Grants in Lieu of Export Duty on Jute Products

Jute export grants under Article 273 of the Constitution were sums charged annually on the Consolidated Fund of India as grants-in-aid to the states of Assam, Bihar, Odisha and West Bengal, given in place of assigning those states any share of the net proceeds of the export duty levied on jute and jute products. Article 273 is a narrow, state-specific provision, but it stands out in the Centre-state financial relations chapter for using a fixed grant instead of the revenue-sharing formulas found elsewhere in that chapter.

What Article 273 Provides

Article 273(1) charges the Consolidated Fund of India, in each year, with such sums as may be prescribed, payable as grants-in-aid of the revenues of Assam, Bihar, Odisha and West Bengal. The clause is explicit about why: these grants stand "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." In other words, rather than treating jute export duty the way Article 269 treats certain sale, purchase and consignment taxes — collected by the Union and assigned to the states where the underlying activity occurs — the Constitution instead compensates the named jute-producing and exporting states with a prescribed grant.

Why a Grant Instead of a Share

The "in lieu of" language signals a deliberate substitution. Had jute export duty been brought within an assignment or sharing mechanism like Articles 269 or 270, the states would have received a proceeds-linked amount that would rise or fall with actual export duty collections. Article 273 instead fixes the compensation as a prescribed grant-in-aid, payable to only the four states most associated with jute cultivation and its export trade, rather than to any state in which the relevant economic activity happened to occur.

A Built-In Time Limit

Article 273(2) makes clear that this arrangement was not meant to be permanent in the way Articles 269 and 270 are. The prescribed sums continue to be charged on the Consolidated Fund of India only 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 the Constitution, whichever is earlier. This dual condition — tied both to the continued existence of the underlying export duty and to a fixed ten-year outer limit running from 26 January 1950 — marks Article 273 as one of the Constitution's more time-bound financial provisions, in contrast to the open-ended distribution mechanisms of Articles 269, 270 and 271.

Where Article 273 Sits in the Financial Relations Chapter

Article 273 falls between Article 271 (surcharge for Union purposes, wholly retained by the Union) and Article 274 (President's prior recommendation for tax Bills affecting states) in the Constitution's sequence on Centre-state financial relations. Unlike its neighbours, which apply generally across all states, Article 273 is one of the few provisions in this chapter addressed to a named, limited set of states — reflecting the specific economic geography of jute production and export at the time the Constitution was framed.

UPSC Relevance

Prelims

• Article 273 grants-in-aid apply specifically to Assam, Bihar, Odisha and West Bengal, in lieu of a share in jute export duty proceeds.
• The grants are charged on the Consolidated Fund of India as a prescribed sum, not a percentage of ongoing export duty collections.
• The arrangement continues only so long as jute export duty is levied, or for ten years from the Constitution's commencement, whichever is earlier.

Mains

• Compare Article 273's grant-in-aid mechanism with the proceeds-sharing approaches under Articles 269 and 270, and discuss why the framers chose a different design for jute-producing states.

FAQ

Q1. Which states receive grants under Article 273? Assam, Bihar, Odisha and West Bengal.

Q2. What are these grants given in lieu of? In lieu of assigning to those states any share of the net proceeds of the export duty on jute and jute products.

Q3. How is the amount of the grant determined? As "prescribed" sums, charged each year on the Consolidated Fund of India — a fixed grant-in-aid rather than a percentage of ongoing duty collections.

Q4. Is the Article 273 arrangement permanent? No. It continues only so long as export duty on jute or jute products is levied by the Government of India, or for ten years from the Constitution's commencement, whichever is earlier.

Q5. How does Article 273 differ from Article 269? Article 269 assigns the entire net proceeds of certain taxes to the states where they are leviable; Article 273 instead substitutes a prescribed grant-in-aid for what would otherwise be a share of jute export duty proceeds, and only for four named states.

Quick Revision

• Article 273 — grants-in-aid to Assam, Bihar, Odisha and West Bengal, charged on the Consolidated Fund of India.
• Given in lieu of a share of net proceeds of export duty on jute and jute products.
• Amount is a prescribed sum, not a percentage of ongoing duty collection.
• Continues only while jute export duty is levied, or for 10 years from commencement of the Constitution, whichever is earlier.
• Sits between Article 271 (Union surcharge) and Article 274 (Presidential recommendation for tax Bills) in the financial relations chapter.

Sources

• The Constitution of India, Articles 271, 273, 274 — Ministry of Law and Justice, legislative.gov.in.

Further Reference

For deeper reading on this topic and the wider polity syllabus, these standard works are recommended:

• M. Laxmikanth, Indian Polity (McGraw Hill) — the standard UPSC handbook.
• D.D. Basu, Introduction to the Constitution of India (LexisNexis) — authoritative constitutional-law treatment.
• The Constitution of India — Bare Act — the official text.