By RANBIR SINGH (PROFESSOR) & A LAKSHMINATH (PROFESSOR)

The Indian Constitution is the longest written Constitution in the world today. More than a legal document, it serves as a socio-economic manifesto of the Indian people. The essential structure of the Indian Government is of Federal or quasi Federal in character, the units having also certain powers as the Union itself. Part XII of the Constitution relates to the financial aspects pertaining to the Government at the Centre and the States while Part XIII lays down provisions relating to the freedom of trade, commerce and intercourse within the territory of India. The focus of this book will be on Part XII of the Constitution, along with an overview of Part XIII, since these two areas of the Constitution cannot be viewed in isolation from each other. Finance is the lifeblood of the economy of any Modern state. In every federation, the problem of allocation of the sources of revenue is difficult since two different authorities are raising from the same body of Tax payers. The basis of distribution of finance differs from federation to federation. Therefore, an analysis of the relations between the centre and state governments in different fields show their interdependence as well as autonomous nature. It is only an insightful study into the working of this part of the Constitution that will clear the haze surrounding concepts such as taxes, fees, fiscal relations, etc. and expose the true meaning of the term ‘federal fiscal relations.’

This book has been written in the backdrop of the law and economics movement that is steadily gaining momentum across the world. This concept is emerging, slowly but surely, from being something of mere academic significance, to one that has very practical real life applications. The works of Posner for instance have revolutionized the movement and have made the study of law and economics even more relevant in today\\\\\\\'s world. This is especially true when one undertakes a review of a topic as vast and complex as Part XII of our Constitution. This book undertakes a detailed review of the Constitutional provisions and the related judicial interpretation, which has been both praised and condemned in equal quantities. An analysis of the Reports of the various Finance Commissions and other Committees has also been done in order to provide the reader with a truly comprehensive view of the situation as it stands today. Alternatives to the existing scheme of distribution of revenues and a change in the system of fiscal relations has also been suggested with a view to maximize the efficiency of the monolithic structure that represents taxation and revenue gathering in India today. The present, rather confused state of our fiscal system can be attributed to the fact that we are a ‘Federation’ only in name.

Somewhere along the way, the zeal for vesting the Union government with overriding powers, and the perpetual need for a ‘strong’ Centre has ended up causing massive chaos in the mechanism for the collection of revenue, and the distribution of finances amongst the States. There is still a great degree of apprehension on the part of some to widen the States’ tax base, for example, and then of course there is the concept of inter-governmental tax immunities that has been criticised by many for being far too protective of the Centre\\\\\\\'s interests.

It goes without saying that reforms are desperately needed. Unfortunately, there continues to be a conflict between the Finance Commission and the Planning Commission, with the former, a statutory body under Article 280 of the Constitution, now almost being totally eclipsed by the latter. The lack of co-ordination between these two organs of the Government has in the past led to misallocation of resources as well as duplication of work. This book has also analysed the system of \\\\\\\'grants in aid\\\\\\\' and has revealed it to be an entirely arbitrary mechanism that is used more to satisfy ulterior political motives, than to provide succour to the poor States in our country. The dominant position of the Centre over the States in our ‘federal’ structure is unquestionable, and this fact is even more clearly brought out by the lopsided scheme of distribution of financial powers set out in the Constitution. Hence the common refrain that the States are akin to \\\\\\\'beggars who have to go with a begging bowl to the Centre\\\\\\\' every time that they are in need of any financial aid.

Published Year: 2005 Format: Hard Back ISBN: INAL17 Publisher: Lexis Nexis Butterworths Wadhwa Nagpur No of Pages: 520 Our Price: India. Rs. 595.00 Reviews: 0 reivew(s).

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