INDIAN ADMINISTRATION PAPER - II

INDIAN ADMINISTRATION PAPER - II

Material prepared according to the Textbook and Reference Books given in

the Syllabus

Subject Code : 18BPA62C

Prepared by : Dr. C. Esther Buvana,

Asst. Professor & Head

Department : PG & Research Department of

Public Administration

Contact No. : 9840881638

E-mail ID : [email protected]

SYLLABUS

Year Subject Title Sem. Sub Code

2018 - 19

Onwards Core 11 : Indian Administration Paper - II VI 18BPA62C

Objective

The aim of this paper is to familiarize the students the basics of the Constitution such as the

Preamble, Fundamental Rights and Directive Principles of state Policy. It will also enable

them to understand the various issues related to the Indian Administration. After completing

this paper the students will learn importance of integrity in the advance systems.

UNIT – I: CONSTITUTION OF INDIA.

Preamble-Fundamental Rights-Directive Principles of State Policy

UNIT- II: MINISTRIES - ORGANISATIONAL STRUCTURE AND FUNCTIONS

Ministry of Home Affairs: Ministry of Finance- Ministry of External Affairs- Ministry of

Defence.

UNIT-III: CONSTITUTIONAL INSTITUTIONS

UPSC-Election Commission- Comptroller and Auditor General of India, -Finance

Commission.

UNIT– IV: ISSUE AREAS-I

Generalist Vs. Specialist - Minister Secretary Relations- ARC-Central State financial

Relations.

UNIT– V: ISSUE AREAS-II

NITI AAYOG- Administrative Integrity -Corruption - Central Vigilance Commission – CBI -

Lokpal- Lok Ayukta

Textbook

1. Maheswar.S.R. Indian Administration, Orient longman Pvt-Ltd, New Delhi,2004.

Reference Books

1. Dr.Puri.K.R. Indian Administration, jawahar Book Publishing House, New

Delhi,2005.

2. Aeathi & awasthi, Indian Administration, Lakshmi Narain Agarwal, Education

Publishing,Agra,2001.

3. Basu,D.D, Introduction to the Constitution of India, Lex is NEXIS Publishers,

Gurgaon,2002.

4. Sharma,P.D. and Sharma B.M, Indian administration, Retrosted and Prospect,

Rawat Publication, Jaipur, 2009.

GENERALIST VS. SPECIALIST

Concept of Generalist and Specialist

Generalists secure their entry in administration on the basis of their university degree,

irrespective of the subjects in it. Their having attained a certain level of education indicates

the essential minimum extent of intellectual and mental development. Also the posting of a

generalist civil servant in any department of the government has nothing to do with his/ her

education or any administrative experience. For example, a generalist entrant with commerce

background can be posted in irrigation department.

In British, generalist means an amateur administrator who has had education in linguistics or

classics with a liberal education augmented by certain personal qualities of character, poise

and leadership, good intuitive judgment, right feelings, and a broad background rather than

narrowly specialised knowledge and skills.

Specialist is one who has special knowledge in some particular field. Specialists in

government, are, therefore, those who are recruited to posts for which professional, scientific,

technical or other specialist qualifications are essential and includes engineers, scientists,

doctors, lawyers, statisticians, economists and other technical people. To qualify as a

specialist, the basic requirement should be an 'institutional' speciality, that is to say, one must

have a pre-employment spell of either techno-professional academic education and/or pre-

entry vocational or occupational training. The hallmark of a specialist is, thus, said to be

devotion to the discipline, continued commitment to his / her professional cause and practice

and pursuit of a speciality.

Role in Governance

Role of Generalists: Generalists have a supreme role in the formulation of policy i.e. in

assisting the political executives to evolve it with all the requisite data and advice as to the

strong and weak points of a projected policy. It is the generalist, who functioning generally as

Secretary or Head of Department, does the coordinating job and takes the necessary

measures, even in specialised matters, before they are put up to the ministers who often are

not specialists in those fields. The role of generalists in such cases is one of the conveyor belt

which funnels right kind of data and advice in such a manner that it can be used by top policy

makers for action. The 'balancing' role i.e. performing reconciliatory function between

conflicting viewpoints, is also played by the generalists. This is possible because of their

capacity to view things in an overall perspective, generated on account of their non-specialist

background and exposure to wider fields of experience and administrative reality.

Role of Specialists: Due to the multiplication of developmental activities, there is a rising

demand to induct specialist like the technocrats, the scientists, the engineers, technicians and

doctors, etc in the Governance. These technocrats made a substantial contribution to the

country’s developmental efforts but they could not attain the coveted top positions in the

Central Secretariat. Specialist has learnt the subject from the trenches, hence can provide

competent leadership in a functional area. As economic reforms deepened and the state

started yielding to the market, the nature of administration changed, demanding domain

knowledge, especially at the policy level.

Controversy between the Two

The genesis of the 'generalist and specialist' controversy in India can largely be traced to the

concept of 'nearness' or 'remoteness' from the area of top policy making. It is more post-

centred rather than person-oriented, and the tussle between the two is in reality for holding

certain positions. The real debate should be around formulating a satisfactory and adequate

staffing policy or better still, evolving a progressive, constructive and objective-oriented,

egalitarian personnel philosophy.

The suitability of the generalist for all policy making positions is questioned by specialists on

the ground that the change in the functions of government in present times calls for certain

professionalism which is not possessed to such an extent by the generalists. Also by reserving

all senior managerial positions to the generalists especially to the IAS, a government is

deprived of the expert advice and specialized knowledge of the specialists.

However it is generally argued by the pro-generalists that the field experience gained by them

at the district and state levels in the initial years of their career helps them in the task of

decision making. But the specialists feel that this field experience is not sufficient to

discharge the multi-varied tasks of the government which requires special or expert

knowledge.

