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Federal-State financial relation in India with special reference to the state of Gujarat – a legal study

Federal-State financial relation in India with special reference to the state of Gujarat – a legal study
Pratima N. Sangani


Department of Law, Saurashtra University, Rajkot 364 002, INDIA.


Federal - State financial relations in India, constitute an important set of determinates in shaping the destiny of Indian economy in its diverse aspects and it is natural that they command a keen interest. Currently there is a good deal of dissatisfaction with the working of the Centre-State financial relations in India resulting in comments on the roles of the Central Government and the States. The Centre is blamed for betraying the trust reposed in it by the fathers of the Constitution. The States believe that the Centre has been unmindful of their interests in a welfare and developing society and that within the technical framework of the Constitution, there has been a policy of making the States increasingly dependent upon the Centre. Also the States are often blamed for lack of responsibility and indifference towards financial discipline and resource mobilization. All this denotes the desirability of having sound and stable Centre-State financial arrangements and ensuring satisfactory working thereof.

In the light of the above, the present doctoral thesis, which is mainly based on the examination of the impact of judicial decisions on Centre-State financial relations in India, history of fiscal federalism and materials and data collected from reports of the various Finance Commissions, with special reference to State of Gujarat.

It is a novel and systematic empirical research at legal side, aimed at an analytical presentation of periodical federal transfers. The review and objective assessment of Finance Commission in India (covering award period from April, 1952 to March, 2005) highlight the progress of financial federalism in India, and evaluates its impact on growth of decentralisation and increasing demand of the States for greater financial autonomy. Also a critical appraisal of the Finance Commission transfers has been made with an eye to rectify regional economic imbalances in furtherance of providing social justice. The other transfers to the States through Planning Commission and Union Ministers has not included in this research thesis. Present scholar being a Law student, the study of legal aspects of federal state financial relationship under provisions of the Constitution is confined only to judicial reviews and transfers through statutory body – Finance Commissions.