Centre, states got here collectively to roll out public pleasant reforms, says PM

DESCRIBING THE implementation of 4 reforms by states, which have been linked to extra borrowing by them throughout 2020-21 and have been introduced as a part of Aatmanirbhar Bharat bundle in response to the pandemic final yr, as a “rare nudge” in Indian public finance, Prime Minister Narendra Modi Tuesday contrasted his authorities’s mannequin of “reforms by conviction and incentives” in opposition to the sooner regimes’ mannequin of “reforms by stealth and compulsion”.
“We have often seen that for various reasons, schemes and reforms remain un-operational often for years. This was a pleasant departure from the past where the Centre & States came together to roll out public friendly reforms in a short span of time amidst the pandemic,” he wrote in a publish on social media platform LinkedIn.
“This was made possible due to our approach of Sabka Saath, Sabka Vikas and Sabka Vishwas. Officials who have been working on these reforms suggest that without this incentive of additional funds, enactment of these policies would have taken years.”
“India has seen a model of ‘reforms by stealth and compulsion’. This is a new model of ‘reforms by conviction and incentives’.”
“When we formulated our economic response to the Covid-19 pandemic, we wanted to ensure that our solutions do not follow a ‘one size fits all’ model,” he wrote. “For a federal country of continental dimensions, finding policy instruments at the national level to promote reforms by state governments is indeed challenging. But we had faith in the robustness of our federal polity and we moved ahead in the spirit of Centre-State bhagidari [partnership].”
The Prime Minister stated 23 states borrowed an additional Rs 1.06 lakh crore by implementing 4 reforms linked with the extra borrowing permission granted underneath Aatmanirbhar Bharat bundle in 2020-21.
In May final yr, the Centre had introduced to extend borrowing limits of states from 3 per cent to five per cent of their Gross State Domestic Product for 2020-21. Of the two per cent further borrowing restrict, 1 per cent was made conditional on the implementation of reforms in 4 focus areas – universalisation of ‘One Nation One Ration card’, Ease of Doing Business, Power Distribution and Urban Local Body revenues.
“This nudge for reform is rare in Indian public finance. This was a nudge, incentivising the states to adopt progressive policies to avail additional funds,” Modi wrote.
He stated 17 states accomplished the primary reform associated to the ‘One Nation One Ration Card’ coverage. These states have been granted extra borrowings of Rs 37,600 crore. The second reform, aimed toward enhancing ease of doing enterprise, was accomplished by 20 states, which have been allowed extra borrowing of Rs 39,521 crore.
Eleven states accomplished the third reform, associated to property tax and water and sewerage fees, and acquired extra borrowing of Rs 15,957 crore.
The fourth reform, associated to energy distribution, had three parts – introduction of Direct Benefit Transfer in lieu of free electrical energy provide to farmers; discount in technical and industrial losses; and decreasing hole between revenues and prices. The Prime Minister wrote: “13 states implemented at least one component, while 6 states implemented the DBT component. As a result, Rs 13,201 crore of additional borrowings was permitted.”