Another point of contention between the generalists and specialists comes from their being

organised into separate hierarchies. This leads to situations where the expert advice rendered

by the specialist is submitted to the generalist for his / her approval.

India's Second Five Year Plan mentions that 'distinction between administrators and technical

personnel exercising administrative functions, and / or between officials in different grades

and cadres which are sometimes drawn, are already out of place'. The Fourth Five Year Plan

is even more forthright in making a commitment for altering the structure of administration

so that specialists, technicians and experts may be enabled to make their contribution in a

reasonable manner at all levels of administration.

MINISTER SECRETARY RELATIONS

The relationship between the Minister and the Secretary is of critical importance to the

effective functioning of the machinery of government. The Minister is a professional

politician who comes to his office with a knowledge of what people expect from the

government and what they would not stand. He comes and goes, depending on the

fluctuations of party fortunes. He has to his credit legislative experience and, may be, some

governmental experience. The Secretary, on the other hand, is a permanent civil servant

possessing wide administrative experience. Each lacks what is best in the other and,

therefore, supplements the other. When, however, one over-steps, or does not perform his

role properly, friction, misunderstanding and disharmony are arisen, obstructing the smooth

running of administration. POLICY AND ADMINISTRATION: The Minister lays down the

policy and it is the duty of the Secretary to implement it. Even when a decision is made

orally, the Secretary must record it briefly but clearly to remove any possibility of ambiguity

and confusion. A policy can be formulated only on the basis of relevant information and data.

This is made available by the Secretary. The Secretary is the principal adviser to his Minister

and “he must advise his Minister without any fear or favour.” The Secretary should keep his

master fully informed of all important developments in the sphere of his responsibility. He

should show sensitiveness to the Minister‟s political and parliamentary responsibilities,

which are of no less importance. It is, however, not possible to separate policy – making from

administration completely. Both are, in practice, integrated with each other. A close and

intimate relationship must, therefore, exist between the Minister and his Secretary for the

good efficiency of the Minister. The Minister must have complete trust and confidence in his

Secretary and the latter must fully co-operate with his master and should respect his views

and share his worries. As the Minister is accountable to Parliament, the Secretary must

always bear in mind that he is only his adviser; the ultimate authority to take decisions on

policies must necessarily be with the Minister. As the Minister is a professional politician, he

necessarily carries a combination of popular, political and parliamentary responsibilities,

which he can afford to neglect only at the cost of undermining his political career. Among the

various duties of the Secretary, one, therefore, is to see that his Minister retains a favourable

public image outside. As the Minister has to decide on policies, he must be clear in his own

mind about what he wants to achieve during the period at his disposal and what his scheme of

priorities is. He must know, or soon make up his mind, on all important issues concerning his

ministry. QUALITIES OF A MINISTER: A Minister must be a good learner; he must

acquire a deep, if not complete, understanding and knowledge of the subject under his charge.

He must constantly remind himself that there are no substitutes or short cuts to industry and

application. Indeed, he should be made of strong moral, mental and physical virtues, and be

farsighted without becoming a mere visionary, firm without seeming rigid. “These qualities

he should wisely employ to warn, to comfort and to command,” said Morarji Desai. The

Minister should not try to appear arrogant and uncommunicative. He should cultivate the

habit of meeting the senior civil servants regularly and should encourage frankness in

discussions. He should be a profound listener. He is likely to obtain the best out of the civil

service if the later has a feeling that it gets a fair deal at the hands of the Minister and has a

participatory role in policy-making. Of course, the Minister should not allow the discussions

to continue endlessly. He must, after listening to all concerned, arrive at a decision. Sardar

Patel followed this practice which paid back so tremendously. N. V. Gadgil, who was a

Minister in the first Cabinet of free India, observes : “Sardar Patel was watchful regarding the

state of affairs in the government. He used to invite the Secretaries of the various departments

to tea or dinner almost every week by turn, listen to their problems and difficulties, and

advise and guide them. The civil servants were greatly encouraged by this and worked with

greater selfconfidence. The Cabinet had introduced the innovation of referring difficult

problems to committees of the Secretaries of the Ministers. This too has encouraged the civil

servants who considered the problems with enthusiasm and offered their suggestions. This

innovation was entirely Vallabhabhai‟s .” INTANGIBLE ELEMENTS: The relationship

between the Minister and his Secretary depends essentially on such intangible elements as

trust, confidence and understanding. By its very nature it cannot be completely expressed in

writings. “In a very real sense it is like the relationship existing between husband and wife –

close, intimate, personal, even psychic.” However, it is very easy to describe such an ideal

relationship than to practice it. “The advice given to the Minister by his Secretary today is not

always that which isin the best interest of the country but very often one which the Minister

may like. The Secretary quite often anticipates his Minister‟s wishes and then advises him

accordingly.” And yet the fact remains that the Secretary is regarded as the Secretary to the

Government as a whole, and not to his Minister alone. Slowly but steadily, however,

objectivity has been giving place to palatability at the hands of a civil service which enjoys

the unparalleled distinction of protection by the Constitution itself. The game was started by a

top few – perhaps at Delhi – but soon all levels seem to have mastered the technique. The

Minister often oversteps his legitimate function of policy-making and starts interfering in the

day-to-day administration. Thus, he undermines the sense of initiative and independence of

the civil service. A Minister should confine himself to his role of a policy-maker and leave

implementation of policy and day-to-day administration to his civil servants. But a popularly

elected Minister, who has necessarily an eye on the next election, is under pressure from

several groups and may desire a particular course of action on a certain issue. It is a duty of

the civil servant to warn him of the consequences that would flow from his desired action.

