Punchhi Commission in India
The Government of India established the Second Commission on Centre-State Relations in April 2007 under the chairmanship of Madan Mohan Punchhi, former Chief Justice of India. It was necessary to investigate issues of Centre-State relations in light of the significant changes that have occurred in India’s polity and economy since the Sarkaria Commission last looked into the subject over two decades ago.
The Commission’s terms of reference were as follows:
(I) The Commission was mandated to examine and review the functioning of existing arrangements between the Union and States under the Indian Constitution, as well as the healthy precedents that had been set, as well as various Court pronouncements on powers, functions, and responsibilities in all spheres, including legislative relations, administrative relations, governors’ role, emergency provisions, financial relations, economic and social planning, and Panchayati Raj institutions.
(ii) In examining and reviewing the functioning of existing arrangements between the Union and States and making recommendations for changes and measures, the Commission was required to take into account social and economic developments over time, particularly in the last two decades, as well as the Constitution’s scheme and framework. In the early decades of the new millennium, such recommendations were also needed to address the growing challenges of ensuring good governance for promoting the welfare of the people while strengthening the country’s unity and integrity, as well as taking advantage of emerging opportunities for sustained and rapid economic growth to alleviate poverty and illiteracy.
(iii) The Commission was expected to pay special attention to, but not limit its mandate to, the following while analyzing and providing recommendations on the above:-
(a) The Centre’s role, responsibility, and jurisdiction in relation to States during major and long-term outbreaks of communal violence, caste violence, or any other social conflict that results in sustained and escalated violence.
(b) The role, duty, and jurisdiction of the Centre in relation to States in the design and implementation of major projects such as river interconnections, which typically take 15–20 years to complete and rely heavily on State support.
(c) The Centre’s duty, responsibility, and authority vis-à-vis States in promoting efficient devolution of powers and autonomy to Panchayati Raj Institutions and Local Bodies, including Autonomous Bodies, under the Constitution’s sixth Schedule within a stipulated time frame.
(d) The Centre’s role, responsibility, and jurisdiction vis-à-vis the States in supporting the concept and practice of district-level independent planning and budgeting.
(e) The Centre’s role, accountability, and jurisdiction vis-à-vis States in tying various forms of Central support to the States’ performance.
(f) The Centre’s role, accountability, and jurisdiction in adopting positive discrimination measures and policies in favor of backward states.
(g) The impact of the Finance Commissions’ recommendations on fiscal relations between the Centre and the States, particularly the States’ increased reliance on devolution of money from the Centre.
(h) Following the implementation of the Value Added Tax regime, the necessity for and significance of different taxes on the production and sale of goods and services.
I The importance of liberalizing inter-state commerce in order to create a unified and integrated domestic market, as well as State Governments’ unwillingness to follow the relevant Sarkaria Commission’s suggestion in Chapter XVIII of its report.
(j) The necessity of establishing a Central Law Enforcement Agency with the authority to investigate crimes with inter-State and/or international ramifications that pose a severe threat to national security on an ad hoc basis.
(k) The viability of enacting supporting legislation under Article 355 in order to deploy Central forces suo moto in the States if and when the circumstances warrants it.
In April 2010, the Commission presented its findings to the government. The Commission relied heavily on the Sarkaria Commission report, the National Commission to Review the Working of the Constitution (NCRWC) report, and the Second Administrative Reforms Commission report in completing the 1,456-page study in seven volumes. However, the Commission report diverged from the Sarkaria Commission recommendations in a number of areas.
The Commission came to the conclusion that ‘cooperative federalism’ will be the key to safeguarding India’s unity, integrity, and social and economic progress in the future after thoroughly considering the issues highlighted in its Terms of Reference and associated factors in all their hues and tints. Cooperative federalism’s ideals may thus have to serve as a practical guide for Indian polity and governance.
The Commission issued around 310 recommendations in all, covering a wide range of topics related to the functioning of Centre-state relations. The following are some of the most essential recommendations:
1. Before initiating legislation in Parliament on items in the Concurrent List, it is required to establish some broad agreement between the Union and states in order to ensure effective execution of the laws on List III subjects.
