Debroy urges states to contribute funds in defence and railway projects

State governments should contribute in funding for defence, national highways and railways projects, said Bibek Debroy, Chairman, Economic Advisory Council to Prime Minister (EAC-PM).

When the Centre provides funds for healthcare, which is a state subject, should states not contribute their bit for defence, railways and national highways, Debroy wondered.

"Railways is important, national highway is important. If they are important then state govts should contribute just as Union government contributes on health, even as health happens to be (on the) state list," Bibek argued

"By the same token, state governments should also contribute for their share in defence, national highways, railways," he said at an event organised by industry body Assocham.

Noting that India as a country is excessively centralised, Debroy said, "In other words, I think we have come to a cusp when we need to debate the present package of central sector and Centrally Sponsored Schemes (CSS)".

Stressing that fiscal consolidation is important, he said there is a need to prioritise and decide areas that are important from point of view of public administration.

Pointing out that India's tax to GDP ratio is low at 17 per cent, Debroy said, "As long as we have tax exemptions we will not have simplified tax structure".

Debroy also said that for a country like India, the largest contribution to growth and productivity will probably come about from more efficiently using land, labour and capital, thus they must be used more efficiently.

"Our titling systems are pretty pathetic, there are states in India where cadastral surveys are obsolete and unless we update them, unless we have some kind of reasonable titling system it would be extremely difficult to use land efficiently," he said.