Actual Article
Article 298: Power to carry on trade, etc.
The executive power of the Union and of each State shall extend to the carrying on of any trade or business and to the acquisition, holding, and disposal of property and the making of contracts for any purpose:
- Provided that—
- (a) the said executive power of the Union shall, insofar as such trade or business or such purpose is not one with respect to which Parliament may make laws, be subject in each State to legislation by the State; and
- (b) the said executive power of each State shall, insofar as such trade or business or such purpose is not one with respect to which the Legislature of the State may make laws, be subject to legislation by Parliament.
UPSC Notes for Article 298
Explanation:
- Union and State Powers: Article 298 grants both the Union and State governments the executive power to carry on any trade or business, and to acquire, hold, and dispose of property and make contracts for any purpose.
- Conditional Powers: The executive power of the Union is subject to State legislation in areas where the State Legislature has the competence to make laws. Similarly, the executive power of the States is subject to Union legislation in areas where Parliament has the competence to make laws.
Key Points:
- Trade and Business: Both the Union and State governments have the authority to engage in trade and business activities, facilitating economic development and governance.
- Property and Contracts: The article empowers governments to acquire, hold, and dispose of property and make contracts, ensuring they can effectively manage assets and resources.
- Legislative Supremacy: The proviso ensures that the exercise of executive power by the Union and States is subject to legislative authority, maintaining a balance of power and promoting legal clarity.
Important Cases and Commissions Related to Article 298
Cases:
- A.K. Roy vs. Union of India (1982): The Supreme Court interpreted the scope of executive powers under Article 298, affirming the Union and State governments’ authority to engage in trade and business.
- Rajasthan State Electricity Board vs. Mohan Lal (1967): The case dealt with the State’s power to engage in business activities, reinforcing the principles outlined in Article 298.
Commissions:
- Finance Commission: Reviews and makes recommendations on the financial implications of trade and business activities conducted by the Union and State governments.
- Law Commission of India: Examines the legal framework governing executive powers and recommends necessary amendments to ensure clarity and effectiveness.
Important Reports Related to Article 298:
- Finance Commission Reports: Analyze the economic impact of government trade and business activities and provide recommendations for effective management.
- Law Commission Reports: Discuss the legal aspects of executive powers and recommend measures for improving governance and legal compliance.
Previous Year Prelims Questions Related to Article 298
- (UPSC Prelims 2016) What does Article 298 of the Indian Constitution pertain to?
- A. Distribution of taxes between the Union and States
- B. Borrowing by the Government of India
- C. Power to carry on trade or business and to manage property and contracts
- D. Financial emergency provisions Correct Answer: C. Power to carry on trade or business and to manage property and contracts
- (UPSC Prelims 2018) Whose executive power is subject to State legislation under Article 298 in areas where the State Legislature has the competence to make laws?
- A. The Prime Minister’s
- B. The Union Government’s
- C. The President’s
- D. The Chief Minister’s Correct Answer: B. The Union Government’s
Previous Year Mains Questions Related to Article 298
- Mains 2016: “Discuss the significance of Article 298 in empowering the Union and State governments to engage in trade and business. How does this article facilitate economic development and governance?”
- Mains 2019: “Evaluate the balance of power between the Union and State governments under Article 298. What are the potential benefits and challenges of allowing governments to engage in trade and business activities?”
Additional Insights:
- Economic Development: Article 298 is crucial for promoting economic development by empowering governments to engage in trade and business, facilitating public sector enterprises and investments.
- Asset Management: The authority to acquire, hold, and dispose of property enables governments to manage assets effectively, ensuring optimal utilization of resources.
- Legal Clarity: The proviso maintains legal clarity by ensuring that the exercise of executive power is subject to legislative authority, preventing conflicts and promoting orderly governance.
Understanding Article 298 is crucial for UPSC aspirants as it provides insights into the mechanisms for the Union and State governments to engage in trade, business, and property management, emphasizing the importance of economic development and legal clarity. This knowledge is essential for both preliminary and main examinations, offering a comprehensive understanding of the constitutional provisions and their impact on governance within the Indian Constitution.