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Editorials/Opinions Analysis For UPSC 26 March 2024

  1. Understanding what The Right to Equality Promises
  2. Debunking Claims of Fiscal Discrimination


The regulations of the Citizenship Amendment Act (CAA), 2019, were recently officially implemented. This legislation is currently under scrutiny in the Supreme Court, with claims that it breaches Article 14 of the Constitution. This presents a significant moment for the Court to potentially redefine not only the citizenship law but also its approach to assessing alleged infringements of the constitutional principle of equality.



  • Government Policies and Interventions
  • India and its Neighbourhood

Mains Question:

The Supreme Court now has an opportunity to reshape not just the citizenship law, but also the way in which it judges alleged violations of our constitutional guarantee of equality. Analyse in the context of the Citizenship Amendment Act (CAA), 2019. (15 Marks, 250 Words).

The Citizenship Amendment Act (CAA), 2019:

The foundation of India’s citizenship laws can be traced back to the constitution, specifically Articles 5-11, and the Citizenship Act of 1955, which outlined provisions for citizenship acquisition through birth, descent, registration, and naturalization.


The CAA amended the Citizenship Act of 1955 to grant eligibility for Indian citizenship to illegal migrants belonging to Hindu, Sikh, Buddhist, Jain, Parsi, and Christian communities from Afghanistan, Bangladesh, and Pakistan.

Definition of illegal migrants:

  • An illegal migrant is someone who enters India without valid travel documents or overstays beyond the permitted duration, potentially facing prosecution, deportation, or imprisonment.
  • Those belonging to the aforementioned communities who entered India on or before December 31, 2014, are not considered illegal immigrants, thus providing a pathway to naturalization.
  • However, the Muslim community is excluded from these provisions.


  • The amendment reduced the residency requirement from 11 years to 6 years for these communities to become eligible for Indian citizenship through naturalization.
  • Members of these communities are exempted from prosecution under the Foreigners Act of 1946 and the Passport Act of 1920.
  • Applicants from these communities are not classified as “illegal immigrants.”


The amendments concerning illegal migrants do not apply to specific tribal areas (under Sixth Schedule) in Assam, Meghalaya, Mizoram, and Tripura, as well as states regulated by the “Inner Line” permit under the Bengal Eastern Frontier Regulations 1873.

The Reasonable Classification Test:

  • The standard test used to assess these violations is the ‘reasonable classification’ test. Under this test, the Court evaluates whether there is a clear distinction between different groups and whether this distinction is directly related to achieving the government’s objectives.
  • During the parliamentary discussions on the Bill, the Home Minister asserted that it adhered to this test. According to him, it pertained to persecuted minorities who had sought refuge in India from neighboring countries, aiming to grant them full citizenship rights.
  • While this argument is legally plausible, one might argue that it should extend to other persecuted groups, such as the Ahmadiyya Muslims in Pakistan. Ordinarily, this would weaken the Home Minister’s argument.
  • However, historically, the Court has granted the state considerable leeway in potential violations of equality laws. For instance, in Charanjit Lal Chowdhury v. Union of India (1950), the Court stated that “the Legislature is free to recognize degrees of harm and it may confine its restrictions to those cases where the harm is deemed to be the clearest.” Applying this standard, the Citizenship Amendment Act (CAA) might be deemed constitutional.
  • This is where the dilemma arises. The classification test originated from U.S. jurisprudence in 1950 and has since undergone refinement and critique, becoming an integral part of equality law. It has evolved to the point where it is almost synonymous with our understanding of equality guarantees.

The Method of Application of the Reasonable Classification Test:

  • What often goes overlooked is that the classification test serves as a tool for the Court to determine whether state actions would breach equality. However, the true safeguard provided by the Constitution lies not in the test itself, but in how the test is applied.
  • Equality is a dynamic concept, and the reasonable classification test was devised to precisely address it. Yet, this precision isn’t always achieved. The Citizenship Amendment Act (CAA) may satisfy this test yet fail to align with our constitutional values.
  • The exclusion of certain persecuted minorities without apparent justification is troubling, particularly because it entails discrimination based on religion, contradicting the principle of secularism. The standard formulation of the classification test often fails to consider these nuances.
  • This isn’t to suggest that it’s incapable of doing so. Justice D.Y. Chandrachud, during the reading down of Section 377 of the Indian Penal Code, emphasized that Article 14 embodies significant values and reducing it to a mere classification exercise may overlook the essence of equality.
  • Other judges have also sought to strengthen the classification test. However, these efforts are temporary fixes. Either the test is adapted to produce fairer outcomes, or a new test emerges.

