Centre-State Relations & Inter-State Disputes — Federalism in Practice

Cross-paper relevance

• GS2 — Core domain: Centre-State legislative/administrative/financial relations, Article 356 misuse, Governor's role, cooperative/competitive federalism, inter-state water disputes
• GS3 — Economic dimension: Fiscal federalism, GST cooperative model, infrastructure coordination (railways/highways overlap of lists), internal security (Centre-State in counterterrorism, DSPE Act)
• Essay — Recurring themes: "Cooperative federalism — aspiration or reality?" (2016), "Centralising tendencies vs federal spirit" (various years); "The Constitution is both federal and unitary" framing

Introduction

India's Constitution establishes a federal system with a strong unitary bias — K.C. Wheare described India's system as "quasi-federal" (federal in form but unitary in spirit); Ivor Jennings noted the "unitary bias"; Granville Austin called it a "cooperative federalism." The Constitution distributes powers between the Union and States through three lists in the Seventh Schedule. Understanding Centre-State relations is foundational for GS Paper II as it underpins questions on federalism, cooperative federalism, fiscal federalism, Governor's role, and inter-state disputes.

Division of Powers: The Three Lists (Seventh Schedule, Article 246)

*Current counts differ from originals due to 42nd Amendment (1976), which transferred 5 subjects from State List to Concurrent List: education, forests, weights & measures, protection of wild animals, administration of justice in districts (excluding Supreme Court & High Courts).

Key rule: In case of conflict between a Central law and a State law on a Concurrent List subject, the Central law prevails (Article 254), unless the State law received Presidential assent and was enacted later — even then Parliament can re-override.

Important Union List subjects: Defence, atomic energy, foreign affairs, citizenship, railways, highways, banking, RBI, stock exchanges, income tax, customs.

Important State List subjects: Public order, police, prisons, local government, public health, agriculture, land, liquor.

Important Concurrent List subjects: Criminal law (IPC/CrPC), civil procedure, marriage and divorce, education, forests, trade unions, social security, electricity.

Legislative Relations: Articles 245–255

Territorial Extent of Legislation

• Article 245: Parliament can legislate for the whole or any part of India; a State legislature can legislate for the whole or part of that State.
• Article 246: Distributes subjects among three lists (see above).
• Extraterritorial legislation: Parliament can make laws for Indian citizens/interests outside India (Article 245(1)); State laws cannot have extraterritorial operation.

Parliament's Power to Legislate on State Subjects (Exceptions)

Administrative Relations: Articles 256–263

Centre's Direction Power

• Article 256: Every State must exercise its executive power to ensure compliance with laws of Parliament. Centre can issue directions to States.
• Article 257: States must exercise their executive power so as not to impede or prejudice Centre's executive power. Centre can direct States on: (i) construction and maintenance of means of communication of national or military importance; (ii) measures for protection of railways within the State.
• Article 257-A (deleted): Was inserted by 42nd Amendment (1976) giving Centre power to deploy forces in States; deleted by 44th Amendment (1978).

Centre's Power to Ensure Compliance

• Article 365: If a State fails to comply with Centre's directions, it is lawful for the President to hold that a situation has arisen where the government of the State cannot be carried on in accordance with the Constitution — this is a ground for President's Rule.

All India Services (Article 312)

• Rajya Sabha can create new All India Services (AIS) by a 2/3 majority resolution if it is in the national interest.
• Existing AIS: IAS, IPS, IFoS (Indian Forest Service added 1966).
• AIS officers serve both Centre and States; their service conditions are determined by Parliament — this gives Centre leverage over State administration.
• Significance: The AIS is a key instrument of unity and integration; the Constitution's framers retained it from the colonial ICS as a steel frame linking Centre and States.

Delegation and Inter-State Cooperation

• Article 258: Centre may, with consent of State government, entrust to a State (or its officers) functions relating to any Central matter.
• Article 258-A: A State government may, with consent of the Centre, entrust Central functions to the Centre.
• Article 261: Full faith and credit shall be given throughout India to public acts, records, and judicial proceedings of the Union and every State.

