The federal character of the Indian Constitution involves a distribution of sovereignty between the national government and the constituent member states. The distribution of powers in general follows the Government of India Act of 1935 both in form and substance.
The Indian Constitution provides for a threefold distribution of legislative powers between the Union and the States. The Central Government is given exclusive powers to make laws concerning 97 items including defense, national security, foreign affairs, banking, currency and coinage, transportation and communication, commerce, atomic energy, the general framework of criminal and civil law, revenue collection, the ability to dissolve state governments during crisis, citizenship, immigration, fiscal and monetary policies.
The State List comprises 36 subjects including agricultural development, water, forests, fisheries, wildlife, internal trade, public order and police, local government, public health and sanitation and state taxes and duties. The third list, called Concurrent, includes 52 items including criminal law and procedure, civil procedure, marriage, contracts, torts, trusts, welfare of labour, insurance, economic and social planning and education.
In the case of overlapping of any matter between the three lists, the central Government has been given the paramount power. Likewise all residuary powers are given to the Centre.
Because of the residuary powers vested in the Centre, it became powerful, and the structure can be characterized as unitary or quasi-federal, rather than federal, the balance heavily tilted in favour of the centre. Besides, Parliament may legislate upon a subject listed in the State List in the event of a proclamation of emergency provisions of the Constitution.
The provision permits the President to undertake the rule of the State for 6 months when he is satisfied that the government of a state cannot be carried out in accordance with the provisions of the Constitution (Articles 356 and 357), and in the case of financial emergencies (Articles 352, 353 and 354). The proclamation of President Rule must by I approved by both Houses of the Parliament and its duration may be extended to a maximum period of 12 months.
The Governors of the states are appointed by the President on the advice of the Prime Minister. They have powers to reserve bills of their respective states for the President’s assent. The states are required to give effect to the laws of the Centre, and not to impede central administration in their respective territories.
The legislative power to make law for imposing tax is divided between the Union and the States by means of specific entries in the Union and State legislative lists in Schedule VII. While the states are competent to levy tax on agricultural income, the power to levy income tax on all other income (other than agricultural) lies with the Parliament. The residuary power in respect of taxation (as in the case of general legislation) belongs to the Parliament.
The bulk of public revenue is collected and distributed by the Central Government and fiscal dependency has been accepted as the permanent destiny of the states. There is provision in the Constitution for the appointment of a Finance Commission (with a fixed term of 5 years) to recommend to the President measures relating to the distribution of financial resources between the Union and the states and to provide additional grants-in-aid to the states according to their needs.
The Constitution of India is basically federal but incorporates certain unitary features arising out of the special conditions under which it was born. The Constitution satisfies all the essential conditions of a federal form of polity such as (i) dual government, (ii) distribution of powers between the Centre and states, (iii) supremacy of the Constitution, and (iv) authority of the courts as the final interpreter of the Constitution. Infect Indian federalism is unique in the sense that here federation has been created by granting guaranteed constitutional autonomy to the previously subordinate regional