Union Finance Minister Nirmala Sitharaman on Saturday said indiscriminate borrowing and spending by certain States on non-merit goods and expenditure is a matter of concern, and fiscal strength is a critical component for 'Atma Nirbhar Bharat'.
The temptation to borrow beyond capacity would create inter-generational burden and affect fiscal soundness of the country, she noted.
"There are new sources of risks every state is facing. The temptation to spend on non-merit goods... The tendency to get into such not-so-viable, non-merit expenditure is very high in some States," she said.
Sitharaman was delivering the second P Parameshwarji Memorial Lecture on "Cooperative Federalism: The Path Towards Atma Nirbhar Bharat" organised here by Bharatiya Vichara Kendram in memory of Sangh idealogue P Parameshwaran.
If contingent liabilities are expanded, the successive governments also have to bear its burden, the union minister warned. As per the Constitution, the Centre can discuss with and question States on borrowing but many of them see it as an interference in their space of authority, she said.
Sitharaman also recalled that there were states which were initially reluctant to accept the Centre's money in building assets saying that they would be monitored if the union government's 50-year interest-free loans were accepted for the purpose. Noting that they do monitoring everywhere, she said even if the state receives world bank assistance, it would also be monitored by the Centre. When they were asked to take the budgetary allocation with 50 years interest-free loans for building assets, they said they did not want as they would be monitored by the Centre.
"This is a vicious narrative", Sitharaman said and asked, "is the Centre Pakistan?" The Finance Minister also said every state gets its share in due time under the rule of Prime Minister Narendra Modi.
"During the pandemic, immediately after that, and in 2021 and 2022, whenever we have the comfort of some more revenue coming in, I have paid extra installments to the states much ahead of time. So that they don't run short of money.. the data can prove it," she added.
Citing the GST Council as a positive example of cooperative federalism, the minister said it can show how good governance can work for the common people of the country. The actual advantage of such a GST Council is the federal structure and the centre-state relations as every state has a voice there.
The Finance Minister also justified the Centre collecting cess of building infrastructure, saying the money collected in this name is not used for itself, instead it is used for building roads, highways, big ports etc in the states.
"When you collect money in the name of infrastructure cess, roads are getting built everywhere, ports are getting built everywhere...no one state has denied highways, no one state has denied major ports." Lamenting that a wrong political narrative was being peddled to spoil the Centre-State relations, she said federal relationships should be governed by three Cs -- cooperation, collectiveness, and coordination. The economy, in the globalised world, must address the vulnerabilities it faces and the Centre and the States would have to work together in that regard, she said.
Despite hurdles and challenges, the country surged ahead in areas of development and even reached the fifth position in the global economy index overtaking the United Kingdom, the Minister pointed out. Observing that cooperative federalism brings a greater sense of togetherness in the country, she said that during the pandemic states and Centre worked together to ensure the wellbeing of people.
Sitaraman said the union government takes care of the interests of everyone under Sabka Saath, Sabka Vikas, Sabka Vishwas and Sabka Prayas. If all the states, in good fiscal health, can take India together, it is not difficult for it to achieve its goal of becoming a developed nation by 2047, the 100th year of independence, she added. Union Minister of State V Muraleedharan also attended the event.