Amendment Power, Article 368, Runj Formula, Basic Structure, CAG, and Finance Commission
The power to amend the Constitution is one of the most distinctive features of the Indian constitutional framework. Unlike the United States where a two-thirds supermajority in both Houses of Congress and ratification by three-fourths of states is required for most amendments, or the United Kingdom where Parliament can amend any law including the fundamental law with a simple majority, India has a middle path: a flexible amendment procedure that allows parliamentary supermajority to change most provisions but preserves certain basic features from destruction by constitutional amendment. Article 368 of the Constitution provides the procedure for amending the Constitution, and the Supreme Court’s interpretation of this provision, particularly in the Kesavananda Bharati case in 1973, established the basic structure doctrine that has defined the limits of constitutional amendment in India. For the RAS examination, understanding the amendment procedure, the basic structure doctrine, the special position of certain provisions that cannot be amended without state ratification, and the constitutional bodies like the CAG and Finance Commission that operate independently of the political executive, is essential.
The Constitution of India is notably easier to amend than the US Constitution but more difficult to amend than the UK statute. Most provisions can be amended by a simple majority of both Houses of Parliament (a majority of members present and voting, not necessarily a majority of the total membership). Some provisions require a special majority (two-thirds of members present and voting in each House, plus an absolute majority of the total membership). A few provisions require not just a special majority in Parliament but also ratification by half of the state legislatures. This graduated system of amendment reflects the federal character of the Constitution and the desire to protect certain features from casual parliamentary majorities. The basic structure doctrine adds a qualitative limit on amendment power: even the most procedurally correct amendment can be struck down if it destroys the essential features of the Constitution. This doctrine has made the Indian Supreme Court one of the most powerful constitutional courts in the world in terms of its authority to review the substance of constitutional amendments. The CAG and Finance Commission are independent constitutional bodies that provide financial oversight and recommend fiscal transfers respectively, ensuring that federal financial relations are conducted on principled grounds rather than pure political bargaining.
🟢 Lite — Quick Review (1h–1d)
Article 368 provides the procedure for amending the Constitution. Not all amendments go through Article 368. Some provisions of the Constitution can be amended by a simple parliamentary majority without going through Article 368 (for example, certain changes to the议会 lists in the Seventh Schedule). These are considered minor changes that do not affect the basic structure of the Constitution.
The three categories of amendments under Article 368 are as follows. First, certain amendments require only a simple majority of both Houses of Parliament (not the special majority requirement of Article 368 itself). Second, most amendments require a special majority: two-thirds of members present and voting in each House, plus an absolute majority of the total membership of each House. Third, some amendments require both the special majority in Parliament and ratification by at least half of the state legislatures. This third category applies to changes affecting the federal structure, the representation of states in Parliament, the Supreme Court and High Court jurisdiction, and the amendment procedure itself.
The basic structure doctrine from Kesavananda Bharati in 1973 means that Parliament can amend any provision of the Constitution but cannot destroy its basic structure. The basic structure has been held to include: supremacy of the Constitution, republican and democratic form of government, secular character, separation of powers, federalism, independence of the judiciary, dignity and freedom of the individual, and limited and reasonable restrictions on fundamental rights. This doctrine was established because the framers of the Constitution believed that a purely procedural limit on amendment power would be insufficient to protect the Constitution from a government with sufficient parliamentary majority.
The Runj formula under the 91st Amendment in 2003 introduced two significant changes to the constitutional framework. First, it capped the total number of ministers in the Council of Ministers at the Union level at 15 percent of the total strength of the Lok Sabha. Second, and more significantly for the states, it capped the total number of ministers in the Council of Ministers in a state at 15 percent of the total strength of the legislative assembly. The amendment also made changes to the anti-defection law.
The CAG (Comptroller and Auditor General) is established under Article 148. The CAG is appointed by the President and can only be removed by the same process as a Supreme Court judge. The CAG audits the accounts of the Union and states, examines the expenditure of the government, and reports to the President or Governor as the case may be. The CAG is not a mere auditor. The CAG’s reports are submitted to the President or Governor, who lays them before Parliament or the state legislature. The Public Accounts Committee examines the CAG’s reports.
