Centre-State Relations

• The Constitution divides powers (legislative, executive, financial) between the Centre and the states. Judicial power isn't divided.
• Harmony and coordination are essential for the federal system.

Study of Centre-State Relations

• Legislative relations
• Administrative relations
• Financial relations

Legislative Relations (Articles 245-255, Part XI)

• Legislative powers divided territorially and by subject matter.
• Parliamentary legislation in the state field occurs under 5 extraordinary situations.

Four Aspects of Centre-State Legislative Relations

• Territorial extent of Central and state legislation
• Distribution of legislative subjects
• Parliamentary legislation in the state field
• Centre's control over state legislation

1. Territorial Extent of Central and State Legislation

• Parliament can make laws for the whole or any part of India (states, UTs, and other included areas).
• State legislature can make laws for the whole or any part of the state. State laws generally don't apply outside the state unless there's sufficient nexus between the state and the object.
• Parliament alone can make 'extra-territorial legislation' applying to Indian citizens and their property anywhere in the world.

Restrictions on Parliamentary Territorial Jurisdiction

• President can make regulations for peace, progress, and good government in:
  • Andaman and Nicobar Islands
  • Lakshadweep
  • Dadra and Nagar Haveli
  • Daman and Diu
  • Ladakh
• President can legislate for Puducherry via regulations when the Assembly is suspended or dissolved. Such regulations have the force of an act of Parliament and can repeal or amend acts of Parliament relating to these UTs.
• Governor can direct that an act of Parliament doesn't apply to a scheduled area in the state or applies with modifications.
• Governor of Assam has similar powers for tribal areas (autonomous districts).
• President has similar power for tribal areas (autonomous districts) in Meghalaya, Tripura, and Mizoram.

2. Distribution of Legislative Subjects

• Three-fold distribution in the Seventh Schedule:
  • List-I (Union List)
  • List-II (State List)
  • List-III (Concurrent List)
• Union List: Parliament has exclusive power (currently 98 subjects). Examples: defence, banking, foreign affairs, currency, atomic energy, insurance, communication, inter-state trade and commerce, census, audit.
• State List: State legislature has exclusive powers “in normal circumstances” (currently 59 subjects). Examples: public order, police, public health and sanitation, agriculture, prisons, local government, fisheries, markets, theaters, gambling.
• Concurrent List: Both Parliament and state legislature can make laws (currently 52 subjects). Examples: criminal law & procedure, civil procedure, marriage & divorce, population control & family planning, electricity, labour welfare, economic and social planning, drugs, newspapers, books & printing press.
• The 42nd Amendment Act of 1976 transferred five subjects from the State List to Concurrent List:
  • Education
  • Forests
  • Weights and Measures
  • Protection of Wild Animals and Birds
  • Administration of Justice (except Supreme Court and High Courts)
• Parliament can make laws for any part of India not included in a state, even if the matter is in the State List (Union Territories or Acquired Territories).
• 101st Amendment Act of 2016: special provision for Goods and Services Tax.

Goods and Services Tax (GST)

• Both Parliament and state legislature can make laws with respect to GST imposed by the Union or the State.

• Parliament has exclusive power to make laws with respect to GST where supply occurs in the course of inter-state trade or commerce.

• Residuary Powers: Power to legislate on subjects not in any of the three lists rests with the Parliament, including the power to levy residuary taxes.

• Matters of national importance and requiring nationwide uniformity are in the Union List. Regional/local importance matters allowing diversity are in the State List. Matters where uniformity is desirable but not essential are in the Concurrent List.

• US: Federal government powers enumerated, residuary powers with states.

• Canada: Double enumeration (Federal and Provincial), residuary powers with the Centre.

• Government of India Act, 1935: Three-fold enumeration (Federal, Provincial, Concurrent), residuary powers to the Governor-General. India follows Canadian precedent.

• Constitution secures the predominance of the Union List over State and Concurrent Lists, and Concurrent List over the State List.

• Conflict resolution: Union List prevails over State List. Union List prevails over Concurrent List. Concurrent List prevails over State List.

• Conflict between Central law and state law on a Concurrent List subject: Central law prevails. Exception: If the state law was reserved for President's consideration and received assent, the state law prevails in that state. Parliament can override such a state law by subsequently making a law on the same matter.