The ‘Manifest Arbitrariness’ Test:

  • The recent development of the ‘manifest arbitrariness’ test by the Court represents the latter response, but unfortunately, it lacks clear parameters.
  • Unlike the reasonable classification test, it lacks specificity, with the Court offering little guidance beyond defining “manifest arbitrariness” as actions lacking adequate determining policy or principle, a definition open to various interpretations. This vagueness isn’t ideal for a judicial test meant to define a nuanced concept like equality.
  • What is needed is a thorough reconsideration of what the right to equality entails. This doesn’t necessarily entail completely discarding the old test, but rather, it requires a radical overhaul.

Way Forward:

  • The Court must delve deeper than its current line of questioning. It must expand and refine the constitutional concept of equality.
  • The traditional notion of ‘treating equals equally and unequals unequally’ has revealed its shortcomings. This will involve a deeply theoretical exercise, but it’s essential for a more robust constitutional framework.
  • Additionally, the Court must pose more incisive queries to the state. For example, why have Ahmadiyya Muslims been excluded, and what is the precise number of immigrants from each country, categorized by religion?
  • Each of these inquiries will scrutinize the state’s purported justifications against this new conception of equality.
  • While such questions may be integrated into the classification test, they are not its fundamental components.
  • Their application relies on the Court’s active engagement with the principles emanating from Article 14. Leaving critical questions of constitutional law subject to such discretion is problematic and lies at the heart of the issue.


The current legal and constitutional challenge to the Citizenship Amendment Act (CAA) presents a timely opportunity for this endeavor because the Act contradicts several of our understandings of equality and the government’s obligations as dictated by the Constitution. Questions of such significance demand a clear differentiation between the principle itself and the method used to assess it. It is important to recognize that only the former is sacrosanct.


Several states, particularly those governed by opposition parties, particularly in southern India, have raised concerns about what they perceive as “discrimination” and “unfair” treatment in the current framework for sharing financial resources between the Union Government and the States.



  • Centre-State Relations
  • Indian Constitution
  • Co-operative Federalism
  • Constitutional Bodies

Mains Question:

The arguments raised by several states about discriminatory treatment in the current system of fiscal resource sharing between the Centre and the States appear flawed when analysed in depth. Comment. (10 Marks, 150 Words).

Fiscal Devolution:

  • Article 270 of the Constitution outlines the mechanism for distributing net tax proceeds collected by the Union government among the States.
  • These taxes include corporation tax, personal income tax, Central Goods and Services Tax (CGST), the Centre’s portion of the Integrated Goods and Services Tax (IGST), Central Excise Duty (CED) on petroleum products (excluding cess and surcharge levied by the Centre), and others. Collectively, these taxes constitute the ‘divisible pool’.
  • The allocation of these funds is determined by the recommendations of the Finance Commission (FC), which is constituted every five years as mandated by Article 280.

Concerns Associated:

Share in Overall Tax Revenue v/s Share in Total Expenditure:

  • The primary concern of the States revolves around the fact that they incur approximately 60 percent of the total expenditure (combined expenditure of the Centre and States), while their share of tax revenue in the total tax revenue is approximately 40 percent.
  • For example, in the fiscal year 2022-23, out of the total expenditure of approximately Rs 100,00,000 crore, States spent Rs 60,00,000 crore, while the remaining Rs 40,00,000 crore was spent by the Centre.
  • Regarding tax collection, out of the total proceeds (from both Centre and States) of about Rs 50,50,000 crore, States collected around Rs 20,00,000 crore, while the Centre collected Rs 30,50,000 crore.
  • However, this data alone doesn’t provide a comprehensive understanding. To achieve a fuller picture, it’s necessary to include the amount transferred by the Centre from its tax collection to the States based on the FC formula.
  • The current allocation for States from the ‘divisible pool’ stands at 41 percent, as recommended by the 15th Finance Commission (FC). During the fiscal year 2022-23, this amounted to Rs 950,000 crore, indicating that tax revenue with the states was Rs 29,50,000 crore, while the remaining net amount with the Centre, after transfer to the states, was Rs 21,00,000 crore.
  • Accounting for this adjustment, the States’ share in overall tax revenue comes to 58.5 percent, which closely aligns with their share in total expenditure, standing at 60 percent.