The Finance Commission is established under Article 280. It is appointed by the President every fifth year (or earlier if required). The Finance Commission recommends the distribution of the net proceeds of taxes between the Union and the states (vertical devolution) and the allocation of each state’s share among the states (horizontal distribution). The 15th Finance Commission (2021) recommended the criteria for distribution including population, area, forest cover, tax effort, and fiscal deficit.
Exam tip: A common examination question involves distinguishing what can and cannot be amended. The basic structure doctrine means that even an amendment passed with the required majority in Parliament and ratified by the required number of states can be struck down if it destroys the basic structure. Another common mistake is thinking that all amendments require the special majority under Article 368. Some amendments require only a simple majority and do not go through Article 368 at all.
🟡 Standard — Regular Study (2d–2mo)
Article 368 — Procedure for Amendment
Article 368 provides the procedure for amending the Constitution. The process begins when a bill amending the Constitution is introduced in either House of Parliament. The bill must be passed by each House by a majority of the total membership of that House and by a two-thirds majority of members present and voting in that House. Some amendments additionally require ratification by at least half of the state legislatures before the amendment bill can be presented to the President for assent.
The key distinction is between amendments that require state ratification and those that do not. Amendments that affect the federal structure, change the representation of states in Parliament, modify the Supreme Court or High Court jurisdiction, or change the amendment procedure itself require state ratification. Other amendments require only the parliamentary special majority.
The Shankari Prasad case in 1951 was the first major case on the amendment power. The Supreme Court upheld the validity of the First Amendment (which introduced Article 31B protecting certain Zamindari abolition laws from judicial review) and held that fundamental rights could be amended under Article 368. The Court rejected the argument that the amendment power could not touch fundamental rights.
The Golakhnath case in 1967 went further. A Constitution Bench held that Parliament could not amend fundamental rights under Article 368 because fundamental rights are beyond the reach of the amendment power. The Court held that Article 368 only provided the procedure for amendment but did not give unlimited power to Parliament to amend fundamental rights. This decision created significant constitutional uncertainty and was effectively reversed by Kesavananda Bharati.
The Kesavananda Bharati case in 1973 is the most important case on the amendment power. By a 7 to 6 majority, the Court held that Parliament cannot amend the basic structure of the Constitution. The Court identified the basic structure as those essential features without which the Constitution would be unrecognisable. This meant that while Article 368 gave Parliament a wide power to amend the Constitution, that power did not extend to destroying the basic structure.
The 42nd Amendment in 1976 attempted to overcome Kesavananda Bharati by adding Article 31C (which said no law implementing any of the Directive State Policies would be void on the ground that it takes away or abridges fundamental rights) and by stating that Article 368 could not be subject to judicial review. The Amendment also sought to freeze the amendment of fundamental rights for a period of two years.
The Minerva Mills case in 1980 struck down the parts of the 42nd Amendment that sought to make all constitutional amendments unchallengeable. The Court held that the limited amending power under Article 368 does not include the power to destroy the basic structure. The basic structure doctrine was reaffirmed and strengthened.
What Constitutes Basic Structure
The Supreme Court has identified the following as part of the basic structure: supremacy of the Constitution, republican and democratic form of government, secular character of the Constitution, separation of powers between the legislature, executive, and judiciary, federal character of the Constitution, dignity and freedom of the individual, independence of the judiciary, parliamentary system, unity and integrity of the nation, and limited and reasonable restrictions on fundamental rights.
The key test is whether a feature is so essential to the Constitution that without it, the Constitution would be unrecognisable. If yes, it is part of the basic structure. This test has been applied flexibly over the years. The Court has held that judicial review itself is part of the basic structure (L. Chandra Kumar case in 1997), that federalism is part of the basic structure (various cases), that secularism is part of the basic structure (various cases including the Sabarimala case), and that the right to equality is part of the basic structure.
The basic structure doctrine means that constitutional amendments can be challenged in court. Even if an amendment is procedurally correct (passed by the required majority and ratified as required), it can still be struck down if it destroys the basic structure. This is a significant limitation on parliamentary sovereignty.
Runj Formula — 91st Amendment
The 91st Amendment in 2003 made significant changes to the constitutional framework. The amendment introduced changes to reduce the size of ministries and strengthen the anti-defection law. The most significant change at the state level was the introduction of paragraph 6 of the Schedule (which gave constitutional status to the 15 percent cap on ministers).
