Part XI of the Indian constitution specifies the distribution of legislative, administrative and executive powers between the union government and the States of India.
This includes: defense, armed forces, arms and ammunition, atomic energy, foreign affairs, war and peace, citizenship, extradition, railways, shipping and navigation, airways, posts and telegraphs, telephones, wireless and broadcasting, currency, foreign trade, inter-state trade and commerce, banking, insurance, control of industries, regulation and development of mines, mineral and oil resources, elections, audit of Government accounts, constitution and organisation of the Supreme Court, High courts and union public service commission, income tax, customs and export duties, duties of excise, corporation tax, taxes on the capital value of assets, estate duty and terminal taxes.
Uniformity is desirable but not essential on items in this list: maintaining law and order, police forces, healthcare, transport, land policies, electricity in the state, village administration, etc.
The list mentions: marriage and divorce, transfer of property other than agricultural land, education, contracts, bankruptcy and insolvency, trustees and trusts, civil procedure, contempt of court, adulteration of foodstuffs, drugs and poisons, economic and social planning, trade unions, labour welfare, electricity, newspapers, books and printing press NS stamp duties.
In case the above lists are to be expanded or amended, the legislation should be done by the Parliament under its constituent power per Article 368 with ratification by the majority of the states.
State government has no role in implementing the matters falling in Union List unless mutually agreed upon per Article 258.
[6] The President of India constitutes a Finance Commission every five years to recommend devolution of Union revenues to State governments.
However, no guidelines define "financial emergency" for the country or a state or union territory or a panchayat or a municipality or a corporation.
However, Article 262 excludes Supreme Court jurisdiction with respect to the adjudication of disputes in the use, distribution or control of interstate river waters.
[8] The state of Jammu and Kashmir had (until it was abolished by Union Government on 5 August 2019) a separate set of applicable laws under Article 370 a temporary article of the Constitution of India, read with Application to Jammu and Kashmir Order, 1954 (Appendix I and II).
[9] The Government of India could declare a state of emergency in Jammu and Kashmir and impose Governor's rule in certain conditions.
[12][13][14][15] In 1991 the Supreme court passed a landmark judgement acknowledging misuse of the article and establishing principles for the Union government to follow before a state emergency can be invoked.
These states lost their competitive advantage of holding mineral resources, as factories could now operate anywhere in India.
In 1996, the Commerce & Industry Minister of West Bengal complained that "the removal of the freight equalisation and licensing policies cannot compensate for the ill that has already been done".
[20] National laws permit a private/public limited company to raise loans internally and externally to its capacity.
The Fiscal Responsibility and Budget Management Act, 2003 limits state borrowing even when they have not defaulted/faced a financial emergency.
The employees' salary and pension expenditure of many state governments exceed their total revenue, without the President declaring a financial emergency.
Article 47 of Directive Principles of the state policy prohibits intoxicating drinks that are injurious to health but is not enforced.