Hyderabad: Telangana State has made a strong case for devolution of powers to States on Wednesday, with Finance Minister T Harish Rao declaring that it was imperative for the Central government to empower States, both in terms of financial resources and autonomy as States are the drivers of economic activity.
Listing suggestions to address the current economic slowdown at the pre-budget meeting of Finance Ministers with Union Finance Minister Nirmala Sitharaman in New Delhi, Harish Rao said that with the exception of macroeconomic policies, much of the action in developing both physical and social infrastructure and providing an investor-friendly ecosystem lies with the States.
The Telangana Finance Minister, stating that the current economic slowdown was unique, pointed out that while inflation was low and external imbalances were modest, the decline began with a loss of confidence not among foreign investors, but among the country’s domestic investors and consumers.
“The growth has been hit more by domestic developments such as stalled investments, improper implementation of GST, collapse of the NBFC sector, higher rates of unemployment resulting in decline in consumption and high non-performing assets in the public sector banks resulting in low credit growth,” he said, adding that one of the main concerns today was decelerating growth of GDP since 2016-17.
Pointing out that the Cabinet resolution constituting the NITI Aayog had articulated that “States do not want to be mere appendages of the Centre and seek a decisive say in determining the architecture of economic growth and development, Harish Rao said the one-size-fits-all approach, often inherent in Central planning, has the potential to create needless tensions besides undermining the harmony needed for national effort.
“One of the main mandates of NITI Aayog is to foster cooperative federalism through structured support initiatives and mechanisms with the States on a continuous basis, and recognizing that strong States make a strong nation and to build ‘Team India,’ he said, adding: “There has been no action in this direction even after five years.”
US$ 5-tn economy looks tough: Harish
The Telangana government on Wednesday warned the Centre that the target of a US$ 5-trillion economy by 2024-25 would be difficult to achieve given the ‘unique’ economic slowdown the country was faced with.
“Because of the slippage in growth, the economy needs to grow at more than 10 per cent in the remaining years. We need to address this issue head on,” Finance Minister T Harish Rao said, at the pre-budget meeting of State Finance Ministers in New Delhi.
The Minister pointed out that the GDP growth rate had slipped from 8.2 per cent in 2016-17 to 7.2 per cent in 2017-18, and said that it had further decelerated to 6.8 per cent in 2018-19. “The growth of GDP in the second quarter of the current year (2019-20) was just 4.5 per cent, the lowest since 2013,” he added.