People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 16

April 27, 2008


Resolution On Centre-State Relations

Adopted at the 19th Congress on March 30, 2008

THE XIX Congress notes with serious concern the deterioration in the centre-state relations in recent years in all the spheres, involving the administrative, legislative and specially financial issues. It is on the pressure of public opinion created by the Left and democratic forces led by the CPI(M), beginning from the Srinagar Conference in 1983 and followed by conferences organised by Left-led chief ministers that the central government took a decision to set-up the Sarkaria Commission. But even after more than two decades, practically none of its recommendations have been implemented. The expectations roused by the UPA government have been belied.

In the administrative sphere, no safeguards against the abuse of Article 356 have been instituted. Moreover, there is a new and alarming tendency of misinterpreting the provisions of Article 355 and sending the armed forces by the central government to the states unilaterally. On the other hand, when the states have asked for the assistance of Central Reserve Forces, there has often been undue delay on the part of the central government. Similarly, as regards the demand that the governor should be appointed from a list of three eminent persons suggested by the chief minister satisfying the criteria mentioned by the Sarkaria Commission, has gone totally unheeded.

In the legislative sphere, not only has the formal central intrusion into the state list been left unreversed, but further intrusions have also been made into the state list in terms of proliferation of so-called Centrally Sponsored Schemes in the state subjects. The Constitutional amendments to set time limits for receiving sanction of governors or assent of the president in the case of bills passed by the state assemblies have not yet been introduced. Moreover, after the centre’s adoption of neo-liberal policies, a new form of assault is now being made on the constitutionally assigned decision-making powers of the states, by the government of India discussing issues on state subjects with IMF, WTO, World Bank and similar external agencies, and then, on the guidance of these external bodies, imposing conditionalities on the state government without any concurrence of the states.

In the financial sphere, confronted with a long prevailing imbalance arising out of the fact that, while in the Constitution, the major responsibilities in the sphere of developmental and administrative expenditure have been given to the states, all the more important powers of revenue-raising have remained concentrated in the hands of the centre, the states have been correctly demanding over the years for increasing the share of central taxes to the states to at least 50 per cent. However, this share is only 30.5 per cent. Moreover, the share is only to the states (net of central loan repayment) as a proportion of the total revenue receipts of the centre has declined from 32.7 per cent in 1990-91 to 29.5 per cent in 2004-05.

In addition, not only the unjust burden of the central loan on the states, particularly connected with the small savings loan, has been left unrelieved, new assaults have been made on the socially important small savings programme itself by making returns on small savings schemes less attractive than the bank deposits. The states have also been denied access to governmental market borrowing usually at a lower interest rate, with share of states in the total market borrowing reduced from 50 per cent in 1950s to 15 per cent now.

There has been growing tendency for the centre to impose neo-liberal conditionalities to central assistance and centrally-sponsored schemes. The states, for instance, have been asked to introduce the Fiscal Responsibility and Budget Management (FRBM) Act by Finance Commission. The new pension scheme, Vaidhyanathan Committee recommendations on cooperatives, lifting of urban land ceiling act etc are being foisted on the states.

As a part of the policies of liberalisation, the central government has been actively contributing to accentuation of regional imbalances. Adequate representation of the states in Planning Commission, Finance Commission and the boards of Reserve Bank of India and other financial institutions has also been denied.

Discussions at the national and the state levels would be urgently necessary as the above disturbing trends, specially keeping in mind that the Thirteenth Finance Commission has recently been set up, and a new Commission on Centre-State relations has also started working. At the same time, discussions would also have to be taken down to the level of common people and this Party Congress gives a call for a wide mass movement across the states in support of a radical restructuring of the centre-state relations in the interest of working people of the entire country.