3. Parliamentary Legislation in the State Field

• In abnormal times, the Parliament is empowered to make laws on any matter enumerated in the State List under five extraordinary circumstances:
  • A. Rajya Sabha Resolution: If Rajya Sabha declares it necessary in the national interest for Parliament to legislate on a State List matter, Parliament becomes competent. Resolution requires 2/3 support of members present and voting. Remains in force for one year, renewable. Laws cease to have effect six months after resolution expires.
  • B. National Emergency: Parliament can legislate on State List matters while a national emergency is in operation. Laws become inoperative six months after the emergency ceases.
  • C. State Request: If legislatures of two or more states pass resolutions requesting Parliament to enact laws on a State List matter, Parliament can regulate that matter for those states. Other states can adopt the law later. Such a law can be amended or repealed only by Parliament. This resolution operates as surrender of power of the state legislature.
  • D. International Agreements: Parliament can legislate on any State List matter to implement international treaties, agreements, or conventions.
  • E. President's Rule: Parliament is empowered to make laws with respect to any matter in the State List in relation to that state. A law made so by the Parliament continues to be operative even after the president's rule.

4. Centre's Control Over State Legislation

• Besides Parliament’s power to legislate directly on state subjects under exceptional situations, the Constitution empowers the Centre to exercise control over the state’s legislative matters in the following ways:
  • Governor can reserve a state bill for the President's consideration. The President enjoys absolute veto over such a bill.
  • A state bill imposing restrictions on freedom of trade, commerce, and intercourse requires prior Presidential sanction for introduction.

Administrative Relations (Articles 256-263, Part XI)

1. Distribution of Executive Powers

• Executive power divided on the lines of legislative powers, except in few cases.
• Executive power of the Centre extends to:
  • Matters on which Parliament has exclusive power (Union List subjects)
  • Exercise of rights, authority, and jurisdiction conferred by treaty/agreement.
• Executive power of a state extends to its territory in respect of matters on which the state legislature has exclusive power (State List subjects).
• Concurrent List: Executive power rests with the states, unless Constitution or parliamentary law specifically confers it on the Centre. A law on a concurrent subject, though enacted by the Parliament, is to be executed by the states except when the Constitution or the Parliament has directed otherwise.

2. Obligation of States and the Centre

• Two restrictions on state executive power to allow Centre to exercise its power:
  • States must ensure compliance with parliamentary laws and existing laws.
  • States must not impede or prejudice the exercise of executive power of the Centre.
• Centre can give directions to states as necessary for the purpose.

3. Centre's Directions to the States

• Centre can direct states regarding:
  • Construction/maintenance of communication means declared of national/military importance.
  • Measures to protect railways within the state.
  • Provision of adequate facilities for instruction in the mother-tongue at the primary stage to children belonging to linguistic minority groups.
  • Drawing up and execution of specified schemes for the welfare of the Scheduled Tribes in the state.

4. Mutual Delegation of Functions

• Legislative powers division is rigid.
• Constitution provides for inter-government delegation of executive functions to avoid deadlock.
• President may, with consent of state government, entrust to that government any of the executive functions of the Centre. Conversely, the governor of a state may, with the consent of the Central government, entrust to that government any of the executive functions of the state. Mutual delegation may be conditional or unconditional.
• Parliament law on Union List can confer powers and impose duties on a state (irrespective of state consent). Notably, the same thing cannot be done by the state legislature.
• Mutual delegation of functions between Centre and state can occur under an agreement or by legislation. Centre can use both methods; a state can use only the first method.

5. Cooperation between Centre and States

• The Constitution contains the following provisions to secure cooperation and coordination between the Centre and the states:
  • Parliament can provide for adjudication of disputes regarding inter-state river waters.
  • President can establish an Inter-State Council (under Article 263) to investigate and discuss subjects of common interest (established in 1990).

6. All-India Services

• Centre and states have separate public services (Central Services and State Services).
• All-India Services: IAS, IPS, and IFoS. Members occupy top positions under both Centre and states, recruited and trained by the Centre.
• These services are controlled jointly by Centre and states, with ultimate control lying with the Central government while the immediate control vests with the state governments.
• All-India Services, irrespective of their division among different states, form a single service with common rights and status and uniform scales of pay throughout the country.
• They are supported because they: help maintain high standards of administration, ensure uniformity, and facilitate liaison and cooperation.

