Grants from the Union

Introduction 

Article 275 of the Indian Constitution establishes the mechanism for grants-in-aid from the Union to States requiring financial assistance, serving as a crucial pillar in India's federal financial framework. This provision embodies cooperative federalism, recognizing the Union's responsibility to support States facing fiscal challenges or developmental needs. The constitutional framers understood that targeted financial support would be necessary to address diverse regional needs, particularly for areas with tribal populations or backward regions, ensuring balanced development across the nation. 

Article 275: Grants from Centre to States 

• Primary Grant Mechanism: 
  • Article 275 establishes that Parliament may, through legislation, provide for specific sums to be charged on the Consolidated Fund of India as grants-in-aid to States determined to need assistance.  
  • This discretionary power allows the Union to respond flexibly to varying state requirements, with the provision that different amounts may be allocated to different States based on their specific circumstances and needs. 
  • The article operates on the principle of need-based allocation rather than formula-based distribution, distinguishing it from other financial provisions in the Constitution.  
  • This approach enables targeted intervention where States face challenges in generating sufficient revenue to meet their expenditure requirements or developmental obligations. 
• Special Provisions for Scheduled Tribes and Areas: 
  • The first proviso to Article 275 mandates specific grants for the welfare of Scheduled Tribes and the improvement of administration in Scheduled Areas. 
  • Under this provision, the Union must provide both capital and recurring grants to enable States to implement development schemes approved by the Central Government. 
  • These schemes focus on promoting tribal welfare and elevating the administrative standards of Scheduled Areas to match those prevailing in other parts of the State. 
  • This provision reflects the Constitution's commitment to protecting and advancing the interests of India's tribal communities. 
  • It ensures that States with significant tribal populations receive adequate financial support to address the unique challenges faced by these communities and to bridge the developmental gap between tribal and non-tribal areas. 
• Assam-Specific Provisions: 
  • The second proviso contains special provisions for Assam, recognizing the state's unique historical and administrative circumstances. It mandates grants equivalent to the average excess of expenditure over revenues in tribal areas during the two years preceding the Constitution's commencement, along with funding for approved development schemes in these areas. 
  • Clause (1A), added later, addresses the scenario of autonomous state formation under Article 244A. It provides for the apportionment of grants between Assam and any newly formed autonomous state, ensuring continuity of financial support during administrative transitions. 
• Presidential Powers and Parliamentary Override 
  • Clause (2) establishes an interim mechanism where the President can exercise powers under Article 275 until Parliament makes specific provision through legislation. However, this presidential authority is subject to parliamentary override, maintaining the supremacy of legislative power in financial matters. 
  • The clause also mandates consultation with the Finance Commission before the President issues any orders under this provision, ensuring that grant decisions are informed by expert analysis of fiscal conditions and requirements. 

Conclusion 

Article 275 represents a sophisticated approach to addressing fiscal imbalances and developmental disparities within India's federal system. By providing flexibility in grant allocation while establishing specific obligations toward tribal communities and backward areas, it balances discretionary power with constitutional mandates for inclusive development. The article's emphasis on parliamentary oversight and Finance Commission consultation ensures that grants serve genuine developmental purposes, making it a vital instrument of India's fiscal federalism that promotes balanced regional development and social justice.