# White Paper on Indian States (1950)/Part 3/Federal Scheme of 1935

Federal Scheme of 1935
47. The federal scheme embodied in the Government of India Act, 1935, was the first effort to provide for a constitutional relationship between the Indian States and the Government of India on a federal basis. One of the special features of this scheme was that, whereas in the case of the Provinces accession to the Federation was to be automatic, in the case of the States accession was to be voluntary and the establishment of the contemplated Federation was conditional on the accession of States entitled to fill not less than 52 seats in the Council of State, and having an aggregate population of not less than one half of the total population of the States.
48. The accession was to be effected by the King's acceptance of an Instrument of Accession, the terms of which made it clear that the Act asserted no authority over the State save such as flowed from the Ruler's freely-executed Instrument. The Instrument, which was to be the over-riding document, was to govern the accession and had to specify the matters on which the Federal Legislature was to have power to legislate for the State, and any limitations subject to which the legislative and executive power of the Federation was to be exercised in relation to that State.
49. The Instruments were to provide that a number of provisions of the Act, which were specified in the Second Schedule to the Act, might be amended without affecting the accession of the States, but no such amendment was to extend, unless accepted by the Rulers concerned, by means of supplementary Instruments, the functions exercised by any federal authority in respect of the States. Thus apparently any change in the basic structure of the Federation or any amendment materially altering provisions such as those relating to the position of the Governor-General in respect of External Affairs and Defence would have affected the accession of the States.
50. An important feature of this scheme was that the proposed Federation was to be composed of disparate constituent units in which the powers and authority of the Federation were to differ as between one ​constituent unit and another. Thus, whereas in the British India sphere of the proposed Federation, the whole field of legislative activity was mapped out by the Act between the Federal Legislature in British India and the Provinces of British India, and residual powers in the British India sphere of the proposed Federal Legislature were to vest either in the Federal Legislature or the Provincial Legislature at the discretion of the Governor-General, in the case of the States, federal powers alone were enumerated and the residuary powers remained with the States. Even so, the States were not required to accede on all matters specified in the Federal List; their acceptance of the various entries in this list could be made subject to such limitations as might be specified in the Instruments of Accession. Unlike the Provinces they were also to have concurrent jurisdiction in respect of matters specified in the Federal List, subject to the over-riding power of the Federal Legislature.
51. In the executive field too, the authority of the Federation, in its application to the States, was to be correspondingly circumscribed. The executive authority of the Federation was further sought to be limited by reservation of executive powers by the Rulers in their Instruments of Accession for which authority was found in Section 8(1)(c)(ii) of the Act. This implied the introduction into the Act of a theory of division of powers in the federal sphere itself. This was an arrangement patently anti-federal in the sense that it was utterly contrary to the principle of division of powers, legislative, executive and judicial found in every other federal constitution.
52. In the fiscal field also, there was no uniformity as between the States and the Provinces. The States were required to accede on very limited number of items such as customs and excise duties, corporation and salt taxes. Even in this field, there was a concession to the demand made by the States that they should contribute to the federal fisc in the form of indirect taxes only, enabling the States to pay appropriate contribution in lieu of taxes such as corporation tax. The unevenness of financial burden was inevitable in a set-up in which some of the federating units retained control over federal subjects such as armed forces and railways, etc.
53. In the judicial field also the jurisdiction of the Federal Court over the States was extremely limited. Internal constitution of the States was no concern of the framers of the Scheme of 1935. The fundamental rights which are the foundation of a democratic, State, found no place in ​the scheme. Even for the purposes of representation on the Federal Legislature, Rulers, and not the people, were to fill the seats allocated to the States. The Instruments of Accession were to guarantee the sovereignty and the rights of the Rulers and the Act excluded from its purview the "rights and obligations of the Crown in relation to the States". In fact, in spite of the provision in the Act authorising the Governor-General, to issue directives to the Rulers for the enforcement of the federal obligations of the States, it was thought that paramountcy would provide the ultimate sanction for the enforcement of the federal authority in the States. The scheme of 1935 thus lacked essential elements of a federal constitution. Lord Meston likened this scheme to the 'mixing of oil with water'. It was indeed no more than a mark-time plan which, had it been adopted, might or might not have paved the way for a full-fledged federal project.
54. The promulgation of the Act of 1935 was followed by protracted negotiations during the course of which the draft of the Instrument of Accession underwent several changes for the worse. However, till September 1939 when the suspension of negotiations was announced, the establishment of the contemplated Federation was not in sight. To the Princes much of the essence of Federation appeared to turn out to be the negation of all to which they had been accustomed. Their approach to the problem was governed by the view that their accession to Federation involved a process of levelling down so far as their internal sovereignty was concerned, as against the Provinces which were to be levelled up as autonomous units and that, therefore, the Provinces and States could not be treated alike. On the other hand, progressive public opinion in British India hardened against the apparent effort of the Princes to whittle down the content of their accession to a farce no less than against such reactionary features of the federal scheme as the installation of dyarchy at the Centre in the form of the reserved subjects in the hands of the Governor-General e.g. Defence and External Affairs. In the meantime, the Muslim League veered round to a position of determined hostility to all constitution plans which envisaged a common Centre for the whole of India. Finally the reactionary elements had their way and the federal scheme of 1935 proved still-born.