7. Public Service Commissions

• Centre-state relations in the field of public service commissions:
  • Chairman and members of state public service commission, though appointed by governor, can be removed only by the President.
  • Parliament can establish a Joint State Public Service Commission (JSPSC) for two or more states on request. Chairman and members of JSPSC are appointed by the President.
  • UPSC can serve the needs of a state on request and with President's approval.
• UPSC assists states in framing joint recruitment schemes (upon request).

8. Integrated Judicial System

• No dual system of justice. Integrated judicial system with Supreme Court at the top and state high courts below.
• Judges of a state high court are appointed by the President in consultation with the Chief Justice of India and the governor of the state. They can also be transferred and removed by the President.
• Parliament can establish a common high court for two or more states.

9. Relations During Emergencies

• During a national emergency (Article 352), the Centre is entitled to give executive directions to a state on 'any' matter. State governments are brought under the control of the Centre, though they are not suspended.
• President's Rule (Article 356): President can assume state government functions.
• Financial emergency (Article 360): Centre can direct states to observe financial propriety and reduce salaries of persons serving in the state.

10. Other Provisions

• Other provisions enabling Centre to control state administration:
  • Article 355 imposes two duties on the Centre:
    • To protect every state against external aggression and internal disturbance
    • To ensure that the government of every state is carried on in accordance with the provisions of the Constitution
  • Governor is appointed by the President and holds office during President's pleasure, acting as Centre's agent and submitting reports.
  • State election commissioner, though appointed by the governor, can be removed only by the President.

11. Extra-Constitutional Devices

• Advisory bodies and conferences to promote cooperation. Examples:
  • NITI Aayog
  • National Integration Council
  • Zonal Councils
  • Governors' Conference
  • Chief Ministers' Conference

Financial Relations (Articles 268-293, Part XII)

1. Allocation of Taxing Powers

• Parliament has exclusive power to levy taxes on subjects in the Union List (13 in number).
• State legislature has exclusive power to levy taxes on subjects in the State List (18 in number).
• No tax entries in the Concurrent List.
• 101st Amendment Act of 2016 makes an exception for goods and services tax (GST) and it has conferred concurrent taxing power upon the Parliament and State Legislatures to make laws governing goods and services tax.
• Residuary power of taxation rests with the Parliament.
• The Constitution also draws a distinction between the power to levy and collect a tax and the power to appropriate the proceeds of the tax so levied and collected.
• Income tax is levied and collected by the Centre but its proceeds are distributed between the Centre and the states.

Restrictions on States' Taxing Powers

• State legislature can impose taxes on professions, trades, etc., but the total amount should not exceed ₹2,500 per annum.
• State legislature is prohibited from imposing a tax on the supply of goods or services or both in the following two cases: (a) where such supply takes place outside the state; and (b) where such supply takes place in the course of import or export.
• State legislature can impose tax on the consumption or sale of electricity. But, no tax can be imposed on the consumption or sale of electricity which is (a) consumed by the Centre or sold to the Centre.
• State legislature can impose a tax in respect of any water or electricity stored, generated, consumed, distributed or sold by any authority established by Parliament for regulating or developing any inter-state river or river valley.

2. Distribution of Tax Revenues

• 80th Amendment Act of 2000 and 101st Amendment Act of 2016 introduced major changes.
• 80th Amendment enacted to give effect to 10th Finance Commission recommendations (29% of certain central taxes/duties to states).
• 101st Amendment paved the way for GST, conferred concurrent taxing powers on Parliament and State Legislatures to make laws governing GST on every transaction of supply of goods or services or both and replaced a number of indirect taxes levied by the Union and the State Governments.

Taxes After Amendments

• A. Taxes Levied by the Centre but Collected and Appropriated by the States (Article 268): Stamp duties on bills of exchange, checks, promissory notes, policies of insurance, transfer of shares and others.
• B. Taxes Levied and Collected by the Centre but Assigned to the States (Article 269):
  • Taxes on sale/purchase of goods (other than newspapers) in inter-state trade/commerce
  • Taxes on the consignment of goods in the course of inter-state trade or commerce.
• C. Levy and Collection of Goods and Services Tax in Course of Inter-State Trade or Commerce (Article 269-A): Goods and Services Tax (GST) on supplies in the course of inter-state trade or commerce are levied and collected by the Centre.

Contd.

