Entrustment of Union Functions to States under Article 258

Article 258 allows Union functions to be entrusted to a State government or its officers. Its fiscal safeguard is that the Government of India must compensate the State for the extra administrative costs incurred in performing functions or duties conferred under the Article.

Constitutional mechanism

• Under Article 258(1), the President may, with the consent of the State government, entrust Union executive functions to that government or its officers, either conditionally or unconditionally.
• Under Article 258(2), Parliament may confer powers and impose duties upon a State, its officers or authorities through a law applicable to that State, even if the subject lies outside the State Legislature's competence.

Fiscal safeguard under Article 258(3)

Under Article 258(3), the Government of India must pay the State for the extra administrative costs incurred because of powers or duties conferred under the Article.

• The amount may first be settled through an agreement between the Union and the State.
• If no agreement is reached, the amount is determined by an arbitrator appointed by the Chief Justice of India.
• The safeguard covers the additional cost of administration arising from the conferred powers or duties, rather than automatically transferring the entire financial burden of the underlying programme.

Federal significance

The provision enables administrative cooperation without requiring the Union to create a separate implementing machinery in every State. The compensation requirement protects States against unfunded administrative burdens and supports fiscal fairness within cooperative federalism.