2. In subjects delegated to the states, the Union should exercise utmost caution in establishing Parliamentary primacy. Greater freedom for states in terms of State List subjects and Concurrent List “transferred items” is the key to stronger Centre-state relations.
3. The Union should only have concurrent or overlapping authority over those subjects that are absolutely necessary to establish policy uniformity in the national interest.
4. The Inter-state Council should continue to assess the management of problems involving concurrent or overlapping authority.
5. The six-month term required in Article 201 for the State Legislature to act when a bill is returned by the President can be extended to the President’s decision on whether to assent or withhold assent to a state bill reserved for his consideration.
6. To streamline the procedures, Parliament should pass a law on the subject of Entry 14 of List I (treaty making and implementation through Parliamentary legislation). Given the federal system of legislative and executive authorities, the exercise of authority cannot be total or unchartered.
7. Financial obligations originating from treaties and agreements, as well as their implications for state finances, should be a permanent term of reference for Finance Commissions established from time to time.
8. When selecting Governors, the Central Government should follow the Sarkaria Commission’s rigorous guidelines, which were proposed in the report, to the letter and spirit:
(I)He should be eminent in some field.
(ii) He should be a person from outside the state.
(iii) He should be a detached figure who is not too closely associated with the state’s local politics.
(iv) He should be a person who has not played a significant role in politics in the recent past. Governors should be appointed for a fixed term of five years and should not be removed at the whim of the federal government.
10. The procedure for impeachment of the President can be applied mutatis mutandis to the impeachment of Governors.
11. The Governor does not have broad discretionary authority to act against or without the advice of his Council of Ministers under Article 163. In fact, the scope of his discretion is limited, and even within that scope, his actions should not be arbitrary or speculative. It must be a decision based on logic, fueled by good faith, and tempered by caution.
12. In the case of bills enacted by a state’s Legislative Assembly, the Governor should decide whether to grant assent or hold it for consideration by the President within six months.
13. In the situation of a hung legislature, it is vital to establish explicit standards to be followed as Constitutional conventions when the Governor appoints the Chief Minister. The following are some examples of these guidelines:
(I) To establish the government, the party or coalition of parties with the most votes in the Legislative Assembly should be called upon.
(ii) If a pre-poll alliance or coalition exists, it should be treated as a single political party, and if the coalition wins a majority, the Governor shall summon the coalition’s head to form the government.
(iii) If no party or pre-election coalition has a clear majority, the Governor should appoint the Chief Minister in the order listed here.
(a) The group of parties with the largest pre-poll alliance
(b) The largest single party claiming to form the government with the support of others.
(c) A post-election coalition with all partners joining the government.
(d) A post-election coalition with some parties joining the government and the rest including independents supporting the government from the outside.
14. When it comes to dismissing a Chief Minister, the Governor should always insist on the Chief Minister prove his majority on the House floor, and he should set a time limit.
- If the Governor believes the Cabinet decision is driven by bias in the face of overwhelming evidence, the Governor should have the authority to sanction a state minister for prosecution against the advice of the Council of Ministers.
- The practice of governors serving as university chancellors while also holding other statutory roles should be abolished. His role should be limited to the requirements of the Constitution.
- When an external aggression or internal disturbance paralyzes state administration, posing a threat to the state’s constitutional machinery, the Union should exhaust all other options for carrying out its paramount responsibility under Article 355 to contain the situation, and the exercise of the power under Article 356 should be limited.
- On the topic of invoking Article 356 in the event of a state’s constitutional machinery failing, appropriate revisions are needed to include the parameters laid down in the Supreme Court’s landmark decision in S.R. Bommai V. Union of India (1994). States’ concerns about this would be alleviated, and ties between the Centre and the states would be smoothed.
