States won't be ignored in India's growth story: FM

Seeks cooperation in early implementation of GST, tackling inflation

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Finance Minister Arun Jaitley on Monday reached out to states and sought their cooperation in implementing the Goods & Services Tax (GST) soon, tackling inflation, addressing fiscal challenges, and implementing the food security law in a cost-effective and efficient manner.

“It is the policy of this government that ‘Team India’ shall not be limited to the government sitting in Delhi, but include states as equal partners in the growth of this great nation,” he told states. “Long inflationary trends have adversely impacted the food and nutritional security of the common man. We are committed to breaking this vicious cycle of high inflation and high interest rates,” he said at a pre-Budget meeting with chief ministers and finance ministers of states.

Jaitley said consensus had to be built on GST, as it had the potential to significantly boost India’s growth, adding it was vital to round off corners towards implementation of GST.

Gujarat Finance Minister Saurabh Patel, a vehement critic of the United Progressive Alliance government’s GST model, said states welcomed the new indirect tax regime. “As regards GST , most states have welcomed it today. The only thing states were looking for was CST (central sales tax) compensation and protection in revenues,” he said.

States also pointed to the need to curb inflation, especially that related to food. Most states stressed the need for rationalisation of taxes, infrastructure creation, interlinking and cleaning of rivers, highway and airport development, revision of royalty on minerals, and creation of jobs, especially in rural areas.

“States with low income, but surplus revenue should be allowed a higher level of fiscal deficit, up to four per cent, by making changes in the Fiscal Responsibility and Budget Management Act,” said Bijendra Prasad Yadav, finance minister of Bihar.

States expressed concern over certain provisions of the new land acquisition law and its impact on infrastructure projects and investment. They also pointed to a few provisions in environmental laws and their adverse impact on completion of critical infrastructure projects.

“Union Territories suggested they be made part of Finance Commission award. States expressed concern on the likely impact of the VII Central Pay Commission (CPC) award on their finances. It was suggested the consultative process for implementation of the VII CPC award must also include states,” the finance ministry said in a statement.

The Union finance minister emphasised the need to address regional disparities through even growth across states. He asked them to address supply-side bottlenecks to manage inflation. “While we look forward to your support in tackling temporary fluctuation in prices, we will also like to evolve a mechanism that addresses the structural issues that create supply bottlenecks,” Jaitley said.

He stressed the need to take up the Essential Commodities Act and put in place strict measures and special courts to stop hoarding and black marketing. The need for a single agriculture market and real-time information dissemination on prices to farmers and consumers had to be addressed, he added.

Jaitley said reviewing the public distribution system model and restructuring the Food Corporation of India for greater efficiency in delivering food grains were on the government’s agenda.

The government, the finance minister said, was committed to evolve a model for national development, driven by states. He added for this, the Centre would extend necessary flexibility to states.

The meeting was attended by Rajasthan Chief Minister Vasundhra Raje, Goa Chief Minister Manohar Parrikar, Sikkim Chief Minister Pawan Chamling, Nagaland Chief Minister T R Zeliang, Manipur Chief Minister Okram Ibobi Singh, Delhi Lieutenant Governor Najeeb Jung, as well as the finance ministers of 18 states.