The GST like Council could be replicated in agriculture, social sector, and digital economy: Mr. N K Singh, Chairman, Fifteenth Finance Commission

“The philosophy of the good working of the GST council can be replicated across other sectors of the Indian economy, including in agriculture, the social sector and more importantly the digital economy”, stated Mr. N K Singh, Chairman, Fifteenth Finance Commission, at the CII Global Economic Policy Summit in New Delhi, organized by the Confederation of Indian Industry. He was speaking on the session ‘Centre-State Partnerships: Reforms, Exports, Sustainability’.

Mr. Singh noted that the active participation of the Indian states would be critical for meeting India’s net zero commitments. He added that minimizing the degree of risks in this transition would be a key priority area and that it is important to work out a mechanism in which the states could become active participants in the process.

“The orderly movement from the era of fossil fuels to renewable energy is a daunting challenge” Mr. Singh stated. In the context of decarbonization, he said that the important decision to be taken would be on the kind of taxes which can be levied and the benefits these taxes would bring in facilitating decarbonization. All taxes on fossil fuels must be designed to facilitate India’s transition to a green economy. In this context, the “Changing patterns of agriculture will be central to reducing fossil fuels and helping in the green transition”.

On India’s exports, Mr. Singh said that 80% of India’s exports come from only 6 states, with 22 states having negligible contributions to India’s overall exports. “Harnessing and augmenting India’s export capabilities requires incentivization” Mr. Singh emphasized. He added that bringing the states which are non-participants into the picture is important, while noting that the Northeastern region has significant potential in becoming a huge exports multiplier.

Urbanization is an important engine of growth, but disorderly patterns of urbanization could have downsides in terms of growth potential, Mr. Singh cautioned. Noting that incubating new urban cities is an aspect that deserves significant attention, he suggested that a robust grant for seed capital can facilitate the creation of new cities, which the Ministry of Urban development must consider for reducing unplanned urbanization.

Mr. Singh suggested that property tax could be an important source of revenue for the Urban Local Bodies, which face significant difficulties in terms of raising significant revenues. He also suggested that instead of untied grants, tied grants should be provided to the Panchayats which are aligned to national priorities. He also stressed on the importance of having at least one think tank or research organization at the state level to enhance the intellectual capabilities or domain knowledge of the states.

Mr. Singh commended the recent steps taken by the Government to address the current challenges in India’s power sector. He added that the legislative changes which have been introduced to address the challenges in the power sector, such as the problem of unpaid dues, is likely to see some positive outcomes.

“Effective Centre-state collaboration is essential for development” noted Mr. Nadir B Godrej, Chairman & Managing Director, Godrej Industries Limited, while moderating the session.

9 December 2022

New Delhi