Financial Relations: Articles 268–293

Division of Taxing Powers

Finance Commission (Article 280)

• The President constitutes a Finance Commission every 5 years (or earlier as deemed necessary).
• Mandate: Recommend distribution of net proceeds of taxes between Union and States; principles for grants-in-aid to States; any other matter referred by President.
• 16th Finance Commission constituted in 2023 under Dr. Arvind Panagariya; award period 2026-31.
• 15th Finance Commission (2021–26): recommended 41% of divisible pool to States (down from 42% due to J&K bifurcation).
• Vertical devolution: Share of taxes going to States.
• Horizontal devolution: How the States' share is distributed among States.

GST Council (Article 279A)

• Inserted by 101st Constitutional Amendment Act, 2016.
• Chaired by Union Finance Minister; members are State Finance Ministers.
• Decisions by 3/4 majority of weighted votes — Centre's vote = 1/3 weight; States' votes collectively = 2/3 weight.
• Recommends: GST rates, exemptions, threshold limits, model GST laws.
• Supreme Court ruling (2022): GST Council's recommendations are not binding on Parliament and State legislatures — they are only persuasive.

Grants-in-Aid (Articles 275, 282)

• Article 275: Grants from Consolidated Fund of India to States in need of assistance; specific grants for tribal welfare and raising administrative standards.
• Article 282: Both Centre and States can make grants for any public purpose even outside their legislative competence.

Article 356 — President's Rule

Constitutional Provisions

• Article 356(1): If the President is satisfied, on receipt of a report from the Governor or otherwise, that the government of a State cannot be carried on in accordance with the provisions of the Constitution, the President may proclaim President's Rule.
• Effect: (a) State executive vests in President; (b) Parliament assumes legislative functions of State legislature; (c) State legislature may be dissolved or suspended.

Duration and Parliamentary Approval

• Proclamation must be approved by both Houses of Parliament within 2 months (by simple majority).
• Can continue for 6 months from date of proclamation.
• Extension beyond 6 months (up to 3 years) requires fresh Parliamentary approval every 6 months.
• Extension beyond 1 year requires: (i) a Proclamation of National Emergency to be in force in the State or in the whole of India; and (ii) Election Commission must certify that elections cannot be held in the State.

Safeguards Added by 44th Amendment (1978)

• Rajya Sabha cannot be bypassed: If Lok Sabha is dissolved before approving the proclamation, the Rajya Sabha can approve it; the Lok Sabha must ratify after reconstitution.
• 6-month limit: Each extension requires fresh Parliamentary approval (originally no time limit existed).

Judicial Review: S.R. Bommai Case (1994)

This is the most important judgment on Article 356 — frequently tested in UPSC Mains.

Facts: S.R. Bommai became Chief Minister of Karnataka (Janata Dal) on 13 August 1988. In April 1989, mass defections eroded his majority. The Governor reported to the President that the government had lost its majority. On 21 April 1989, the President imposed President's Rule without allowing a floor test. Bommai challenged this in the Supreme Court.

Judgment: A 9-judge constitutional bench of the Supreme Court decided the case on March 11, 1994 (AIR 1994 SC 1918). Key holdings:

Impact: The S.R. Bommai judgment drastically curtailed the misuse of Article 356. Before 1994, President's Rule had been imposed over 100 times — often for political reasons. After Bommai, courts have increasingly subjected such proclamations to judicial scrutiny.

Usage data: Article 356 was invoked 135 times from 1950 to May 2026 (MHA data; 132 up to 2018, and 3 more since — most recently Manipur: imposed February 13, 2025; revoked February 4, 2026, nine days early). First use: PEPSU (Punjab) 1951. Post-Bommai (1994) invocations have been significantly fewer and more legally scrutinised.

Note on revocation: Revocation of President's Rule does NOT require Parliamentary approval (unlike initial proclamation or extension). The President can revoke by notification at any time — this is why the Manipur President's Rule was revoked nine days before its scheduled Parliamentary approval deadline on February 13, 2026.