- Given the strict criteria now in place for invoking the emergency provisions of Articles 352 and 356 as a “last resort” measure, as well as the Union’s obligation to protect states under Article 355, it is necessary to establish a constitutional or legal framework to deal with situations that necessitate Central intervention but do not warrant invoking the extreme measures of Articles 352 and 356. The framework for “localised emergency” would ensure that the state government could continue to operate and that the Assembly would not have to be dissolved, while also providing a mechanism for the Central Government to respond particularly and locally to the crisis. Article 355 read with Entry 2A of List I and Entry 1 of List II of the Seventh Schedule completely justifies the declaration of a local emergency.
- To make the Inter-State Council a credible, powerful, and fair vehicle for resolving interstate and Centre-state conflicts, appropriate revisions to Article 263 are required.
- To maximize coordination and encourage harmonisation of policies and actions with inter-state ramifications, the Zonal Councils should convene at least twice a year with an agenda submitted by the states involved. A reinforced Inter-State Council’s Secretariat can also serve as the Zonal Councils’ Secretariat.
- The Empowered Committee of State Finance Ministers proven to be a successful inter-state fiscal cooperation exercise. Similar models must be institutionalized in other sectors as well. A forum of Chief Ministers, chaired by one of the Chief Ministers on a rotating basis, may be considered in the same way, with the goal of coordinating policy in sectors such as energy, food, education, the environment, and health.
- In sectors such as health, education, engineering, and the judiciary, new pan-India services should be developed.
- Even if it necessitates amending the Constitutional provisions, factors impeding the composition and operation of the Second Chamber as a representative forum of states should be removed or adjusted. In truth, the Rajya Sabha has enormous potential for negotiating acceptable solutions to the thorny issues that arise in budgetary, legislative, and administrative ties between the Centre and the states.
- A balance of power between states is desirable, which can be achieved through equal participation in the Rajya Sabha. This necessitates amending the necessary legislation to ensure that states in the Rajya Sabha have an equal number of seats, regardless of their population size.
- Through suitable constitutional modifications, the scope of devolution of powers to local entities to act as institutions of self-government should be defined.
- As with the RTE Act, all future Central legislation involving state participation should include cost sharing provisions. Existing Central legislation entrusting state implementation to the federal government should be appropriately updated to provide for cost sharing by the federal government.
- Major mineral royalty rates should be reviewed at least every three years and without delay. States should be fairly paid if the modification of royalty takes longer than three years.
- A constitutional change should eliminate the current profession tax ceiling entirely.
- The possibility of increasing revenue from the taxes stated in article 268 should be revisited. This issue could be referred to the next Finance Commission, or an expert group could be formed to investigate the situation.
- All fiscal laws should provide for a yearly examination by an independent authority, and the reports of these committees should be brought before both Houses of Parliament/state legislatures to increase accountability.
- The Finance Commission’s Terms of Reference (ToR) should be applied equally to the Centre and the states. There should be a framework in place to allow states to participate in the finalization of the Finance Commissions’ Terms of Reference.
- The Central Government should examine all existing cesses and surcharges in order to reduce their percentage of gross tax revenue.
- Due to the tight ties between plan and non-plan expenditure, an expert committee may be formed to investigate the issue of plan and non-plan expenditure distinction.
- The Finance Commission and the Planning Commission should work together considerably more closely. The Finance Commission’s and the Five-Year Plan’s periods will be synchronized, which will greatly improve coordination.
- The Ministry of Finance’s Finance Commission division should be transformed into a full-fledged department that would serve as the permanent secretariat for the Finance Commissions.
- In the current scenario, the Planning Commission plays a critical function. However, rather than micromanaging sectoral plans of the Central ministries and states, its role should be one of coordination.
- Under Article 307 read with List-I Entry 42, steps should be taken to establish an Inter-State Trade and Commerce Commission. This Commission should have both consultative and executive powers, as well as decision-making authority. The Commission’s rulings, as a constitutional authority, should be final and binding on all states and the Union of India. Any party who is dissatisfied with the Commission’s judgment may file an appeal with the Supreme Court.
The Commission’s Report was sent to all interested parties, including state governments, UT administrations, and federal ministries and departments, seeking their feedback on the Commission’s proposals. The Inter-State Council is considering the comments received from the Union Ministries/Departments and State Governments/UT Administrations.