• D. Taxes Levied and Collected by the Centre but Distributed between the Centre and the States (Article 270): All taxes and duties referred to in the Union List except certain duties, taxes and surcharges.
• E. Surcharge on Certain Taxes and Duties for Purposes of the Centre (Article 271): The Parliament can at any time levy the surcharges on taxes and duties referred to in Articles 269 and 270.
• F. Taxes Levied and Collected and Retained by the States: The taxes enumerated in the state list.
• (i) land revenue;
  • (ii) taxes on agricultural income;
  • (iii) duties in respect of succession to agricultural land;
  • (iv) estate duty in respect of agricultural land;
  • (v) taxes on lands and buildings;
  • (vi) taxes on mineral rights;
  • (vii) Duties of excise on alcoholic liquors for human consumption; opium, Indian hemp and other narcotic drugs and narcotics, but not including medicinal and toilet preparations containing alcohol or narcotics;
  • (viii) taxes on the consumption or sale or electricity;
  • (ix) taxes on the sale of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas, aviation turbine fuel and alcoholic liquor for human consumption, but not including sale in the course of inter-state trade or commerce or sale in the course of international trade or commerce of such goods;
  • (x) taxes on goods and passengers carried by road or inland waterways;
  • (xi) taxes on vehicles;
  • (xii) taxes on animals and boats;
  • (xiii) tolls;
  • (xiv) taxes on professions, trades, callings and employments;
  • (xv) capitation taxes;
  • (xvi) taxes on entertainments and amusements to the extent levied and collected by a Panchayat for a Municipality or a Regional Council or a District Council;
  • (xvii) stamp duty on documents (except those specified in the Union List); and
  • (xviii) fees on the matters enumerated in the State List (except court fees).

3. Distribution of Non-tax Revenues

• A. The Centre:
  • Receipts from posts and telegraphs
  • Railways
  • Banking
  • Broadcasting
  • Coinage and Currency
  • Central Public Sector Enterprises
  • Escheat and Lapse
• B. The States:
  • Receipts from Irrigation
  • Forests
  • Fisheries
  • State Public Sector Enterprises
  • Escheat and Lapse

4. Grants-in-Aid to the States

• Two types of grants-in-aid:
  • A. Statutory Grants (Article 275): Parliament can make grants to states in need of financial assistance. Sums are charged on the Consolidated Fund of India every year. Also provides for specific grants.
  • B. Discretionary Grants (Article 282): Centre and states can make grants for any public purpose, even if not within their legislative competence.
  • C. Other Grants: The Constitution also provided for grants in lieu of export duties on jute and jute products.
• The Constitution also provided for grants in lieu of export duties on jute and jute products to the States of Assam, Bihar, Orissa and West Bengal.

5. Goods and Services Tax Council

• The 101st Amendment Act of 2016 provided for the establishment of a Goods and Services Tax Council.

• The Article 279-A empowered the President to constitute a GST Council by an order.

Matters Council makes recommendations on

• The taxes, cesses and surcharges levied by the Centre, the States and the local bodies that would get merged in GST.
• The goods and services that may be subjected to GST or exempted from GST.
• Model GST Laws, principles of levy, apportionment of GST levied on supplies in the course of inter-state trade or commerce and the principles that govern the place of supply.
• The threshold limit of turnover below which goods and services may be exempted from GST.

6. Finance Commission (Article 280)

• Quasi-judicial body constituted by the President every fifth year. Makes recommendations on:
  • Distribution of net proceeds of taxes between Centre and states.
  • Principles governing grants-in-aid to states.
  • Measures to augment state Consolidated Funds to supplement panchayat and municipality resources.
  • Other matters referred by President in the interest of sound finance.
• Constitution envisages the Finance Commission as the balancing wheel of fiscal federalism in India.

7. Protection of the States' Interest

• To protect the interest of states in the financial matters, the Constitution lays down that the following bills can be introduced in the Parliament only on the recommendation of the President:
  • A bill which imposes or varies any tax or duty in which states are interested
  • A bill which varies the meaning of the expression 'agricultural income' as defined for the purposes of the enactments relating to Indian income tax
  • A bill which affects the principles on which moneys are or may be distributable to states
  • A bill which imposes any surcharge on any specified tax or duty for the purpose of the Centre.

