answer: (C) Concurrent List

Education was originally a State subject, but the 42nd Amendment Act, 1976 moved it to the Concurrent List, on which both Parliament and State Legislatures can make laws (the Union law prevails in a conflict, Article 254). The same amendment shifted four other subjects: forests, weights and measures, protection of wild animals and birds, and administration of justice. The Seventh Schedule (Article 246) has three lists: Union, State and Concurrent.

Answer: (D) President

Under Article 263 the President may, by order, establish an Inter-State Council to inquire into and advise upon disputes between states and to discuss subjects of common interest to the Union and the states. It was actually set up on 28 May 1990 on the recommendation of the Sarkaria Commission; the Prime Minister is its Chairman and all Chief Ministers are members, but the Prime Minister does not constitute it. Do not confuse it with the Zonal Councils, which are statutory bodies (States Reorganisation Act, 1956) chaired by the Union Home Minister.

Answer: (D) Seventh Schedule

The Seventh Schedule contains the three legislative lists — Union List, State List and Concurrent List — that distribute law-making power between the central government and the states.

Answer: (D) Finance Commission

Article 280 provides for the constitution of a Finance Commission every five years (or earlier if needed) to recommend the distribution of tax revenues between the Union and the States.

Answer: (C) Concurrent list

Education was a State subject until the 42nd Amendment (1976) moved it to the Concurrent List, so both Parliament and the State Legislatures can make laws on it. The same amendment shifted four other subjects to the Concurrent List: forests, weights and measures, protection of wild animals and birds, and administration of justice. The Seventh Schedule contains the three lists (Article 246).

Answer: (D) 275 and 282

Article 275 provides for statutory grants-in-aid from the Union to states (particularly for tribal welfare and states needing assistance), while Article 282 provides for discretionary grants by the Union or a state for any public purpose.

Answer: (B) State List

Public order/"Law and Order" is a State List subject under the Seventh Schedule, placing primary responsibility for policing with state governments.

Answer: (D) levied by the Centre and shared with the States

Income tax on non-agricultural income is a Union subject, levied by the Centre but shared with the states according to the devolution formula recommended by the Finance Commission.

Answer: (B) The Finance Commission

The Finance Commission is a constitutional body established under Article 280 of the Indian Constitution. It is the chief advisory body recommending how tax revenues should be distributed between the Union and the States. A new Finance Commission is constituted every five years.