Finance minister Arun Jaitley’s call for GST Council like bodies to work on aligning the states’ and the Union government’s interests on agriculture, rural development and healthcare echoes what former chief economic adviser Arvind Subramanian talked about last January. The GST Council’s success lies in how it parcels decision-making powers amongst the states and the Centre, consensus is inevitable for any change to be made.
In the process, various interests, sometimes conflicting, are balanced and reform can happen. It helps iron out differences and reins in an overbearing Centre. This is a sea-change from what coordination bodies like the National Development Council and Inter State Council achieved over the past many decades. Consequently, there has been no politicising of the GST, given ruling parties/coalitions of different political persuasions must arrive at a broad consensus.
GST Council like structures can help the implementation of central schemes like Ayushman Bharat or a PM Kisan Samman Nidhi Yojana overcome adoption-hurdles in Opposition-ruled states like West Bengal, Delhi, Odisha, Madhya Pradesh, Rajasthan. Indeed, the Kisan Samman Nidhi support to farmers could be hiked if the Centre were to move away from MSP-based procurement by the Food Corporation of India and its subsidies, which benefits just a handful of states.
The hiked amount could be a compensation for states benefitting from MSP and the incentive for states where significant FCI/subsidiary-led procurement doesn’t occur at a scale that would make a marked difference to farmers’ income to come to the negotiating table. This would be a massive fillip to rolling out key agricultural reforms. Negotiations on implementing E-NAM, mandi reforms (including allocating land to non-cartelised mandis) wouldn’t get stalled by just one or two players. More welcome, as seen in the case of GST negotiations, even Opposition-ruled states will more likely be driven by reason and reform logic instead of narrow political considerations. Key beneficiaries of farm exports can collectively get the Centre to reverse restrictions on exports.
They can even make it see reason on allowing GM technology given all farmers will benefit if GM crops that are proven safe are allowed instead of dogmatically, or at the behest of vested interests, blocking seed-tech or other GM technology. Similarly, on healthcare, it would be easier to replicate best practices and roll out schemes such as mohalla clinics if a Delhi can get a critical number of states to join forces with it.
Such councils, if created, would help realise cooperative federalism, and there would be less of political volleying on schemes and reforms between the states and the Centre. This could actually be the difference between “lost decades” a rather enduring trait of India’s reforms story—and faster, more widespread development.