The Runj formula (named after Justice Runj, though more accurately associated with the 91st Amendment’s sponsor) has two main components. First, it caps the total number of ministers in the Council of Ministers at the Union level at 15 percent of the total strength of the Lok Sabha (92 out of 543). Second, it caps the total number of ministers in the Council of Ministers in a state at 15 percent of the total strength of the legislative assembly.
The rationale for the Runj formula was to prevent the proliferation of ministries that had become common in coalition governments after the anti-defection law made it difficult for state governments to dissolve assemblies and seek fresh mandates. By capping the number of ministers, the amendment aimed to reduce the financial cost of governance and ensure that the Chief Minister and other senior ministers had meaningful portfolios to manage.
The amendment also clarified the anti-defection law by clarifying that the merger clause applies when one-third of the members of a legislative party split from the original party, and that this is not defection if the split is not accompanied by voting against the party or other acts contrary to the party whip.
CAG — Comptroller and Auditor General
Article 148 establishes the CAG as a constitutional authority. The CAG is appointed by the President by warrant under the President’s hand and seal. The CAG holds office during good behaviour and can only be removed by the President on a resolution passed by both Houses of Parliament supported by two-thirds of members present and voting in each House, following the same procedure as for removal of a Supreme Court judge.
The CAG’s independence is protected by several provisions. The CAG cannot be removed during the term of office except by the same rigorous process as a Supreme Court judge. The CAG’s salary and conditions of service are charged on the Consolidated Fund of India and cannot be voted on by Parliament. The CAG cannot hold any other office of profit after leaving the office.
The CAG’s role is not limited to auditing government accounts. The CAG audits the accounts of the Union and states, examines the expenditure of the government to ensure it is within the authorised limits, audits the accounts of government companies and corporations where the government has a significant stake, and reports to the President (for Union accounts) or the Governor (for state accounts) who lays the reports before Parliament or the state legislature.
The CAG’s reports are significant because they often reveal financial irregularities, misappropriation, and policy failures. The Public Accounts Committee (PAC) of Parliament examines the CAG’s reports. The PAC is a committee of the Lok Sabha and is dominated by the ruling party. Despite this limitation, the CAG’s reports have been instrumental in exposing financial scandals.
The 1976 amendment to the CAG’s role expanded the CAG’s mandate to include audit of public sector undertakings and corporations where the government has a financial stake. This made the CAG a more comprehensive oversight body.
Finance Commission
Article 280 establishes the Finance Commission. The President appoints the Finance Commission every fifth year (or earlier if required). The Commission consists of a Chairman and four other members. The Chairman is typically an economist or former civil servant. The other members are experts in finance, economics, or public administration.
The Finance Commission’s functions include recommending the distribution of the net proceeds of taxes between the Union and the states (vertical devolution), recommending the allocation of each state’s share of the divisible pool among the states (horizontal distribution), recommending grants-in-aid to states, and recommending measures to improve the fiscal health of states.
The criteria for distribution of taxes between states have evolved over the years. The 15th Finance Commission (2021) used the following criteria: population (15 percent), area (15 percent), forest cover (10 percent), tax effort (2.5 percent), fiscal deficit (30 percent), and other factors. The exact criteria and weights are determined by each Finance Commission.
Vertical devolution: the Finance Commission recommends what percentage of the net proceeds of taxes should be transferred to the states. The 15th Finance Commission recommended 41 percent of the net proceeds of taxes to be transferred to the states. This is the vertical share.
Horizontal distribution: the Finance Commission recommends how the states’ share (the vertical devolution) should be distributed among individual states. The criteria for horizontal distribution include population, area, backwardness, infrastructure development, and fiscal discipline.
Grants-in-aid: the Finance Commission also recommends specific purpose grants for items like disaster relief, environment conservation, and implementation of centrally sponsored schemes. These are conditional grants that states must use for specified purposes.
🔴 Extended — Deep Study (3mo+)
Detailed Analysis of Each Major Amendment Case
The Shankari Prasad case in 1951: the Supreme Court upheld the First Amendment which introduced Article 31B protecting certain laws implementing the Zamindari abolition programme from judicial review. The Court held that fundamental rights could be amended under Article 368. This was the beginning of the debate over the scope of the amendment power.
The Golakhnath case in 1967: a Constitution Bench held that Parliament could not amend fundamental rights under Article 368. The Court held that Article 368 only provided the procedure for amendment but did not give unlimited power to amend fundamental rights. This created significant constitutional uncertainty. The Court drew a distinction between amendment of the Constitution and amendment of the basic structure.
