• The Commission recommended that coordination of policies and implementation in a dual polity, especially given large areas of common interest and shared action, requires a sustained process of contact, consultation, and interaction, for which a proper forum is necessary.
• The Commission observed that executive powers of the Union and States overlap in many areas. The division of matters in the Union List and State List is not absolute. Several entries overlap.
• In implementing its laws and policy, the Union is mainly dependent on State administrations. Union and States can entrust their executive functions to each other. States are dependent on the Union for financial resources and in many administrative matters.
• Interdependence is indispensable in a diverse and developing society. Institutionalized and sustained consultation is critical given this interdependence. The Commission recommended setting up a Council under article 263 of the Constitution.

The important recommendations of the Commission included :

• Formation of an intergovernmental council consisting of the prime minister and chief ministers of states to collectively decide on various governance aspects that cause friction between the center and states.
• Sparing use of article 356 of the Constitution should be made, and all possibilities of forming an alternative government must be explored before imposing the president's rule in the state. The state assembly should not be dissolved unless the parliament approves the proclamation.
• It rejected the demand for the abolition of the governor's office and his selection from a panel of names given by the state governments. However, it suggested that active politicians should not be appointed governors. When different political parties rule the state and the center, the governor should not belong to the ruling party at the center. Further, the retiring governors should be debarred from accepting any office of profit.
• The judges of high courts should not be transferred without their consent.
• The three-language formula should be implemented in its true spirit in all the states in the interest of unity and integrity of the country.
• The work of the union and the state governments, which directly affects the local people, must be carried out in the local language.
• Central control over radio and television should be relaxed, and the individual Kendra’s should be free to decide the timing for the relay of national hook-up programs.
• It favored amendments for sharing certain taxes between the center and the states, even though it generally opposed the curtailment of the center’s powers.
• The financial sphere did not favor any drastic changes in the basic scheme of division of taxes but favored sharing of corporation tax and levy of consignment tax.
• It did not favor disbanding all-India services in the interest of the country’s integrity. Instead, it selected new all-India services.
• It made a strong case for inter-state councils but insisted that these should be used only for the purpose mentioned in article 263 of the constitution.
• It favored retention of the national development council and suggested activation of the zonal councils.
• It found the present division of functions between the finance commission and the planning commission as reasonable and favored the continuance of this arrangement.
• It favored the determination of terms of reference of the finance commission in consultation with the state governments.
• It also suggested setting up similar expert bodies at the state level.

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