This is indeed a serious issue affecting centre state relationship. Of course, we should expect SC to enlighten us with its own pearls of wisdom, though any wise counsel should be against it. Anyway, the main point is this- we must decide how much percentage of income from taxes and levies etc. should be utilised for cost of administration like salaries, pension etc. and follow the limits strictly. It should not be the case that taxes are used up almost entirely for salaries and pensions and such basic operating expenses!!! Finance Commission should be asked to develop such norms for the states and the centre. This should be in addition to the Fiscal Responsibility Act which covers extent of permissible borrowings. There is no politics here; just pure routine management of fiscal affairs.
Though, I am not sure if we can have one size fits all. In general state governments outspend the centre--the proportion of total expenditure is 65%. This is largely because they have to ensure a range of public services--another story about their quality--which require personnel etc. But your larger point on fiscal probity is well taken.
Frankly, I believe the time has come to evolve some kind of institution like the GST. At the least it will ensure a dialogue among all the stakeholders.
Finally, I am not a big fan of the courts straying into executive turf. Fear the kind of decision that we saw with respect to electoral bonds. They threw the baby out with the bathwater, instead of suggesting that the scheme be redrawn and the flaws ironed out. It was an important step to solve for cash addiction in election funding.
This is indeed a serious issue affecting centre state relationship. Of course, we should expect SC to enlighten us with its own pearls of wisdom, though any wise counsel should be against it. Anyway, the main point is this- we must decide how much percentage of income from taxes and levies etc. should be utilised for cost of administration like salaries, pension etc. and follow the limits strictly. It should not be the case that taxes are used up almost entirely for salaries and pensions and such basic operating expenses!!! Finance Commission should be asked to develop such norms for the states and the centre. This should be in addition to the Fiscal Responsibility Act which covers extent of permissible borrowings. There is no politics here; just pure routine management of fiscal affairs.
Dear Surendra,
Thank you for your thoughts.
Though, I am not sure if we can have one size fits all. In general state governments outspend the centre--the proportion of total expenditure is 65%. This is largely because they have to ensure a range of public services--another story about their quality--which require personnel etc. But your larger point on fiscal probity is well taken.
Frankly, I believe the time has come to evolve some kind of institution like the GST. At the least it will ensure a dialogue among all the stakeholders.
Finally, I am not a big fan of the courts straying into executive turf. Fear the kind of decision that we saw with respect to electoral bonds. They threw the baby out with the bathwater, instead of suggesting that the scheme be redrawn and the flaws ironed out. It was an important step to solve for cash addiction in election funding.
Look forward to your continued participation.
Best
Anil
Hi Anil, a wonderful article as always. Displays your journalistic prowess to an exponent. Warrants repeated readings!