The Minister is, after all, a reasonable human being and may be convinced about the harmful

results of his proposal. If he remains firm and the civil servant thinks the desired course of

action to be harmful to public interest, he must put down his views in writing and wait for

and abide by the Minister‟s decision. The civil service must appreciate that the nation has,

through its Constitution, conferred on its bureaucracy a charter of privileges. This has been

done to reinforce the sense of independence and fairness of the civil service and such are the

occasions when these qualities are tested and the founding fathers‟ hopes proved true. Such a

tendency of not to offer advice without fear or favour has gradually spreaded to all levels in

the administration. Those who seek frank advice from their subordinates are not many, and

those who have the courage and frankness to offer advice are still fewer. This is a new,

discouraging phenomenon, not known to the preindependence administration when advice

was frankly given as well as sought. HISTORY OF MINISTER - SECRETARY

RELATIONSHIP: In India, historically, the politician – Minister – made his advent in the

machinery of Government for the first time in 1921, when the Montagu Chelmsford Reforms

of 1919 were implemented. For the first time in the administrative history of this country, the

Secretary was called upon to work under a lay Minister. The experiment of Minister -

Secretary relationship did not go off entirely without friction and conflict. Many of the

Ministers later complained before the Reforms Enquiry Committee (1924) about lack of co-

operation the part of the Secretary. One member of the committee admitted that : “despite the

general harmony which seems to have characterised the relation between the Ministers and

the Secretaries of their respective departments, the position has not been free from difficulty.

And there is reason to believe that some Ministers have considered themselves unduly

fettered.” After the passing of the Government of India Act, 1935, the question of the

Minister - Secretary relationship again came to the forefront - and more prominently. The

introduction of responsible government under this Act directly affected thefunctions and

status of the Secretary in three ways : Firstly, the Minister, who was to be from the public life

of the country, might not possess governmental experience. Moreover, he would certainly be

called upon to devote a considerable portion of his time to political, parliamental and public

duties. Secondly, the Minister was liable to change from time to time and, certainly, more

frequently than the Secretaries. Thirdly, the machinery of public administration, which was

the instrument for implementation of government’s policy, was to have a separate and

continuous existence of its own. The Minister’s accountability to the legislature implied the

undivided responsibility of the Secretary of the Ministry to the Minister. This was vital both

for departmental efficiency and discipline. A Committee on Organization and Procedure was

set up in 1937 which examined the question of proper relationship between the Minister and

his Secretary. It pointed out that the Minister had a right to expect advice based on the widest

administrative experience available in the department. The Secretary was the only officer in

the department qualified by experience to give such advice. The Minister, who was naturally

not in a position to attend to the day-to-day administration, expected administration to be

efficiently carried on. This was impossible to ensure if the control of the department under

the Minister was divided. The Secretary was the sole administrative head of the department

under the Minister, responsible to him for the implementation of the ministerial policy, and

the final adviser of the Minister on all administrative questions within the department. The

Committee held that the Minister had the freedom to consult experts or other departmental

officers on technical or even administrative questions but, at the same time, the Secretary was

to be always associated with such consultations and the final decision on such matters should

not be taken without giving the Secretary the opportunity of expressing his views. Moreover,

in view of the political, parliamentary and public pre-occupations of the Minister, the

Committee recommended that matters of only major importance should be referred to the

Minister for his decision. It must be noted that, at least during the early days of independence,

some of the civil servants had somewhat strange views in their mind about their own position

in the emerging administrative set-up. They found it rather difficult to act in complete

harmony and co-operation with the political element in the Government, namely, Ministers.

Sri Prakash, the former Indian High Commissioner in Pakistan, recalles the difficulties he

faced in getting his instructions implemented by an Indian Civil Service Officer who was his

deputy in the High Commission. Finding consolation in a similar sad experience by even

Jawaharlal Nehru, Sri Prakash wrote : “It would be interesting to recallfunctions and status of

the Secretary in three ways : Firstly, the Minister, who was to be from the public life of the

country, might not possess governmental experience. Moreover, he would certainly be called

upon to devote a considerable portion of his time to political, parliamental and public duties.

Secondly, the Minister was liable to change from time to time and, certainly, more frequently

than the Secretaries. Thirdly, the machinery of public administration, which was the

instrument for implementation of government’s policy, was to have a separate and continuous

existence of its own. The Minister’s accountability to the legislature implied the undivided

responsibility of the Secretary of the Ministry to the Minister. This was vital both for

departmental efficiency and discipline. A Committee on Organization and Procedure was set

up in 1937 which examined the question of proper relationship between the Minister and his

Secretary. It pointed out that the Minister had a right to expect advice based on the widest

administrative experience available in the department. The Secretary was the only officer in

the department qualified by experience to give such advice. The Minister, who was naturally

not in a position to attend to the day-to-day administration, expected administration to be

efficiently carried on. This was impossible to ensure if the control of the department under

the Minister was divided. The Secretary was the sole administrative head of the department

under the Minister, responsible to him for the implementation of the ministerial policy, and

the final adviser of the Minister on all administrative questions within the department. The

Committee held that the Minister had the freedom to consult experts or other departmental

officers on technical or even administrative questions but, at the same time, the Secretary was

to be always associated with such consultations and the final decision on such matters should

not be taken without giving the Secretary the opportunity of expressing his views. Moreover,

in view of the political, parliamentary and public pre-occupations of the Minister, the

Committee recommended that matters of only major importance should be referred to the

Minister for his decision. It must be noted that, at least during the early days of independence,

some of the civil servants had somewhat strange views in their mind about their own position

in the emerging administrative set-up. They found it rather difficult to act in complete

harmony and co-operation with the political element in the Government, namely, Ministers.

Sri Prakash, the former Indian High Commissioner in Pakistan, recalles the difficulties he

faced in getting his instructions implemented by an Indian Civil Service Officer who was his

deputy in the High Commission. Finding consolation in a similar sad experience by even

Jawaharlal Nehru, Sri Prakash wrote : “It would be interesting to recall that even the Prime

Minister had his own sad experience. He told me that high ranking Indian Civil Service

officers thought that the Government should be run according to their own directions, and

that he himself had a difficult time keeping them in check and getting his policies

implemented. When he had to encounter such opposition, the position of small folks like

myself can well be appreciated.” SOME EXAMPLES OF MINISTER - SECRETARY

CONFLICTS: In independent India an open conflict between the Minister - T.T.

