Indian Federalism and Industrial Development

Abstract

Industrial development in India is primarily responsibility of Centre, but a federal systcm of government permits and requires States to play a significant role also. The most important factor in this study is that only Centre has enough financial resources and skilled personnel to implement large-scale industrial plans. Yet India is committed to a federal system and constitution requires division of respon? sibility between Centre and States. The Seventh Schedule of constitution lists Union, State and concurrent powers separately, but only those powers covering industry are pertinent here. Jurisdiction over industry is assigned to States, except for two important items. The Union List gives ihe Centre jurisdiction over industries (1) declared by Parliament to be necessary for defense or war and (2) the control of which by Union is declared by Parliament by law to be expedient in public interest.1 The second exception is a key one and has provided authority for Parlia? ment to pass Industries Development and Regulation Act of 1951, basic law governing most of subsequent steps taken by Centre. The constitution also assigns to States authority over production, supply and distribution of goods, but this, too, has a significant exception. The Concurrent List assigns jurisdiction to Union over produc? tion, supply and distribution of goods in those cases where control by Centre is deemed to be expedient in public interest.2 This is a broad statement which may include control by Centre over foodstuffs, including oils, cattle fodder, raw cotton and raw jute, and over labor5 price control and factory regulations. A consultant in public administration to Indian government has pointed out that Seventh Schedule confines India more rigidly than is apparent in any other important federal nation.3 He contends that Centre is severely handicapped in carrying out development programs because constitution assigns most powers and revenues to States.4 This position is an accurate one, particularly in that it warns that Centre may find itself short of constitutional authority to expand social welfare programs in future.5 At present, however, Centre dominates industrial projects and will do so as long as States must abdicate their constitutional responsibilities because of lack of resources. A prime example of how Union makes most use of its constitutional authority was passage of Industries Development and Regulation