Governor: The Linchpin of Centre-State Relations

Sarkaria Commission found that Governors had been misused to destabilise State governments and recommended a fixed 5-year term and no post of profit after retirement. Punchhi Commission went further — recommended impeachment of Governors by state legislature (modelled on Presidential impeachment) and that the appointment be made by a formal committee (PM + HM + Lok Sabha Speaker + CM concerned).

UPSC Confusion Trap: Fixed 5-year term = Sarkaria. Impeachment by state legislature = Punchhi. Never mix these up in Mains answers.

Inter-State Water Disputes: Article 262 and the ISRWD Act

Constitutional Framework

• Article 262(1): Parliament may by law provide for adjudication of any dispute or complaint with respect to use, distribution, or control of waters of any inter-State river or river valley.
• Article 262(2): Parliament may bar the jurisdiction of the Supreme Court and all other courts in such disputes — this is an extraordinary exclusion clause.
• Inter-State River Water Disputes Act, 1956 (ISRWD Act): Enacted under Article 262. Provides for constitution of ad hoc Water Disputes Tribunals. Amended in 2002 to impose time limits for tribunal formation and award delivery. The Inter-State River Water Disputes (Amendment) Act, 2019 proposed replacing multiple ad hoc tribunals with a single permanent tribunal with a Disputes Resolution Committee (DRC) — passed by Parliament but key provisions not yet notified/fully operational as of May 2026.

Tribunal Process

1. A State makes a request to Central Government that a water dispute has arisen.
2. If Central Government is satisfied that the dispute cannot be settled by negotiation, it constitutes a Tribunal within one year (amended 2002 on Sarkaria Commission recommendation).
3. Tribunal must give its award within three years (extendable by 2 more years).
4. Tribunal award is final and binding on parties; notified by Central Government in the Official Gazette.
5. Supreme Court bar: Once a Tribunal is constituted, the Supreme Court loses jurisdiction under Article 262(2).

Major Active Tribunals and Disputes

Cauvery Water Dispute — Case Study

Historical background:

• 1892 & 1924 Agreements between Madras Presidency and Mysore State regulated water sharing.
• Post-Independence, when States reorganised on linguistic basis (1956), disputes intensified.
• Karnataka (rice cultivation expansion) vs Tamil Nadu (traditional rights).

CWDT established: 1990; took 17 years to deliver final order in 2007.

Final award (2007):

• Tamil Nadu: 419 tmcft (thousand million cubic feet)
• Karnataka: 270 tmcft
• Kerala: 30 tmcft
• Puducherry: 7 tmcft

Supreme Court judgment (February 16, 2018):

• Modified award: Tamil Nadu — 404.25 tmcft; Karnataka — 284.75 tmcft.
• Declared Cauvery a national asset.
• Directed Centre to formulate a scheme for implementation.

Cauvery Water Management Authority (CWMA):

• Central Government notified the Cauvery Water Management Scheme in June 2018.
• CWMA constituted to secure compliance with Supreme Court's order.
• Cauvery Water Regulation Committee (CWRC) established under CWMA to monitor and regulate releases.

Article 263 — Inter-State Council and Zonal Councils

Inter-State Council

• Article 263: President may establish an Inter-State Council if it appears to him that the public interests would be served thereby.
• Functions: Inquire into and advise upon disputes between States; investigate and discuss subjects where some or all States or the Union have a common interest; recommend policy and action.
• Inter-State Council established by Presidential Order in 1990 (on Sarkaria Commission recommendation).
• Composition: PM as Chair; Chief Ministers of all States and UTs with legislatures; 6 Cabinet Ministers nominated by PM.
• Meets infrequently — no specific mandatory schedule.

Zonal Councils

• Statutory bodies created by States Reorganisation Act, 1956 (not constitutional).
• Five Zonal Councils: Northern, Central, Eastern, Western, Southern.
• North-Eastern Council: Established by North-Eastern Council Act, 1971.
• Chaired by: Union Home Minister (since 2002).
• Purpose: Promote cooperation on matters of common interest — economic and social planning, border disputes, inter-State transport, etc.
• Purely advisory — cannot override Centre or State legislative or executive decisions.