8. Borrowing by the Centre and the States

• The Constitution makes the following provisions with regard to the borrowing powers of 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.
• Similarly, a state government can borrow within India (and not abroad) upon the security of the Consolidated Fund of the State or can give guarantees, but both within the limits fixed by the legislature of that state.
• The Central government can make loans to any state or give guarantees in respect of loans raised by any state.
• A state cannot raise any loan without the consent of the Centre, if there is still outstanding any part of a loan made to the state by the Centre or in respect of which a guarantee has been given by the Centre.

9. Inter-Governmental Tax Immunities

• Indian Constitution contains the rule of 'immunity from mutual taxation':
  • A. Exemption of Central Property from State Taxation: Property of Centre is exempt from all taxes imposed by a state or any authority within a state.
  • B. Exemption of State Property or Income from Central Taxation: The property and income of a state is exempted from Central taxation.

10. Effects of Emergencies

• Centre-state financial relations change during emergencies:
  • A. National Emergency: President can modify constitutional distribution of revenues.
  • B. Financial Emergency: Centre can give directions to states regarding financial propriety and salaries.

Trends in Centre-State Relations

• Till 1967, relations were smooth due to one-party rule at the Centre and in most states.
• In 1967 elections, the Congress party was defeated in nine states and its position at the Centre became weak.
• Non-Congress governments in states opposed centralization, raising the issue of state autonomy.

Tension Areas in Centre-State Relations

• Mode of appointment and dismissal of governor
• Discriminatory and partisan role of governors
• Imposition of President's Rule
• Deployment of Central forces
• Reservation of state bills
• Discrimination in financial allocations
• Role of Planning Commission
• Management of All-India Services
• Use of electronic media for political purposes
• Appointment of enquiry commissions
• Sharing of finances
• Encroachment by the Centre on the State List
• Implementation of Centrally sponsored schemes
• Modus operandi of central agencies

Administrative Reforms Commission

• The Central government appointed a six-member First Administrative Reforms Commission (ARC) of India in 1966 under the chairmanship of Morarji Desai
• It made 22 recommendations for improving the Centre-state relations.

Recommendations:

• Establishment of an Inter-State Council under Article 263 of the Constitution.
• Appointment of persons having long experience in public life and administration and non-partisan attitude as governors.
• Delegation of powers to the maximum extent to the states.
• Transferring of more financial resources to the states to reduce their dependency upon the Centre.
• Deployment of Central armed forces in the states either on their request or otherwise.

Rajamannar Committee

• In 1969, the Tamil Nadu Government (DMK) appointed a three-member committee under the chairmanship of Dr. P.V. Rajamannar to examine the entire question of Centre-state relations

The important recommendations

• An Inter-State Council should be set up immediately
• Finance Commission should be made a permanent body
• Planning Commission should be disbanded and its place should be taken by a statutory body
• Articles 356, 357 and 365 should be totally omitted
• The provision that the state ministry holds office during the pleasure of the governor should be omitted
• Certain subjects of the Union List and the Concurrent List should be transferred to the State List
• The residuary powers should be allocated to the states
• All-India services (IAS, IPS and IFOS) should be abolished

West Bengal Memorandum

• In 1977, the West Bengal Government (led by the Communists) published a memorandum on Centre-state relations and sent it to the Central government

Memorandum inter alia suggested the following

• The word 'union' in the Constitution should be replaced by the word 'federal'
• The jurisdiction of the Centre should be confined to defence, foreign affairs, currency, communications and economic co-ordination
• All other subjects including the residuary should be vested in the states
• Articles 356 and 357 and 360 should be repealed
• State's consent should be made obligatory for formation of new states or reorganisation of existing states
• Of the total revenue raised by the Centre from all sources, 75 per cent should be allocated to the states
• Rajya Sabha should have equal powers with that of the Lok Sabha
• There should be only Central and state services and the All-India Services should be abolished

Sarkaria Commission

• In 1983, the Central government appointed a three-member Commission on Centre-state relations under the chairmanship of R.S. Sarkaria

