(1) There shall be charged on the Consolidated Fund of India in each year as grants-in-aid of the revenues of the States of Assam, Bihar, Orissa and West Bengal, in lieu of assignment of any share of the net proceeds in each year of export duty on jute and jute products to those States, such sums as may be prescribed.

 

(2) The sums so prescribed shall continue to be charged on the Consolidated Fund of India so long as any export duty on jute or jute products continues to be levied by the Government of India or until the expiration of ten years from the commencement of this Constitution whichever is earlier.

 

(3) In this article, the expression “prescribed” has the same meaning as in article 270.

Debate Summary

Draft Article 254, Draft Constitution of India 1948

Notwithstanding anything in article 253 of this Constitution, such proportion, as Parliament may by law determine, of the net proceeds in each year of any export duty on jute or jute-products shall not form part of the revenues of India, but shall be assigned to the States in which jute is grown in accordance with such principles of distribution as may be formulated by such law:

Provided that until Parliament so determine, there shall be assigned to those States out of the net proceeds of the duty in each year such part thereof and in such proportions as may have been fixed in that behalf by any order made under the Government of India Act, 1935, and in force immediately before the commencement of this Constitution.

 

Draft Article 254 (Article 273, Constitution of India 1950) was discussed on 8 August 1949 in the Constituent Assembly. The Draft Article provided that a portion of the export duty imposed on jute and jute-products by the Union government will be allocated to States in which jute was grown. The percentage and manner of allocation of the export duty to the States were to be determined by Parliament through legislation.

 

The Chairman of the Drafting Committee proposed an amendment to replace the Draft Article to provide that a certain sum of money will be withdrawn from the Consolidated Fund of India every year as aid to Bengal, Bihar, Assam and Orissa instead of assigning a fixed percentage of the export duty on jute and jute products. The President would determine the amount to be charged on the Consolidated Fund of India and the aid would be given to these States for a maximum time period of 10 years. 

 

The Chairman of the Drafting Committee proposed the amendment because he believed export duty was a part of the revenue of the Union government. He acknowledged that some revenue was given to certain State governments under the Government of India Act, 1935 because jute was an important commodity in these regions. However, he stated that the continuation of such an exception would propel other States to demand a similar arrangement for other important commodities and these demands would be detrimental to the interests of the Union government. Instead of abruptly discontinuing this exception which would affect the specific States, he proposed a gradual reduction of allocating Union revenue to these State governments.

 

A Member argued that the proposed amendment to the Draft Article should include an export duty on tea as well since tea is an important commodity in Assam.

 

Some Members opposed the amendment on the grounds that it affected the interests of States like Bengal disproportionately. A Member stated that the 10-year limit was arbitrary and it would affect the financial commitments made by certain States based on the revenue to be derived under Draft Article 254. A member proposed that States should be given a greater degree of freedom in determining tax structures.

 

After heated debate, the Assembly accepted the proposed amendment.

 

Another member proposed a minor amendment to the amendment proposed by the Chairman of the Drafting Committee - to empower the Parliament to decide the amount to be allocated to certain States instead of the President. This amendment was rejected.

 

The Draft Article, as amended, was adopted on 8 August 1949.