India's competitive federalism is on full display at the World Economic Forum in the Swiss resort town of Davos, as states from Tamil Nadu, Telangana, Maharashtra, and more are ready to woo investors, said NK Singh, Chairman of the country's 15th Finance Commission.
Speaking with CNBC-TV18 Managing Editor Shereen Bhan, Singh said, "That is a very positive sign. Not a populist federal compact, but a competitive federal compact, which wants to take advantage of the world's belief in India's overall macroeconomic stability."
Speaking about the reforms for the World Bank and other multilateral development institutions, Singh said he is more positive than ever. They have put together a two-volume report in record time, addressing several issues on the architecture of the financial module, which should serve the world well. Singh also lauded Prime Minister Narendra Modi's leadership in pushing the reform agenda much before India assumed the presidency of the G-20 and afterward.
"Nobody expected that progress would be so rapid at the G-20. The annual meeting of the IMF and World Bank in Marrakesh adopted our recommendations—30 important recommendations."
On his expectations from the upcoming interim budget, particularly on any big-ticket announcements such as the PM Kisan Yojana in 2019, Singh expressed optimism that the ongoing reform momentum will continue with the symmetry that has been achieved between a sound fiscal policy coupled with a monetary policy that has been conducive to growth.
On the appointment of Arvind Panagariya as the chairperson of the 16th Finance Commission, Singh said the prime minister has "as usual made an impeccable choice."
On the challenges that Panagariya could face, Singh said, "I think his challenges are as high as all challenges, namely not only the distribution of resources between the union and the states, but among the states in terms of the parameters which he selects and which the commission chooses to select under him, particularly with the fact that the issues of global warming and climate change are going to certainly occupy not only the attention of the Indian states and the central government but have a global focus. And that's an area that has been added as a new additional dimension, really to the 16 Finance Commission."
Singh also pointed out that the 16th Finance Commission will submit its report on October 31, 2025, and until then, the 15th Finance Commission will continue its work under him.
On whether he will give some guidance to the 16th Finance Commission, Singh pointed out that it would be "presumptuous to give this guidance to the successor commission."
“I think that each of the Finance Commissions in India has been selected with people of impeccable reputation and impeccable domain knowledge, and it is entirely up to the commission to put together this kind of normative formula. Certainly, the classic ones that the Indian Constitution provides, namely, the distribution, as I said, between the union and the states, and the formula for the distribution within the states. And of course, the third tier of government, namely the municipality, the urban local bodies, and the Panchayat, as well as disaster management, have classically now become part of the terms of reference of any Finance Commission.”
For the full report, watch the accompanying video
(Edited by : Ajay Vaishnav)
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