Cess and Surcharge Not a Part of The Divisible Pool:

  • Another concern relates to the cess and surcharge collected by the Centre, which does not contribute to the ‘divisible pool’ and thus is not shared with the States.
  • Between 2017-18 and 2022-23, there has been a 133 percent increase in the collection of major cesses and surcharges.
  • In the fiscal year 2022-23, these accounted for a quarter of the total taxes collected by the Centre.
  • States argue that due to their exclusion, they are only receiving 32 percent of the total tax receipts of the Centre, compared to the 41 percent recommended by the 15th FC. However, it’s essential to consider the purpose behind these cesses.
  • For instance, the GST Compensation Cess (GST-CC) is used for repaying loans taken to compensate States for the shortfall in tax collection due to GST implementation from 2017 to 2022.
  • As these funds are already being returned to the States, including them in the divisible pool would be redundant.
  • Similarly, the Road and Infrastructure Cess (RaIC), imposed on petroleum products, is specifically intended for building infrastructure projects like national highways and expressways.
  • Including these proceeds in the divisible pool and then arguing for a lower transfer to the states contradicts the purpose of levying the RaIC.
  • Therefore, considering that cesses and surcharges are earmarked for specific purposes, including their proceeds in the divisible pool and then contesting that the transfer to states is lower than the FC devolution percentage is not reasonable. States are receiving their rightful share in full from the Centre’s tax collection as per the FC award.
  • Furthermore, besides bolstering States’ tax revenue as per the FC devolution formula, the Centre also supports them on the expenditure side by contributing to centrally sponsored schemes (CSSs), where its share can range from 50 percent to as high as 90 percent, depending on the scheme.
  • Additionally, the Union government provides 50-year interest-free loans for financing capital expenditure, amounting to Rs 130,000 crore for the current fiscal year.

Discrimination in Horizontal Devolution:

  • A third concern raised by the southern States, particularly, revolves around what they perceive as blatant discrimination in the distribution of devolved funds among the States, commonly referred to as ‘horizontal devolution’ in Finance Commission terminology.
  • They argue that industrially developed States, including all southern States, receive significantly less than a rupee for every rupee they contribute to the Centre’s tax revenue, unlike States like Uttar Pradesh and Bihar.
  • For example, Karnataka receives only 46 paise for every rupee it contributes, while Uttar Pradesh receives Rs 1.79 for each rupee contributed by it.
  • However, this argument is flawed. It resembles the scenario of a high-income earner who contributes more to the government’s revenue (as it should be in a progressive tax system) but expects equivalent benefits in return. This proposition carries an inherent contradiction.
  • Similarly, a prosperous state like Karnataka, which contributes a rupee in taxes, should not necessarily anticipate a rupee in return. Successive Finance Commissions have adhered to this principle while formulating their recommendations.
  • The 15th Finance Commission (FC) employs various parameters with assigned weights to determine the share of states in the divisible pool.
  • These parameters include: 45 percent for income distance, 15 percent for population, 15 percent for area, 10 percent for forest and ecology, 12.5 percent for demographic performance, and 2.5 percent for tax effort.
  • “Income distance” refers to the disparity between a state’s income and the state with the highest per capita income.
  • States with lower per capita income, indicating a limited capacity to generate resources, are allocated a higher share to foster equitable and balanced development.
  • Consequently, “income distance” receives the highest weight of 45 percent, while population and area are each allocated a significant 15 percent, reflecting their substantial resource demands.
  • While the formula aims to support disadvantaged states, it also incentivizes states in better economic positions (in terms of per capita income and low population) by rewarding efforts to control population growth and enhance tax collection efficiency. The allocation of 15 percent weight to these efforts represents a well-balanced approach.
  • Additionally, such states receive post-devolution revenue deficit (PDRD) grants to address gaps in their Revenue Accounts following devolution.
  • The eligibility and amount of these grants are determined by the FC based on the disparity between a state’s assessed revenue and expenditure. The 15th FC recommended PDRD grants totaling approximately Rs 300,000 crore over the five years ending in FY 2025-26.


Opposition-governed states, particularly those in the southern regions, have expressed reservations regarding what they perceive as discriminatory practices in the current arrangement for sharing fiscal resources between the Central government and the States. However, as seen above, there are valid points that counter the argument that states are treated unfairly in fiscal transfers.

April 2024