Times of India ⁽⁹²⁾

Read full article Abstract: With the second anniversary of the government round the corner, assessments of its performance will begin soon. Such assessments need to take into account the baseline at which this government began. Any progress must be judged against this baseline. In May 2004, when the first National Democratic Alliance (NDA) government lost the election, it handed to the United Progressive Alliance (UPA) an economy that had grown 8.1% during the preceding full year. The UPA ruled till May 2014, returning to NDA an economy that had grown just 5% during its last full year (the new GDP series subsequently revised this growth rate to 6.9%). Under UPA-I, which ruled from 2004 to 2009, GDP growth averaged 8.4%. While this was an impressive performance, there is no satisfactory answer to the question what UPA-I did to make it happen. You can carefully scan Budget speeches and other relevant documents of UPA-I but, beyond continuation of trade liberalisation and trimming of the small-scale industries reservation list, you would find references to few reforms to which this performance can be…

Read full article Abstract: Any big change requires big ideas, decisive leadership and happy coincidence of circumstances. Nothing illustrates this better than the unfolding story of cooperative federalism in India. As chief minister of Gujarat, Narendra Modi had often argued that the central government implemented schemes were at odds with the state’s needs and priorities. For example, schemes that provided funds for electrification were at best of limited value to Gujarat since it had already achieved near 100% electrification. This state could have spent the money provided for such a scheme more productively if allowed to use it for other purposes. In advancing this view, Modi was joined by other chief ministers such as Vasundhara Raje of Rajasthan who argued that the vast numbers of central schemes further restricted their fiscal space because many of them required matching contributions by them from their otherwise untied funds. Once these matching funds were committed to access central schemes, states were left with very limited funds for even the most important expenditure items such as enforcement of law and order. Nevertheless, this system…

Read full article Abstract: If there is one policy reform on which there is consensus, it is the Goods and Services Tax (GST). Yet, as negotiations between the Centre and states reshape this important reform, continuous reassessment is warranted. If we were to implement the flawless GST as originally recommended by the task force of the 13th Finance Commission (TFC), the gains would be immense. The latter had recommended that India replace myriad central and state indirect taxes by a single uniform value added tax on substantially all goods and services. With the combined indirect tax revenue of the Centre and states a tad below 11%, allowing for a handful of exceptions, the TFC taskforce had pegged the uniform GST rate at 12%. Taxation at this rate would mean that the taxpayer would not have to pay an unusually high tax on any single commodity or service. The burden will be spread evenly across different goods and services consumed. The single rate would also eliminate production inefficiencies since it would tax value added at each stage of production at the…

Read full article Abstract: Of the numerous initiatives that Prime Minister Narendra Modi has launched Swachh Bharat Abhiyaan, which would give Mahatma Gandhi the gift of a clean India on his 150th birth anniversary on October 2, 2019, has the greatest potential to transform the lives of all Indians – rich and poor. Sanitation has been the theme of virtually every government in recent times. Prime Minister Rajiv Gandhi had launched the Central Rural Sanitation Programme in 1986 and Prime Minister Atal Bihari Vajpayee the Complete Sanitation Campaign in 1999. But no previous government has shown the resolve and commitment exhibited by Modi. This time it feels real. Till date, sweeping streets and ending open defecation have occupied media centre stage. But equally critical to Swachh Bharat are access to piped water; well-functioning drainage, sewage and solid waste management in all cities and villages; elimination of ponds in which stagnant water collects and serves as host to bacteria and mosquitoes; instilling greater appreciation of cleanliness in all its aspects among the masses. Indeed, taking the campaign to its logical conclusion…