The Kesavananda Bharati case in 1973: the landmark case where a 13-judge Constitution Bench by a 7 to 6 majority established the basic structure doctrine. The Court held that Parliament cannot amend the basic structure of the Constitution. The case arose from the Kerala government’s attempt to impose a ceiling on property holdings. The Court identified federalism, parliamentary democracy, secularism, separation of powers, judicial review, and protection of fundamental rights as part of the basic structure.
The 42nd Amendment in 1976: the most comprehensive amendment to the Constitution during the Emergency. It attempted to overcome Kesavananda Bharati by adding Article 31C (protecting laws implementing Directive State Policies from judicial review on grounds of abridgement of fundamental rights) and by stating that Article 368 was not subject to judicial review. It also sought to freeze the amendment of fundamental rights.
The Minerva Mills case in 1980: the Supreme Court struck down the parts of the 42nd Amendment that sought to make all constitutional amendments unchallengeable. The Court held that the limited amending power under Article 368 does not include the power to destroy the basic structure. The basic structure doctrine was reaffirmed and strengthened. The Court also held that the balance between the fundamental rights and the Directive State Policies is part of the basic structure.
The Waman Rao case in 1981: the Court held that laws placed in the 9th Schedule after the date of the Kesavananda Bharati decision (25 November 1975) are subject to basic structure review. Laws placed in the 9th Schedule before that date were not subject to review because they were placed when the Golakhnath doctrine held that fundamental rights could not be amended.
The IR Coelho case in 2007: the Court held that all laws in the 9th Schedule are now subject to basic structure review, whether placed before or after Kesavananda Bharati. This was a significant expansion of the basic structure doctrine. The Court distinguished between laws that violate the basic structure because they destroy federalism, secularism, separation of powers, or judicial independence (which would be struck down) and laws that violate fundamental rights but not the basic structure (which would continue to be protected by the 9th Schedule).
Comparison of Amendment Procedures in India vs USA
The Indian amendment procedure is often compared with the US procedure. In the United States, most amendments require a two-thirds supermajority in both Houses of Congress and ratification by three-fourths of states (38 out of 50). This is a very high threshold that has resulted in only 27 amendments in over 230 years.
In India, most amendments require only a two-thirds majority in each House (a majority of members present and voting, not necessarily a majority of total membership) and in some cases ratification by half of the states. This is a lower threshold than the US and has resulted in over 100 amendments since 1950.
Some constitutional scholars argue that India should adopt a more rigorous amendment procedure, closer to the US model, to protect the Constitution from casual parliamentary majorities. Others argue that the basic structure doctrine already provides sufficient protection and that making amendments more difficult would reduce the Constitution’s flexibility.
One key difference is that India does not require a constitutional convention (unlike the US). Constitutional conventions in the US are informal gatherings of states that have been used historically to propose amendments. India has no equivalent mechanism. Some scholars argue that this makes Indian constitutional change more responsive to parliamentary majorities and less responsive to broader constitutional deliberation.
Another key difference is that the Indian Supreme Court can review the substance of constitutional amendments (under the basic structure doctrine). The US Supreme Court generally cannot review the procedure for constitutional amendment (though it can interpret the scope of constitutional provisions). This makes the Indian Supreme Court more powerful in constitutional matters than the US Supreme Court in this specific regard.
CAG in Detail
The CAG’s role has evolved significantly since 1976. Before 1976, the CAG focused primarily on audit of government accounts. After the 1976 amendment, the CAG’s mandate expanded to include audit of public sector undertakings and corporations where the government has a financial stake. This made the CAG a more comprehensive oversight body.
The CAG conducts three types of audit: compliance audit, performance audit, and IT audit. Compliance audit checks whether government expenditure is within the authorised limits and whether the expenditure follows the prescribed rules and procedures. Performance audit evaluates whether government programmes and schemes are achieving their intended objectives efficiently and effectively. IT audit examines the use of information technology in government systems.
The CAG’s relationship with the Public Accounts Committee (PAC) is significant. The PAC examines the CAG’s reports and makes recommendations to Parliament. The PAC is a committee of the Lok Sabha, and its composition reflects the composition of the House. Despite being dominated by the ruling party, the PAC has historically performed an important oversight function.
