While adhering to fiscal deficit targets and debt to GDP ratios, it is equally important to undertake robust expenditure planning based on a ‘commonly agreed expenditure code’ to address the socio-economic challenges without diluting the goals of fiscal consolidation, Shaktikanta Das, Governor, Reserve Bank of India stated yesterday. In a speech delivered at the launch of the book ‘Indian Fiscal Federalism’, he noted that recent initiatives in fostering co-operative federalism have opened new chapters of co-operation between Centre and States. The GST Council is functioning on the principle of shared sovereignty.
The Indian model of GST preserves the essence of Indian federalism, he opined. India is, however, a union of states in which both the union and the states have to be fiscally strong. While this issue has to be addressed by the Finance Commission, the challenge for the GST Council now is to realise the full potential of GST for enhancing tax-GDP ratio and work on other areas of our economy to enhance its competitiveness. He stated further that alongside co-operative federalism, there has to be competitive federalism. The ranking of states on the parameter of ‘ease of doing business’ has generated very healthy competition among states.