Krishnamachari and the Finance Secretary - H.M. Patel - occurred for the first time in 1957.

The issue was the purchase of shares of certain private companies by the nationalized Life

Insurance Corporation of India. According to the Minister, the Finance Secretary only

„casually‟ mentioned to him about the purchase of these shares, whereas the Secretary

maintained that he had been acting all along with the knowledge and approval of the

Minister. The final result of this episode was that the Minister, on grounds of Constitutional

Responsibility of the Minister for any actions of the civil servants, resigned from his office.

And the Secretary too preferred retirement from government service, although he had been

eventually freed from all charges. Since the Minister is accountable to Parliament, should he

enjoy the freedom of choosing his Secretary ? A Minister inherits his Secretary, he does not

appoint him, although departures from this practice have been too frequent. N. V. Gadgil

observes : “I found that like the singer asking for a particular ‘tabalchi’, some ministers

insisted on having a particular Secretary.” A Secretary is supposed to serve any Minister with

equal competence, honesty and loyalty. There are, however, a few instances when a certain

Minister does not find his Secretary co-operative enough and asks for his replacement.

Decisions on a change of Secretary are, however, taken by the Prime Minister, who is the

head of the Council of Ministers. The question was forced to the surface in 1966 when

Gulzarilal Nanda, the Home Minister, complained of non-cooperation by the Home

Secretary, L. P. Singh, and had asked the Prime Minister, Mrs. Indira Gandhi, for his

replacement, twice. Both the times the Prime Minister did not accept the right of a Minister to

have his Secretary changed. “It was not always possible to accommodate minister in this

matter,” she said. The controversy ended with the Minister resigning from his office, the

Secretary remaining in position. On another occasion, she observed : “As far as the

appointment of the Secretary is concerned, that is a departmental affair. There is a special

Appointments Committee of the Cabinet which goes into the matter.” Such an attitude is

neither helpful nor constructive. As Parliament holds the Minister accountable, he may be

given the freedom of getting a Secretary changed with whom he finds it difficult to work.

This does not mean that the Minister should have unlimited freedom in getting the Secretary

of his choice. There should be a panel of names eligible for Secretaryship in Government and

a Minister‟s choice must, as a rule, be limited only to this panel. The Ministers themselves

are unlikely to change Secretaries frequently, for fear of public criticism. A significant

dimension was added to the Minister-Secretary relationship in 1969 when a Deputy Minister

of the Central Government felt „hurt‟ by certain remarks made by the Secretary of his

ministry. When this incident was discussed in the Lok Sabha, the Minister said that the

Secretary addressed him „in a hard tone‟ and in a „very objectionable‟ manner. Clarifying

the matter later, the Cabinet Minister in charge of the concerned Ministry told the Rajya

Sabha : “In the discussion that took place (between the Cabinet Minister, the Deputy Minister

and the Secretary), the Law that even the Prime Minister had his own sad experience. He

told me that high ranking Indian Civil Service officers thought that the Government should be

run according to their own directions, and that he himself had a difficult time keeping them in

check and getting his policies implemented. When he had to encounter such opposition, the

position of small folks like myself can well be appreciated.” Secretary raised his voice

perhaps to emphasise his point. This appeared to have hurt the feelings of the Deputy

Minister. I asked the Law Secretary to express regret. He did so in my presence and the

Deputy Minister said that he was satisfied with his expression of regret. He told the Law

Secretary and me that the matter may be taken as closed!” The curtain finally fell on this

episode without anyone - the Deputy Minister or the Secretary - losing his head! In 1987, one

more incident took place which was a unique in its own way. At a meeting of the Science &

Technology Co-ordination Committee which held in the second week of January 1987, the

Prime Minister Mr. Rajiv Gandhi insulted the senior officer like C.S. Shastry, the

Agricultural Secretary in the Central Government. The Committee had before it an agenda to

review the official programmes. But Rajiv Gandhi departed from the agenda and demanded

that Mr. Shastry should make a presentation on the National Dairy Development Board rather

than on edible oils as already scheduled. When Shastry reminded him of the agenda, the

Prime Minister ordered him to go out of the room and immediately issued oral instructions

reverting him to his parent cadre of Andhra Pradesh! Hardly had the ink dried when another

episode, extremely ugly and shocking, occurred. The occasion was a press conference which

the Prime Minister was addressing in New Delhi on 20th January 1987, and the victim was

the Foreign Secretary A. P. Venkateswaran. The Prime Minister was asked by the Pakistani

correspondent “when he would be visiting Islamabad, and he replied that he had no such

plan.” The correspondent reminded the Prime Minister that Foreign Secretary Venkateswaran

had said during his recent visit to Pakistan that the Prime Minister would be visiting the

capitals of other member countries including Pakistan in his current capacity as SAARC

chairman. The Prime Minister did not directly reply to the question, but remarked : “you will

be talking to the new Foreign Secretary soon.” Thus was Venkateswaran‟s removal

announced in a press conference! And the concerned officer was present at the conference in

his capacity as the Foreign Secretary taking notes of the proceedings! The audience was

shocked. Venkateswaran immediately rushed to his office in the Ministry of External Affairs

and submitted his resignation from the service with immediate effect. Inder Malhotra wrote in

The Times of India : “The sudden removal of the Foreign Secretary, A.P. Venkateswaran, has

shocked the entire governmental set-up, shattered the morale of the bureaucracy and aroused

very serious misgivings about the future pattern of government in New Delhi.” Such a public

and humiliating style of announcing ousters destroys whatever little civil service morale

survives. It also must not be forgotten that all these officers subjected to humiliating

treatment have been known for their honesty and integrity.

