In regard to centre-state relations, two important institutions, the Finance Commission and the Planning Commission, have tended to work in opposite directions. The Finance Commission strives to ensure the financial autonomy of the states so that they may fulfil satisfactorily the functions assigned to them by the constitution.

The Planning Commission brings the states into a national plan frame and leaves them hardly any sphere which they may call their own so that the country may move, without deviation or distortion, along the path of planned development of the Planning Commission's conception. This paper first outlines how successive Finance Commissions have striven to preserve and promote the federal character of the Indian union and then examines how successive Planning Commissions have imposed and promoted unitary elements in the system.

THE Indian constitution does not explicitly use the term 'federation'. Instead, Article 1 declares that India that is Bharat shall be a Union of states. B R Ambedkar explained that in this the drafting committee had merely followed the usage in the preamble to the British North America Act, 1986.

Of course, that does not make India a unitary state. The basic difference between a unitary system and a federal system is that, while in the former the demarcation of powers between the national and the sub-national governments is made by the national government, in the latter this demarcation is made by a written constitution which is the source of authority of the national and the sub national governments both.

This is true of the Indian constitution. In its Seventh Schedule, the constitution lays down in great detail, in three lists, namely the union list, the state list and the concurrent list, the distribution of legislative powers between the union and the states Moreover, it recognizes that the division of the legislative powers must be supported by a division of financial powers and demarcates the spheres of taxation into two lists, a union list and a state list, to be exploited independently and exclusively by the union and states.

Further, anticipating that the revenues of the states from taxes in the state list may fall short of the states' expenditure on functions assigned to them, the constitution provides a comprehensive arrangement for sharing between the union and the states the revenues from some of the taxes in the union list.

For this purpose, it requires that an independent finance commission shall be appointed at the end of every fifth year or earlier if the president considers it necessary The recommendations of the commission are generally honoured Evidently, these arrangements have so far worked well and the federal intentions of the constitution have been fulfilled reasonably satisfactorily. The Ninth Finance Commission has been recently appointed But