The important recommendations

• A permanent Inter-State Council called the Inter-Governmental Council should be set up under Article 263
• Article 356 (President's Rule) should be used very sparingly
• The institution of All-India Services should be further strengthened and more of such services should be created
• The residuary powers of taxation should continue to remain with the Parliament, while the other residuary powers should be placed in the Concurrent List
• When the President withholds his/her assent to the state bills, the reasons should be communicated to the state government
• The National Development Council should be renamed and reconstituted as the National Economic and Development Council
• The zonal councils should be constituted afresh and reactivated to promote the spirit of federalism
• The Centre should have powers to deploy its armed forces, even without the consent of states
• The Centre should consult the states before making a law on a subject of the Concurrent List
• The procedure of consulting the chief minister in the appointment of the state governor should be prescribed in the Constitution itself
• The net proceeds of the corporation tax may be made permissibly shareable with the states
• The governor cannot dismiss the council of ministers so long as it commands a majority in the assembly
• The governor's term of five years in a state should not be disturbed except for some extremely compelling reasons
• No commission of enquiry should be set up against a state minister unless a demand is made by the Parliament
• The surcharge on income tax should not be levied by the Centre except for a specific purpose and for a strictly limited period
• The present division of functions between the Finance Commission and the Planning Commission is reasonable and should continue
• Steps should be taken to uniformly implement the three language formula in its true spirit
• No autonomy for radio and television but decentralisation in their operations
• No change in the role of Rajya Sabha and Centre's power to reorganise the states
• The commissioner for linguistic minorities should be activated

The Central government has implemented 180 (out of 247) recommendations of the Sarkaria Commission.

Punchhi Commission

• The Second commission on Centre-State Relations was set-up by the Government of India in 2007 under the Chairmanship of Madan Mohan Punchhi

The important recommendations

• To facilitate effective implementation of the laws on List III subjects, it is necessary that some broad agreement is reached between the Union and states before introducing legislation in Parliament on matters in the Concurrent List
• The Union should be extremely restrained in asserting Parliamentary supremacy in matters assigned to the states
• The Union should occupy only that many of subjects in concurrent or overlapping jurisdiction which are absolutely necessary to achieve uniformity of policy in demonstrable national interest
• There should be a continuing auditing role for the Inter-state Council in the management of matters in concurrent or overlapping jurisdiction
• The period of six months prescribed in Article 201 for State Legislature to act when the bill is returned by the President can be made applicable for the President also to decide on assenting or withholding assent to a state bill reserved for consideration of the President
• Parliament should make a law on the subject of Entry 14 of List I to streamline the procedures involved
• Financial obligations and its implications on state finances arising out of treaties and agreements should be a permanent term of reference to the Finance Commissions constituted from time to time
• While selecting Governors, the Central Government should adopt the following strict guidelines as recommended in the Sarkaria Commission report and follow its mandate in letter and spirit:
  • (i) He/she should be eminent in some walk of life
  • (ii) He/she should be a person from outside the state
  • (iii) He/she should be a detached figure and not too intimately connected with the local politics of the state
  • (iv) He/she should be a person who has not taken too great a part in politics generally and particularly in the recent past
• Governors should be given a fixed tenure of five years and their removal should not be at the sweet will of the Government at the Centre
• The procedure laid down for impeachment of President can be made applicable for impeachment of Governors as well
• On the question of dismissal of a Chief Minister, the Governor should invariably insist on the Chief Minister proving his/her majority on the floor of the House for which he/she should prescribe a time limit
• The Governor should have the right to sanction for prosecution of a state minister against the advice of the Council of Ministers
• When an external aggression or internal disturbance paralyses the state administration creating a situation of a potential break down of the Constitutional machinery of the state, all alternative courses available to the Union for discharging its paramount responsibility under Article 355 should be exhausted to contain the situation and the exercise of the power under Article 356 should be limited strictly to rectifying a failure of the Constitutional machinery in the state
• On the question of invoking Article 356 in case of failure of Constitutional machinery in states, suitable amendments are required to incorporate the guidelines set forth in the landmark judgement of the Supreme Court in S.R. Bommai case
• Given the strict parameters now set for invoking the emergency provisions under Articles 352 and 356 to be used only as a measure of "last resort", and the duty of the Union to protect states under Article 355
• The Zonal Councils should meet at least twice a year with an agenda proposed by states concerned to maximise co-ordination and promote harmonisation of policies and action having inter-state ramification.
• New all-India services in sectors like health, education, engineering and judiciary should be created
• Factors inhibiting the composition and functioning of the Second Chamber as a representative forum of states should be removed or modified even if it requires amendment of the Constitutional provisions.
• A balance of power between states inter se is desirable and this is possible by equality of representation in the Rajya Sabha
• All future Central legislations involving states' involvement should provide for cost sharing as in the case of the RTE Act
• The royalty rates on major minerals should be revised at least every three years without any delay