ADMINISTRATIVE REFORMS IN INDIA SINCE INDEPENDENCE

The Context for Reforms When India became independent in 1947, it faced problems of

partition, refugees, migiation, retirement of a great number of administrative personnel,

problem of integration of the princely States, etc. The new government adopted the ideology

of welfare of the people through socio-economic development, which led to a greater

proliferation of tasks and functions. To take up the welfare programmes and challenges, the

administrative machinery, which was inherited from the colonial regime and rendered weak

by erosive circumstances and stressful situations accompanying Independence, had to be

revamped and reinforced. Administration, as the instrument for designing and implementing

all the developmental programmes had to be restructured, reformed and renewed. Various

measures were taken up by the GO1 in administrative reforms. We will discuss these

measures now.

Secretariat Reorganisation Committee, 1947

The Government of India set up the Secretariat Reorganisation Committee in 1947, which

was headed by Girija Shankar Bajpai. The Committee enquired into the matters of personnel

shortages, better utilization of the available manpower and improvement of methods of work

in the Central Secretariat.

Shri N. Gopalaswamy Ayyangar Report, 1950

Shri N. Gopalaswamy Ayyangar conducted a comprehensive review of the working of the

machinery of the Central Government, which was presented in his report on 'Reorganisation

of the Machinery of Central Government'.

A.D. Gorwala Committe, 1951

In July 195 1, a Committee. headed by Shri .A.D. Gorwala in its Report on Public

Administration underlined the need for having a clean, efficient and impartial administration.

Paul. H. Appleby Reports, 1953 &I956 I In continuation of these efforts, the Government of

India invited an American expert, Mr. Paul. H. Appleby to suggest reforms in Indian

administration. Appleby submitted two reports. His first report namely 'Public Administration

in I India: Report of a Survey', 1953, dealt with administrative reorganisation and practices.

His second report namely, 'Re-examination of India's Administrative System with special

reference to Administration of Government's Industrial and Commercial Enterprises', 1956,

dealt with matters pertaining to streamlining organisation, work procedures, recruitment,

training in these enterprises. Among the twelve recommendations made, the Government of

India accepted two of his recommendations. First, related to the establishment of a

professional training institute, namely the Indian Institute of Public Administration for

promoting research in public administration. The second related to the setting up of a central

office to provide leadership in respect to organisation, management and procedures. As a

result, an Organisation and Methods (0 & M) Division was set up in March 1954, in the

Cabinet Secretariat for improving the speed and quality of the government business and

streamlining its procedures. 0 & M units and work-study units were set up in the Ministries /

Departments. The focus was on improving the paper work management and methods. A

Manual of office Procedure was prepared for all Ministries and Departments. Committee on

Plan Projects, 1956 In 1956, the Planning Commission set up a 'Committee on Plan Projects'

to evolve organisation norms, work methods and techniques, with a view to achieve economy

and efficiency in the implementation of the plan projects. In 1964, a Management and

Development Administration Division was also established as a part of this Committee to

promote the use of modem tools of management. It also undertook studies on problems

related to development administration at the district level.

Committee on Prevention of Corruption, 1962

The Committee was set up under the chairmanship of K Santhanam to study the causes of

corruption, to review the existing set up for checking corruption and to suggest measures for

improvement. The Committee stressed on the need for streamlining the procedures relating to

prevention of corruption and recommended the setting up of Central Vigilance

Commission(CVC).

Administrative Reforms Commission (ARC), 1966

The Administrative Reforms Commission was set up in January 1966 under the chairmanship

of K Hanumanthaiya. Its terms of reference was the widest as it covered the entire gamut of

public administration at the Centre as well in the States.

The ARC setup 20 study teams, 13 working groups and 1 task force. The committee gave 20

reports, making a total of 581 recommendations in a period spread over 1966-70. The first

ARC highlighted in its report on the following subjects:

• Machineiy of government of India and its procedures.

• Personnel administration

• Redress of citizens’ grievances

• Centre- state relations

• State administration

• Administration of Union Territories

• Machinery for planning

• Economic administration

• Finance, accounts and audit

• Delegation of financial and administrative powers.

• Railways

• Post and Telegraph

These led to major and minor changes in administration as well as paved the way for further

thinking, which led to more reforms. The major recommendations of the ARC are mentioned

below: It spelt out the tasks for the Department of Administrative Reforms. The Commission

suggested that the Department should concentrate on:

1) Undertaking studies on administrative reforms that are of a foundational nature;

2) Creating 0 & M expertise in the ministries and departments and providing training to

the staff in their 0 & M units in modem managerial techniques; and

3) Providing guidance to the 0 & M units in implementing the improvements and

reforms.

4) It recommended the reactivating of the 0 &M units in different ministries and

departments. It called for setting up of a special cell in the central reforms agency to

give effect to the reports of ARC; and

5) It stated that the central reforms agency should be research based in matters dealing

with the methods of work, staffing pattern and organisational structure.

Kothari Committee, 1976

The Committee on recruitment and selection methods under the chairmanship of Shri Kothari

was set up in 1976 by the UPSC to examine and report on the system of recruhent to All

India Services and Central Group A and B Services. The committee in its report

recommended for single examination for the AIS and Central Group A non-technical

services.

National Police Commission, 1977

The Commission was set up under the chairmanship of Shri Dharam Vira to examine the role

and functions of police with special reference to control of crime and maintenance of public

order, the method of magisterial supervision, the system of investigation and prosecution and

maintenance of crime records. The Commission made over five hundred recommendations

extending to a wide area of interest relating to police administration.

Economic Reforms Commission, 1981

The Commission was set up with L K Jha as the chairman. The main functions assigned to

the Commission related to the study of the important areas of economic administration with a

view to suggest reforms. The Commission submitted a number of reports to the Government

of India, which advocated the rationalisation and modernisation of the economic

administrative system to pave way for a new economic order.