Sarkaria Commission (1983)

Constituted: June 1983 by Prime Minister Indira Gandhi. Chairman: Justice R.S. Sarkaria (retd. Judge, Supreme Court). Report submitted: January 1988 — a massive 1,600-page document with 247 recommendations.

Context: Growing regionalism in 1980s (Punjab, Assam, Tamil Nadu), demands for more autonomy by regional parties in power in States.

Key Recommendations

Acceptance: Many recommendations were not implemented immediately. The Inter-State Council was set up in 1990.

Punchhi Commission (2007–2010)

Constituted: April 2007. Chairman: Justice Madan Mohan Punchhi (retd. Chief Justice of India). Report submitted: March 30, 2010 — a 7-volume report with 273 recommendations.

Context: Changed political landscape since Sarkaria — rise of coalition governments at Centre, globalisation, economic liberalisation, new security challenges.

Key Recommendations

Cooperative Federalism and Competitive Federalism

Cooperative Federalism

A model where Centre and States work as partners, pooling resources and sharing responsibilities, rather than adversarial federalism.

Institutional manifestations in India:

• NITI Aayog (2015): Replaced the top-down Planning Commission; includes Governing Council with all CMs and Lt. Governors; emphasis on States as "development partners."
• GST Council (Article 279A): Joint decision-making body on indirect tax policy — the most significant example of cooperative federalism in practice.
• Aspirational Districts Programme (now Aspirational Districts/Blocks): Centre–State collaboration for development of backward districts.
• SDG Localisation: NITI Aayog's State/UT ranking on SDG index — promotes cooperation on development goals.

Competitive Federalism

States compete with each other to attract investment, improve governance rankings, and demonstrate better performance.

Examples:

• Ease of Doing Business rankings (DPIIT): States ranked annually; creates positive competition.
• Sustainable Development Goals (SDG) index (NITI Aayog): States ranked on SDG performance.
• Export Preparedness Index (EPI): State performance on exports.
• Swachh Survekshan: Cities ranked on cleanliness — competitive pressure for improvement.

Critique: Competitive federalism can widen regional inequalities if less-developed States cannot compete on equal terms.

Commonly Confused Pairs — UPSC Alert

Article 249 vs Article 252 vs Article 253

The 355 → 356 → 365 Chain — Three Articles in Sequence

UPSC Mains linkage: The Punchhi Commission specifically recommended that Article 355 be amended to allow localised Centre intervention (specific district, specific law-and-order issue) without triggering the full Article 356 state takeover. This graduated response framework (355 → localised action → 356 only if all else fails) is the core Punchhi reform proposal on President's Rule.

Key Constitutional Provisions Summary Table

UPSC Mains PYQs — Verified Deep Links

Centre-State Relations & Federalism:

• GS2 2020 Q1 — How far do you think cooperation, competition and confrontation have shaped the nature of federation in India? Cite some recent examples to validate your answer. (15M)
• GS2 2024 Q2 — What changes has the Union Government recently introduced in the domain of Centre-State relations? Suggest what could be done to strengthen cooperative federalism in India. (15M)
• GS2 2022 Q13 — 'National parties favour centralisation whereas regional parties favour State autonomy.' Comment. (15M)
• GS2 2023 Q4 — Explain the significance of the 101st Constitutional Amendment Act. To what extent does it reflect the accommodative spirit of cooperative federalism? (15M)
• GS2 2015 Q2 — The concept of cooperative federalism has been increasingly emphasised in recent years. Highlight the drawbacks in the existing structure and suggest measures to strengthen it. (12.5M)
• GS2 2019 Q(R)11 — From the resolution of contentious issues regarding distribution of legislative powers by the courts, the Principle of Federal Supremacy and Harmonious Construction have emerged. Explain. (15M)

Article 356 & Governor:

• GS2 2023 Q3 — Account for the legal and political factors responsible for the reduced frequency of using Article 356 by the Union Government after 1994. (15M)
• GS2 2022 Q2 — Discuss the essential conditions for exercise of legislative powers by the Governor and the legal status of the Bills presented to him for assent. (15M)
• GS2 2021 Q13 — The jurisdiction of the Central Bureau of Investigation (CBI) regarding lodging an FIR and conducting probe within a particular State is being questioned by various States. What do you think are the reasons for this? (15M)