The CAG’s reports have exposed several major financial scandals, including the Bhopal gas tragedy (where the government failed to collect adequate compensation), the 2G spectrum scam (where spectrum was allocated without proper auction), and the coal block allocation scam (where coal blocks were allocated without competitive bidding). In each case, the CAG’s reports provided detailed evidence of financial irregularity that led to political and legal consequences.
The independence of the CAG is protected by constitutional provisions. The CAG’s salary and conditions of service are charged on the Consolidated Fund of India and cannot be voted on by Parliament. The CAG cannot be removed during the term of office except by the same rigorous process as for a Supreme Court judge. The CAG cannot hold any other office of profit after leaving office.
Finance Commission — 15th Finance Commission
The 15th Finance Commission was appointed in 2019 and submitted its report in 2021. It covered the award period 2021-2026. The Commission’s recommendations on vertical devolution were that 41 percent of the net proceeds of taxes should be transferred to the states. This was slightly lower than the 14th Finance Commission’s recommendation of 42 percent, which generated controversy.
The criteria for horizontal distribution used by the 15th Finance Commission included: population (15 percent), area (15 percent), forest cover (10.25 percent), tax effort (2.5 percent), fiscal deficit (30 percent), revenue deficit (10 percent), and performance on digital_transactions (1.75 percent). The exact criteria and weights were determined after extensive consultation with state governments.
The Commission also made recommendations on grants-in-aid, including grants for disaster relief ( Rs 89,152 crore for 2021-22), grants for implementation of centrally sponsored schemes, and grants for improving the fiscal health of states. The Commission’s recommendations are not binding on the Union government, but in practice they are accepted with minor modifications.
The 15th Finance Commission also recommended the criteria for distribution of the State’s Disaster Response Fund and the National Disaster Response Fund. These are important for disaster-prone states like Rajasthan (drought and flood) and Kerala (flood).
The Finance Commission’s recommendations on fiscal consolidation targets for states have been controversial. The Commission recommended that states should aim for a fiscal deficit of 3 percent of GDP by 2023-24. Some states argued that this target was too restrictive and would prevent them from investing in infrastructure and social welfare programmes.
Practice Problems and PYQ Patterns
Common examination questions include the difference between the amendment procedures for different categories of provisions under Article 368, the basic structure doctrine and its significance in protecting the Constitution from destructive amendments, the difference between the Shankari Prasad case and the Golakhnath case, the Kesavananda Bharati case and the establishment of the basic structure doctrine, the difference between the CAG and a statutory auditor, the role of the Finance Commission in federal fiscal relations, and the criteria used by the 15th Finance Commission for distribution of taxes to states.
Previous year questions from RAS have asked about the amendment procedure under Article 368, the basic structure doctrine and its application in specific cases, the CAG’s role in financial oversight, the Finance Commission’s role in federal fiscal transfers, the 91st Amendment and the Runj formula, the difference between vertical and horizontal devolution, and the criteria for distribution used by recent Finance Commissions.
⚠️ Exam Tips and Common Traps:
- Not all amendments go through Article 368. Some provisions can be amended by a simple parliamentary majority without going through Article 368. Students should distinguish between amendments that require the special majority under Article 368 and those that require only a simple majority.
- The basic structure doctrine means that even procedurally correct amendments can be struck down if they destroy the basic structure. This is a unique feature of the Indian Constitution.
- The Golakhnath case held that fundamental rights could not be amended. This was reversed by Kesavananda Bharati, which established the basic structure doctrine.
- The CAG is not a mere auditor. The CAG’s reports are submitted to Parliament through the President and are examined by the Public Accounts Committee. The CAG has a significant role in exposing financial irregularity.
- The 15th Finance Commission recommended 41 percent vertical devolution to states. The criteria for horizontal distribution included population, area, forest cover, tax effort, and fiscal deficit.
- The Runj formula under the 91st Amendment capped the number of ministers at 15 percent of the total strength of the legislative assembly. This was to prevent proliferation of ministries.
- The basic structure includes judicial review, federalism, secularism, separation of powers, and independence of the judiciary. These features cannot be destroyed by constitutional amendment.
- The 42nd Amendment attempted to freeze fundamental rights amendments and make Article 368 unchallengeable. The Minerva Mills case in 1980 struck down these provisions and reaffirmed the basic structure doctrine.