Commission on Centre-State Relations, 1983

Mr. R S Sarkaria, was the chairman of this Commission. Its term of reference was to examine

and review the working of the existing arrangements between the union and states with

regard to powers, functions and responsibilities in a11 spheres and make recommendations as

to the changes and measures needed. National Commission to Review the Working of the

Indian Constitution, 2000- 03, under the Chairmanship of Chief Justice (Retd.)

Venkatacheliah, was set up to examine the working of the Indian Constitution.

Transparency and Right to Information

This provision in the Action Plan entails freedom of information to the public. This will

include amendments to the Official Secret Act, 1923 and Indian Evidence Act. The Freedom

of Information Act, 2003 has been passed. The Act seeks to provide freedom to every citizen

to secure information under the control of public authorities. It seeks to make government

open, transparent, responsive and accountable to the people. This Act provides easy access to

the people to all information relating to government activities and decisions except matters

relating to national security. Most of the States - Goa, Karnataka, Maharashtra, Delhi,

Rajasthan and Tamil Nadu- too have legislated the Right to Information.

Information and Facilitation Counters (IFCs) have been set up by ministries, departments and

organisations with large public interface in areas such as land records, passport, investigation

of offences, administration of justice, tax collection and administration, issue of permits and

licenses etc. information and Communications Technology based public service delivery has

helped in promoting accountability and transparency in administration.

Redressal of Public Grievances

Director of Grievances have been appointed in every ministry and department for redressal of

public grievances in the Central government. The time limits for disposal of public

grievances have been specified and software has been developed for computerized, web-

enabled and networked monitoring of public grievance redressal mechanism. A compendium

of guidelines has been published in this regard. Similarly, a Standing Committee of

Secretaries to Government of India has been set up under the chairmanship of the cabinet

secretary to monitor the public grievance redressal mechanism of the Central government. At

the State level, States like Madhya Pradesh, Tamil Nadu and Uttar Pradesh have made

institutional arrangements to monitor the redressal of public grievances by Chief Minister's

Secretariat. Likewise, Andhra Pradesh, Assam, Haryana, Madhya Pradesh, Maharashtra,

Rajasthan, Tamil Nadu and Uttar Pradesh have started special programmes and campaign for

taking administration to the people. Delhi has set up a Public Grievance Commission and

Assam and Madhya Pradesh have also set up a separate department for the same.

The Second Administrative Reforms Commission:

The Second Administrative Reforms Commission was set up on August 31, 2005 by the

government of India under the chairmanship of Shri. Veerappa Moily to prepare a detailed

blueprint for revamping the public administrative system. The commission was asked to

suggest measures to achieve a ‘proactive, responsive, accountable, sustainable and efficient

administrating for the country at all levels of the government.’ The terms of references of the

second administrative reforms commission are as follows:

• Right to Information Act

• Unlocking Human Capital

• Crisis Management

• Ethics In Governance

• Public Order

• Local Governance

• Capacity building for Conflict Resolution

• Combating terrorism

• Social Capital

• Refurnishing of Personnel Administration

• Promoting e-Govemance

• Citizen-Centric Administration

• Organizational structure of Government of India

• Strengthening financial management system

• State and District Administration.

Personnel Administration i. Personnel planning and organization for it. ii. Recruitment policy

and procedures, including selection techniques. iii. The Union Public Service Commission

and the State Public Service Commissions iv. Promotes policies and incentives v. Policies

and rules governing conduct and discipline to ensure efficiency, honesty and maintenance of

morale. vi. Training vii. The role of the Cabinet Secretary and the Ministries of Home Affairs

and Finance. viii. Personnel management for public sector enterprises

CENTRE STATE FINANCIAL RELATIONS

Articles 268 to 293 in Part XII of the Constitution deal with Centre state financial relations.

Besides these, there are other provisions dealing with the same subject. These together can be

studied under the following heads

Allocation of Taxing Powers

The Constitution divides the taxing powers between the Centre and the states in the following

way:

• The Parliament has exclusive power to levy taxes on subjects enumerated in the

Union List (which are 13 in number ).

• The state legislature has exclusive power to levy taxes on subjects enumerated in the

State List (which are 18 in number13).

• There are no tax entries in the Concurrent List. In other words, the concurrent

jurisdiction is not available with respect to tax legislation. But, the 101st Amendment

Act of 2016 has made an exception by making a special provision with respect to

goods and services tax. This amendment has conferred concurrent power upon

Parliament and State Legislatures to make laws governing goods and services tax .

• The residuary power of taxation (that is, the power to impose taxes not enumerated in

any of the three lists) is vested in the Parliament. Under this provision, the Parliament

has imposed gift tax, wealth tax and expenditure tax.

Articles related to Centre State Relations

Article No. Subject Matter

256. Obligation of states and the Union

257. Control of the Union over states in certain cases

257A. Assistance to states by deployment of armed forces or other forces of the Union

(Repealed)

258. Power of the Union to confer powers, etc., on states in certain cases

258A. Power of the states to entrust functions to the Union

259. Armed Forces in states in Part B of the First Schedule (Repealed)

260. Jurisdiction of the Union in relation to territories outside India

261. Public acts, records and judicial proceedings

262. Adjudication of disputes relating to waters of interstate rivers or river valleys

263. Provisions with respect to an inter-state Council

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. For example, the

income-tax is levied and collected by the Centre but its proceeds are distributed between the

Centre and the states.

Further, the Constitution has placed the following restrictions on the taxing powers of the

states:

(i) A state legislature can impose taxes on professions, trades, callings and employments. But,

the total amount of such taxes payable by any person should not exceed 2,500 per annum.

(ii) A 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. Further, the Parliament is

empowered to formulate the principles for determining when a supply of goods or services or

both takes place outside the state, or in the course of import or export.

