The States and Federation

(Minister, Indore)

On account of the inclusion of the Indian States in the Federation, the greatest change in the relation of India with Great Britain that is proposed to be brought about is that instead of there being a Governor-General in Council, he will be freed from the council and he will also act in the name and style of Viceroy for the purely British Provinces and Indian States respectively. Thus if in some matters a seemingly more than existing popular control is proposed, the principle of the Morley-Minto reforms in associating the natives of the country in the governance of the Empire has been given up.

Similarly the preamble of the ‘Proposals’ brings the Indian States within the orbit of the Constitution. As will be seen in the sequel, the assurance conveyed in the following two paragraphs in the proposals are illusory. Already there exists a tacit distinction between the States in India, e. g., Nepal, and the Indian States, e.g., Kashmir. If troops have to be marched into the former territories, under the existing Act the sanction of Parliament has to be obtained. No such sanction was required when troops were marched into Alwar, the other day. Unlike the former, Orders in Council extend to the territories of the Indian States. All these together with the other undefined ramifications of paramountcy will now be embodied in an Act of Parliament, which it alone can modify.

"The States, though under the suzerainty of the King-Emperor, form no part of His Majesty's dominions." Yet the following condition is unambiguous. "Full liberty will, of course, be reserved to the Crown to refuse to accept the accession of any State to the Federation if it is sought on terms incompatible with the scheme of federation embodied in the Constitution Act." Moreover, the powers of the Crown are now to be conferred on the Governor-General in relation to the States outside the federal sphere. While the former quotation will lead to the substantial modification of the treaties, the latter will once for all settle the claims of the Indian States to direct relations with the Crown, viz., that they can go no further. Even an appeal to Parliament will thus be barred. This fact is again emphasised when explaining the special responsibilities of the Governor-General in respect of the item, "The Protection of any Indian State."

Coming now to the law-making power of the Federation, it is significant that while the provincial legislatures have the power to make laws to meet local conditions, such a power is not only not given to the Indian States but this fact is emphasised by the provision that "if any provision of law of a State is in conflict with the Federal legislature" present or future, the former shall give way to the latter. Further, "the Governor-General shall be entitled, by inspection or otherwise, to satisfy himself that an adequate standard of administration is maintained." He will also issue orders in this behalf.

The administration of the Railway Board is proposed to be incorporated in the Constitution Act. It controls revenues almost as large as the rest of the revenues of India. Admittedly it is a commercial concern in which much private capital, in addition to the public moneys, is employed. The policy latterly has been to nationalise the railways. In these circumstances it is improper to remove the control over the railways for ever from the future autonomous government of India. However liberal the constitution of the Board may be, even including members belonging to the Indian legislature, the scheme is outrageous.

Next to law-making is the extension of the jurisdiction of the Federal Court in the territories of Indian States, which can be regarded as an intrusion into their sovereignty rights. A judge of a State Court will be eligible for being appointed judge of the Federal Court, although it is not clear whether a practising pleader in a State High Court will be eligible for appointment as a judge, like his brother practitioner in British India. The Federal Court will hear appeals from the decisions of the State Courts on questions of the interpretation of the Constitution and rights under it in abstract, although in money matters beyond a certain sum it will require the leave of the lower court. Will appeals below that sum be heard without such leave being granted? The writ of the King Emperor, which does not at present run through the whole of India, will in future do so. The powers of the Governor-General to make any reference to the Federal Court for consideration, whatever that may mean, and opinion, are unlimited.

The first point to be noticed as regards finance is that all claims of the State, perhaps as found by the Davidson Committee, will be met from the duties on Salt, Federal Excise and Export duties only, but obviously the import Sea Customs duties will not be touched.

Although it will not be obligatory on any State to levy a particular federal tax within its territories, it must make a proportionate contribution to the federal government, apparently from its general revenues, if it is unable to levy the federal tax. The same applies to the corporation tax.

These powers of the federal government, coupled with enhancement of its powers in respect of borrowing, will make the finance in Indian States confined to a more limited extent than now. There is a corresponding advantage of having its loans guaranteed by the Federation. But this is a doubtful advantage since the financial control of the federal government will be complete.

Even at the commencement of the Federation, Corporation and Income Taxes will be federal throughout. As already pointed out, the States may make proportional contributions directly. While under these arrangements the provinces will receive subventions to meet their deficits, no such help will be extended to the States.

The implications of what has been stated in the preceding paragraphs become still more significant both as regards the provinces and States when the subjects under the special responsibility of the Governor-General (and of the Governors too) are examined. His sphere under that head will extend to the entire Federation. Curiously under them figures the protection of the rights of the Indian States, presumably against the provinces, but they will have, no protection from the inroads of the Governor-General in other matters in which they are at present subject only to diplomatic representations.

Of these special responsibility matters, No. (1) prevention of grave menace to the peace or tranquility of India, is already an all-India matter under the control of the Governor- General in Council. It extends to Indian States too. Then No (2) safeguarding of the financial stability and credit of the Federation, may, with other provisions foreshadowed, give room for interfering in the financial conditions of the Indian States to the Governor-General alone.

The clauses regarding commercial discrimination are likely to be applicable to the States too. Already in their treaties there are terms making it obligatory on them to obtain the permission of the British Government before employing an European or an American. And by political practice it is laid down that before the State grants any concession of a commercial nature to a foreigner, it should first obtain the advice of the Paramount power. The enforcement of this practice has varied with circumstances and the strength of the State administration. It seems that under the new order of things it will be legalised and will become uniform.

It is a well known law that the currency policy of a State governs the economic life of its people. Since this department will be controlled by the proposed Federal Bank, it follows that he who governs it, will shape the economic life of India. It is evident that there should not be Violent fluctuations in it; it should progress in an orderly manner. Consequently it should not be too much under the thumb of leaders of parties. All the same, the Indian States, no less than British India, should have a substantial hand in framing and leading its destiny. Too much stress can be laid on keeping it sacrosanct.

Some Princes of India appear to have formulated safeguards under eighteen heads as a condition precedent to their entering the Federation. The list discloses that some have been formulated prior to, or without studying the White Paper, some fall under the category of paramountcy, yet there are others which strike at the very root of federation and there are only a few which could be incorporated in the Constitution.

Among the eighteen safeguards referred to in the preceding paragraph, one refers to a Confederation of States. It appears that such confederation is to come into existence for the purpose of electing only members to the legislatures. For such a modest aim the word ‘confederation’ is pompous. ‘Union’ will be more appropriate. But in order to escape from certain consequences of a federation which are vaguely foreshadowed in the eighteen points, a confederation is really wanted. But it should be much more of a union than what is roposed. Moreover this is the time, that is to say, when new instruments of accession have to be forged, to have provision made for a real confederation. It will lay down uniform actions for many matters of common interest which alone will give stability to the tottering structure of the Indian States and not the safeguards which are founded upon the support of a foreign power, which is subject to many changes. Some of these eighteen points are deserving of immediate consideration, i.e., as regards normative and concurrent legislation and are capable of being granted at once. But the only thing which will give complete freedom to an unit of federation., especially a State claiming full internal sovereignty, is the right to secede after due notice. The claim to keep the army independent is another right, but it will be hardly compatible with the federation under consideration, since the States have already placed limitations upon it by their treaties. It will not be possible nor advisable to go over it, in the new instrument of accessions. It is not too much to say that the eighteen points are ill-conceived, badly mingled, promiscuously mixed and will fail to achieve their object.