Finance Commission & Fiscal Relations:

• GS2 2018 Q14 — How is the Finance Commission constituted? What do you know about the terms of reference of the recently constituted Finance Commission? What, in your view, should be the key recommendations? (15M)
• GS2 2021 Q5 — How have the recommendations of the 14th Finance Commission of India enabled the states to improve their fiscal position? (15M)

One Nation One Election:

• GS2 2017 Q3 — Simultaneous elections to the Lok Sabha and State Assemblies will limit the amount of time and money spent in electioneering but it will reduce the government's accountability to the people. Discuss. (15M)

Recent Developments (2024–2026)

Governor–State Conflicts — Multi-State Constitutional Crisis (2024–2025)

In 2024, the Supreme Court adjudicated Governor-related Centre-State conflicts from five states simultaneously: Tamil Nadu, Kerala, Punjab, Telangana, and West Bengal. These cases — involving Governors refusing to give assent to state bills, withholding them indefinitely, or reserving them for Presidential consideration years after passage — represent the most concentrated Governor-State constitutional crisis in India's history since the Bommai era (1988–1994).

The April 2025 Tamil Nadu judgment (State of Tamil Nadu v. Governor, 8 April 2025, 2-judge bench — Pardiwala + Mahadevan JJ) held that Governors cannot exercise "absolute veto" or "pocket veto" on Bills and prescribed timelines (1 month to withhold assent, 3 months if acting against Cabinet advice). The 20 November 2025 Presidential Reference ruling (In re: Assent, Withholding or Reservation of Bills, 5-judge bench — CJI B.R. Gavai + Surya Kant + Vikram Nath + P.S. Narasimha + Atul S. Chandurkar) effectively superseded the timelines approach — holding that no judicially imposed timelines are permissible, "deemed assent" is constitutionally impermissible, and decisions under Articles 200 and 201 are generally not justiciable. However, prolonged, unexplained, indefinite inaction can still attract a limited mandamus (without comments on merits).

UPSC angle: Prelims — April 2024 Tamil Nadu SC ruling; November 2025 Presidential Reference ruling on Articles 200-201. Mains — systematically evaluate the Governor's role as constitutional head versus Centre's agent; do the 2024–2025 cases vindicate the Sarkaria Commission's recommendations?

States' Mineral Tax Power — Fiscal Federalism Strengthened (July 2024)

In Mineral Area Development Authority v. Steel Authority of India (MADA v. SAIL) (25 July 2024), a 9-judge bench (8:1) of the Supreme Court reaffirmed states' power to levy taxes on minerals under Entry 50 of the State List (List II, Seventh Schedule). The bench overruled India Cement Ltd. v. State of Tamil Nadu (1989), which had held that states could not levy royalties or taxes on minerals beyond what Parliament permitted under the MMDR Act. The 2024 ruling significantly strengthens fiscal federalism — mineral-rich states (Jharkhand, Odisha, Chhattisgarh, Rajasthan) can now levy additional state taxes on mining activity, augmenting their own-tax revenues substantially.

UPSC angle: Prelims — MADA v. SAIL (25 July 2024); 9-judge bench; 8:1; Entry 50 State List; overruled India Cements (1989); states can tax minerals. Mains — how does the MADA v. SAIL ruling affect the fiscal federal balance? Connect to the 16th Finance Commission's mandate on horizontal devolution and states' fiscal autonomy.

West Bengal–CBI Case — Article 131 Federalism (2024)

The Supreme Court upheld the maintainability of West Bengal's Article 131 original suit against the Union of India in 2024. West Bengal alleged that the CBI continued to conduct investigations in the state despite the state's withdrawal of general consent (which is required under the Delhi Special Police Establishment Act, 1946 for CBI to operate in a state). The Court held that the suit raises substantial constitutional questions about the division of powers and federalism — and dismissed the Union's preliminary objection to maintainability.