(iii) A 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; or (b) consumed in the construction, maintenance or operation of any

railway by the Centre or by the concerned railway company or sold to the Centre or the

railway company for the same purpose.

(iv) A 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. But, such a law, to be effective,

should be reserved for the president’s consideration and receive his assent.

Distribution of Tax Revenues

The 80th Amendment Act of 2000 and the 101st Amendment Act of 2016 have introduced

major changes in the scheme of the distribution of tax revenues between the centre and the

states.

The 80th Amendment was enacted to give effect to the recommendations of the 10th Finance

Commission. The Commission recommended that out of the total income obtained from

certain central taxes and duties, 29% should go to the states. This is known as the ‘Alternative

Scheme of Devolution’ and came into effect retrospectively from April 1, 1996. This

amendment has brought several central taxes and duties like Corporation Tax and Customs

Duties at par with Income Tax (taxes on income other than agricultural income) as far as their

constitutionally mandated sharing with the states is concerned.

The 101st Amendment has paved the way for the introduction of a new tax regime (i.e.,

goods and services tax - GST) in the country.

Accordingly, the Amendment conferred concurrent taxing powers upon the Parliament and

the State Legislatures to make laws for levying GST on every transaction of supply of goods

or services or both. The GST replaced a number of indirect taxes levied by the Union and the

State Governments and is intended to remove cascading effect of taxes and provide for a

common national market for goods and services. The Amendment provided for subsuming of

various central indirect taxes and levies such as (i) Central Excise Duty, (ii) Additional

Excise Duties, (iii) Excise Duty levied under the Medicinal and Toilet Preparations (Excise

Duties) Act, 1955, (iv) Service Tax, (v) Additional Customs Duty commonly known as

Countervailing Duty, (vi) Special Additional Duty of Customs, and (vii) Central Surcharges

and Cesses so far as they related to the supply of goods and services. Similarly, the

Amendment provided for subsuming of (i) State Value Added Tax / Sales Tax, (ii)

Entertainment Tax (other than the tax levied by the local bodies), (iii) Central Sales Tax

(levied by the Centre and collected by the States), (iv) Octroi and Entry Tax, (v) Purchase

Tax, (vi) Luxury Tax, (vii) Taxes on lottery, betting and gambling, and (viii) State Surcharges

and Cesses in so far as they related to the supply of goods and services. Further, the

Amendment deleted Article 268-A as well as Entry 92-C in the Union List, both were dealing

with service tax. They were added earlier by the 88th Amendment Act of 2003. The service

tax was levied by the Centre but collected and appropriated by both the Centre and the States.

After the above two amendments (i.e., 80th Amendment and 101st Amendment), the present

position with respect to the distribution of tax revenues between the centre and the states is as

follows:

A. Taxes Levied by the Centre but Collected and Appropriated by the States (Article

268): This category includes the stamp duties on bills of exchange, cheques, promissory

notes, policies of insurance, transfer of shares and others.

The proceeds of these duties levied within any state do not form a part of the Consolidated

Fund of India, but are assigned to that state.

B. Taxes Levied and Collected by the Centre but Assigned to the States (Article 269):

The following taxes fall under this category:

(i) Taxes on the sale or purchase of goods (other than newspapers) in the course of inter-state

trade or commerce.

(ii) Taxes on the consignment of goods in the course of inter-state trade or commerce.

The net proceeds of these taxes do not form a part of the Consolidated Fund of India. They

are assigned to the concerned states in accordance with the principles laid down by the

Parliament.

C. Levy and Collection of Goods and Services Tax in Course of Inter-State Trade or

Commerce (Article 269-A): The Goods and Services Tax (GST) on supplies in the course of

inter-state trade or commerce are levied and collected by the Centre. But, this tax is divided

between the Centre and the States in the manner provided by Parliament on the

recommendations of the GST Council. Further, the Parliament is also authorized to formulate

the principles for determining the place of supply, and when a supply of goods or services or

both takes place in the course of inter-state trade or commerce.

D. Taxes Levied and Collected by the Centre but Distributed between the Centre and

the States (Article 270): This category includes all taxes and duties referred to in the Union

List except the following:

(i) Duties and taxes referred to in Articles 268, 269 and 269-A (mentioned above);

(ii) Surcharge on taxes and duties referred to in Article 271 (mentioned below); and

(iii) Any cess levied for specific purposes.

The manner of distribution of the net proceeds of these taxes and duties is prescribed by the

President on the recommendation of the Finance Commission.

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 (mentioned above). The proceeds of such surcharges go to the Centre exclusively. In

other words, the states have no share in these surcharges.

However, the Goods and Services Tax (GST) is exempted from this surcharge. In other

words, this surcharge can not be imposed on the GST.

F. Taxes Levied and Collected and Retained by the States: These are the taxes belonging

to the states exclusively. They are enumerated in the state list and are 18 in number. These

are18 : (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 or 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).

Distribution of Non-tax Revenues

A. The Centre

The receipts from the following form the major sources of non-tax revenues of the Centre: (i)

posts and telegraphs; (ii) railways; (iii) banking; (iv) broadcasting (v) coinage and currency;

(vi) central public sector enterprises; (vii) escheat and lapse;19 and (viii) others.

B. The States

The receipts from the following form the major sources of non-tax revenues of the states: (i)

irrigation; (ii) forests; (iii) fisheries; (iv) state public sector enterprises; (v) escheat and

lapse;20 and (vi) others.

Grants-in-Aid to the States

Besides sharing of taxes between the Centre and the states, the Constitution provides for

grants-in-aid to the states from the Central resources. There are two types of grants-in-aid,

viz, statutory grants and discretionary grants:

Statutory Grants

Article 275 empowers the Parliament to make grants to the states which are in need of

financial assistance and not to every state. Also, different sums may be fixed for different

states. These sums are charged on the Consolidated Fund of India every year.

