The Constitution of India
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, in so far 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, in so far as such trade or business or such purpose is not one with respect to which the State Legislature may make laws, be subject to legislation by Parliament.
Why this exists
After independence, the framers wanted government to be able to function practically—buying land for offices, running public sector enterprises, signing contracts for supplies, and so on—without needing a specific law for every transaction. Article 298 gives this general executive competence. But because India has a federal division of legislative powers (Union List, State List, Concurrent List), the provisos ensure that when a government engages in trade or activity outside its normal legislative domain, it doesn't escape oversight—the other level of government's laws can still apply.
How courts read it
Courts have clarified that Article 298 is a source of executive power to carry on trade, acquire property, and contract, but it does not by itself override Article 299 (which lays down the formalities for government contracts) or fundamental rights. Judgments have held that this executive power must still respect constitutional limits, such as non-discrimination under Article 14, especially when governments run commercial enterprises or allot resources like land or licenses. Courts have also used the provisos to confirm that federal boundaries on subject-matter jurisdiction still apply even to commercial or property activities of governments.
Common misconceptions
- Myth: Article 298 lets the government do any trade or make any contract without following other constitutional rules.
Fact: Courts have held that this power still must comply with other constitutional requirements, like the contract formalities in Article 299 and fundamental rights such as equality under Article 14. - Myth: Only the Union government can run businesses under this Article.
Fact: The Article equally applies to State governments, giving them the same basic power to trade, hold property, and contract.