Centre vs States — Who Controls What in India

The division of governmental power between India's central government and its 28 states and 8 union territories is set out in Article 246 of the Constitution, read with the Seventh Schedule. The Seventh Schedule divides all legislative subjects into three lists: the Union List, on which only Parliament may legislate; the State List, on which only state legislatures may legislate; and the Concurrent List, on which both may legislate, with central law prevailing in case of conflict. Union territories have no state legislature and are governed by Parliament even on State List subjects. Residuary powers — matters not covered by any of the three lists — belong exclusively to Parliament. This gives India's central government a structural advantage over comparable federations: not only does it have more subjects in its exclusive list, but it also controls the residuary category as new issues arise.

Representational Image: Centre vs States — Who Controls What in India

The Union List currently contains 100 subjects of national importance: defence, foreign affairs, atomic energy, railways, banking, insurance, currency and coinage, inter-state commerce, citizenship, and communication, among others. The State List contains 61 subjects of regional concern: public order, police, agriculture, land rights, public health, local government, roads, and education (prior to its transfer to the Concurrent List in 1976). The Concurrent List contains 52 subjects where both levels can legislate: labour law, criminal law and procedure, civil procedure, forests, economic and social planning, and price control, among others. The 42nd Amendment (1976) transferred five subjects from the State List to the Concurrent List — including education and forests — expanding central legislative reach during the Emergency period.

What You Need to Know

• The Union List currently has 100 subjects; the State List has 61; the Concurrent List has 52; residuary powers (matters in none of the three lists) vest exclusively in Parliament under Article 248 — making Parliament the legislator for all emerging domains including cyber law, artificial intelligence, and digital currencies.
• In case of conflict between central and state law on a Concurrent List subject, central law prevails under Article 254, unless the state law has received Presidential assent and is later over-ridden by a subsequent central law.
• Parliament may legislate on State List subjects in five exceptional circumstances: if the Rajya Sabha passes a resolution by two-thirds majority declaring the subject to be in the national interest (Article 249); during a national emergency (Article 250); with the consent of two or more states (Article 252); to implement international treaty obligations (Article 253); or when President's Rule is in operation in a state.
• The 101st Constitutional Amendment (2016) inserted Article 246A, which grants both Parliament and state legislatures concurrent power to legislate on GST — bypassing the conventional three-list structure; inter-state GST is Parliament's exclusive domain.
• The 16th Finance Commission (report submitted November 2025, implemented from April 2026) retained the states' share in the divisible pool of central taxes at 41% — unchanged from the 15th Finance Commission — meaning states receive 41 paise of every rupee collected in the central divisible pool, distributed according to criteria including population, income distance, and demographic performance.

How It Works in Practice

1. Union List — exclusive central domain: On Union List subjects, states have no legislative authority. Parliament's law on defence, foreign affairs, banking, railways, and atomic energy applies nationwide without any state modification. State governments administer many Union functions through central schemes, but they have no independent legislative authority in these domains.

2. State List — qualified state autonomy: On State List subjects — police, agriculture, land, public health, local government — states have primary legislative authority. But the exceptions for national interest (Article 249), emergencies (Article 250), and treaty implementation (Article 253) mean this authority is qualified rather than absolute. The Centre also influences State List administration through centrally-sponsored schemes, conditional grants, and all-India services (IAS/IPS/IFS officers who man both central and state bureaucracies).

3. Concurrent List — shared but Centre-dominant: Education, labour law, criminal procedure, and forests are Concurrent List subjects where both levels can legislate. When Parliament legislates comprehensively — as it did with the Labour Codes (2019–2020) consolidating 29 central labour laws — it effectively pre-empts significant state legislation on the same subject, even though states nominally retain concurrent authority.

4. Residuary powers — central advantage: India follows the Canadian rather than the American model: residuary powers vest in the Centre, not the states. This means every new domain of governance — cybersecurity, digital assets, platform regulation, space commercialisation, AI governance — starts as Parliament's exclusive territory unless a constitutional amendment transfers it to state competence.

5. Administrative and financial overlay: Even on subjects formally in the State List, the Centre exercises significant influence through: financial transfers (Finance Commission devolution; Centrally Sponsored Schemes where Centre sets conditions for state spending); all-India services (IAS/IPS officers who serve both Centre and states under central control); central regulatory agencies with state-level reach; and advisory roles of bodies like NITI Aayog. The formal division of subjects and the practical distribution of power are not identical.

What People Often Misunderstand

• India is not a federation like the US: In the US, residuary powers rest with states; in India, they vest in the Centre. This single design choice gives the Indian Centre a structural advantage in every domain not explicitly assigned to states, including all new technology and governance challenges.
• The Union List has more subjects than the State List: The Union List (100 subjects) outnumbers both the State List (61 subjects) and the Concurrent List (52 subjects); the most economically and security-significant subjects are in the Union List.
• "Concurrent" does not mean "equal": On Concurrent List subjects, central law prevails over state law in case of conflict; states can legislate differently from the Centre only if they get Presidential assent, and even that can be overridden by subsequent central legislation.
• The Centre can legislate on State List subjects through multiple routes: Articles 249, 250, 252, and 253 provide four distinct routes for Parliament to legislate on State List subjects; the practical boundary between Union and State competence is therefore more permeable than the formal three-list structure suggests.
• The Seventh Schedule has been amended multiple times: The 42nd Amendment (1976) transferred five subjects from the State List to the Concurrent List (including education and forests); the 101st Amendment (2016) created Article 246A for GST; the Constitution remains formally amendable in ways that can shift the legislative balance between Centre and states.

What Changes Over Time

The 16th Finance Commission's report (submitted November 2025, covering 2026–31) retained the 41% vertical devolution but introduced performance-based criteria giving greater weight to economic contribution — a shift from purely equalisation-based transfers that southern and better-governed states have advocated. The proposed 131st Constitutional Amendment on Lok Sabha seat expansion (introduced April 2026) has Centre-state implications for representation. GST's post-compensation era (after June 2022, when the five-year compensation guarantee expired) has created new fiscal federalism tensions as states adjust to revenue structures without the guaranteed growth floor.

Sources and Further Reading

• Constitution of India — Article 246: https://indiankanoon.org/doc/77052/
• Vajiramandravi — 7th Schedule of Indian Constitution: https://vajiramandravi.com/current-affairs/7th-schedule-of-indian-constitution/
• PRS Legislative Research — 16th Finance Commission Report: https://prsindia.org/policy/report-summaries/report-of-the-16th-finance-commission-for-2026-31
• Anantam IAS — Finance Commission: https://anantamias.com/finance-commission/

(This series is part of a long-term editorial project to explain the structures, institutions, and practical realities of governance in India for a global audience. Designed as a 25-article briefing cluster on Federalism, States & Centre–State Relations, this vertical examines how power, money, and authority are distributed between New Delhi and India's states — from the Seventh Schedule, fiscal federalism, GST, Governors, and central agencies to Centre–state disputes, regional parties, and the evolving balance of the Indian Union. Written in an accessible format for diplomats, investors, researchers, academics, journalists, students, policymakers, civil society organisations, and international observers, the series seeks to explain both the constitutional design of Indian federalism and the political realities through which it operates in practice. This is Vertical 4 of a larger 20-vertical knowledge architecture being developed by IndianRepublic.in under the editorial direction of Saket Suman. All articles are protected under applicable copyright laws. All Rights Reserved.)