Apart from this general provision, the Constitution also provides for specific grants for

promoting the welfare of the scheduled tribes in a state or for raising the level of

administration of the scheduled areas in a state including the State of Assam.

The statutory grants under Article 275 (both general and specific) are given to the states on

the recommendation of the Finance Commission.

Discretionary Grants

Article 282 empowers both the Centre and the states to make any grants for any public

purpose, even if it is not within their respective legislative competence. Under this provision,

the Centre makes grants to the states.

“These grants are also known as discretionary grants, the reason being that the Centre is

under no obligation to give these grants and the matter lies within its discretion. These grants

have a two-fold purpose: to help the state financially to fulfil plan targets; and to give some

leverage to the Centre to influence and coordinate state action to effectuate the national plan.”

Other Grants

The Constitution also provided for a third type of grants-in-aid, but for a temporary period.

Thus, a provision was made for grants in lieu of export duties on jute and jute products to the

States of Assam, Bihar, Orissa and West Bengal. These grants were to be given for a period

of ten years from the commencement of the Constitution. These sums were charged on the

Consolidated Fund of India and were made to the states on the recommendation of the

Finance Commission.

Goods and Services Tax Council

The smooth and efficient administration of the goods and services tax (GST) requires a co-

operation and co-ordination between the Centre and the States. In order to facilitate this

consultation process, the 101st Amendment Act of 2016 provided for the establishment of a

Goods and Services Tax Council or the GST Council.

Article 279-A empowered the President to constitute a GST Council by an order22. The

Council is a joint forum of the Centre and the States. It is required to make recommendations

to the Centre and the States on the following matters:

(a) The taxes, cesses and surcharges levied by the Centre, the States and the local bodies that

would get merged in GST.

(b) The goods and services that may be subjected to GST or exempted from GST.

(c) 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.

(d) The threshold limit of turnover below which goods and services may be exempted from

GST.

(e) The rates including floor rates with bands of GST.

(f) Any special rate or rates for a specified period to raise additional resources during any

natural calamity or disaster.

Finance Commission

Article 280 provides for a Finance Commission as a quasi-judicial body. It is constituted by

the President every fifth year or even earlier. It is required to make recommendations to the

President on the following matters:

• The distribution of the net proceeds of taxes to be shared between the Centre and the

states, and the allocation between the states, the respective shares of such proceeds.

• The principles which should govern the grants-in-aid to the states by the Centre (i.e.,

out of the Consolidated Fund of India).

• The measures needed to augment the Consolidated fund of a state to supplement the

resources of the panchayats and the municipalities in the state on the basis of the

recommendations made by the State Finance Commission.

• Any other matter referred to it by the President in the interests of sound finance.

Till 1960, the Commission also suggested the amounts paid to the States of Assam, Bihar,

Orissa and West Bengal in lieu of assignment of any share of the net proceeds in each year of

export duty on jute and jute products.

The Constitution envisages the Finance Commission as the balancing wheel of fiscal

federalism in India.

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; and

• A bill which imposes any surcharge on any specified tax or duty for the purpose of the

Centre.

The expression “tax or duty in which states are interested” means:

(a) a tax or duty the whole or part of the net proceeds whereof are assigned to any state; or (b)

a tax or duty by reference to the net proceeds whereof sums are for the time being payable,

out of the Consolidated Fund of India to any state.

The phrase ‘net proceeds’ means the proceeds of a tax or a duty minus the cost of collection.

The net proceeds of a tax or a duty in any area is to be ascertained and certified by the

Comptroller and Auditor- General of India. His certificate is final.

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. So far, no such law has been enacted 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. Any sums required for the purpose of making such loans are to be

charged on the Consolidated Fund of India.

• 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.

Inter-Governmental Tax Immunities

Like any other federal Constitution, the Indian Constitution also contain the rule of

‘immunity from mutual taxation’ and makes the following provisions in this regard:

Exemption of Central Property from State Taxation

The property of Centre is exempted from all taxes imposed by a state or any authority within

a state like municipalities, district boards, panchayats and so on. But, the Parliament is

empowered to remove this ban. The word ‘property’ includes lands, buildings, chattels,

shares, debts, everything that has a money value, and every kind of property–movable or

immovable and tangible or intangible. Further, the property may be used for sovereign (like

armed forces) or commercial purposes.

The corporations or the companies created by the Central government are not immune from

state taxation or local taxation. The reason is that a corporation or a company is a separate

legal entity.

Exemption of State Property or Income from Central Taxation

The property and income of a state is exempted from Central taxation. Such income may be

derived from sovereign functions or commercial functions. But the Centre can tax the

commercial operations of a state if Parliament so provides. However, the Parliament can

declare any particular trade or business as incidental to the ordinary functions of the

government and it would then not be taxable. Notably, the property and income of local

authorities situated within a state are not exempted from the Central taxation. Similarly, the

property or income of corporations and companies owned by a state can be taxed by the

Centre.

The Supreme Court, in an advisory opinion24 (1963), held that the immunity granted to a

state in respect of Central taxation does not extend to the duties of customs or duties of

excise. In other words, the Centre can impose customs duty on goods imported or exported

by a state, or an excise duty on goods produced or manufactured by a state.

Effects of Emergencies

The Centre-state financial relations in normal times (described above) undergo changes

during emergencies. These are as follows:

National Emergency

While the proclamation of national emergency (under Article 352) is in operation, the

president can modify the constitutional distribution of revenues between the Centre and the

states. This means that the president can either reduce or cancel the transfer of finances (both

tax sharing and grants-in-aid) from the Centre to the states. Such modification continues till

the end of the financial year in which the emergency ceases to operate.

Financial Emergency

While the proclamation of financial emergency (under Article 360) is in operation, the Centre

can give directions to the states: (i) to observe the specified canons of financial propriety; (ii)

to reduce the salaries and allowances of all class of persons serving in the state; and (iii) to

reserve all money bills and other financial bills for the consideration of the President.

References

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