UPSC angle: Prelims — Article 131; West Bengal v. Union (2024); CBI general consent withdrawal; DSPE Act 1946. Mains — analyse how the CBI jurisdiction issue exemplifies legislative and executive tensions in Indian federalism; should there be a statutory framework for CBI's operation in states?

New Criminal Laws — Centre-State Implementation Tensions (2024)

The BNS, BNSS, and BSA came into force on 1 July 2024. Police is a State List subject (Entry 2). Implementation of the new criminal laws — particularly the mandatory forensic science laboratory visits (BNSS Section 185), new paperwork timelines, and electronic summons — became a Centre-State coordination challenge, with some state police forces complaining about inadequate notice and training.

UPSC angle: Prelims — Police: State List Entry 2; BNSS Section 185 (mandatory FSL visits); 1 July 2024. Mains — examine how the criminal law reform creates Centre-State tensions in a federal system where law-and-order is a state subject; what coordination mechanisms exist?

President's Rule in Manipur — Article 356 and Federalism (2025–2026)

President's Rule was imposed in Manipur on 13 February 2025 under Article 356, following the resignation of CM N. Biren Singh amid prolonged ethnic violence. The Lok Sabha approved the initial six-month period, and a further six-month extension was approved in August 2025. This is the 11th time President's Rule has been imposed in Manipur and the 135th overall (bringing the total across India from 132 as of 2018 to 135 as of May 2026).

President's Rule was revoked on 4 February 2026 — nine days early, before the parliamentary approval deadline for the second extension. Yumnam Khemchand Singh was sworn in as Chief Minister, with two Deputy CMs (one from the Kuki-Zo community and one from the Naga community) to reflect the ethnic-balance political settlement.

Key federalism point on revocation: Revocation of President's Rule does NOT require Parliamentary approval — unlike the original proclamation (must be approved within 2 months) or each extension (must be approved every 6 months). The President can revoke by notification at any time under Article 356(2). This is why the Manipur revocation was made before the next parliamentary approval deadline.

The case reactivates the S.R. Bommai safeguards: the Governor's report must be based on objective material; the President's decision is judicially reviewable; the State Assembly cannot be dissolved until Parliament approves the proclamation.

UPSC angle: Prelims — Manipur President's Rule imposed February 13, 2025; revoked February 4, 2026; 11th imposition in Manipur; 135th overall in India; S.R. Bommai (1994) safeguards; revocation requires no Parliamentary approval. Mains — evaluate whether the S.R. Bommai safeguards have been effective in preventing misuse of Article 356 over the 30 years since the judgment; analyse the ethnic-balance power-sharing arrangement in Manipur post-President's Rule.

Exam Strategy

For Prelims:

• Memorise the exact number of subjects in each List (Union: 97 entries; State: 61; Concurrent: 52 — current post-42nd Amendment counts; entries 92 and 92C of the Union List deleted by 101st Amendment 2016).
• Know that Article 262 bars Supreme Court jurisdiction on inter-state water disputes.
• Know the S.R. Bommai case year (1994) and its key holdings (floor test, judicial review of Article 356).
• Know composition of GST Council and the weighted voting: Centre = 1/3, States collectively = 2/3.
• Finance Commission is established under Article 280 every 5 years.

For Mains:

• For any question on federalism or Centre-State relations, use the three dimensions structure: Legislative relations → Administrative relations → Financial relations.
• The S.R. Bommai case is essential for any question on Article 356 or President's Rule — include the 9-judge bench, 1994, key principles.
• For inter-state water disputes, use the Cauvery case as a detailed example.
• Sarkaria vs Punchhi: Sarkaria (1983–88, 247 recs) was the first commission; Punchhi (2007–10, 273 recs) updated it — highlight the contextual differences.
• Cooperative vs Competitive federalism: NITI Aayog and GST Council = cooperative; DPIIT rankings and SDG index = competitive.
• Link to current affairs: Any news about Centre dismissing a State government, water disputes, Governor withholding Bills, or GST Council disputes is relevant here.
• The Governor's role is a perennially important sub-topic — frame it around the constitutional provisions, judicial interpretations, and Commission recommendations.