06-15-2008, 03:12 AM
<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>Modi is right </b>
The Pioneer Edit Desk
States earn, Centre binges: Won't do
While Congress spokespersons have responded with characteristic overstatement in demanding Mr Narendra Modi's trial on charges of sedition, it would be prudent to examine the Gujarat Chief Minister's recent remarks and place them in the context of Centre-State fiscal relations. Mr Modi's contention is that Gujarat, as one of India's economic powerhouses, contributes Rs 40,000 crore to the national exchequer. In turn, the Centre gives Gujarat only 2.5 per cent of that amount in terms of development assistance and the like. The Gujarat Government sees this as patently unfair. Mr Modi has rhetorically asked the Union Government to sign an agreement for one year, a period in which no funds will be transferred from Gujarat to the national exchequer and the State Government will forego all aid and assistance from the Centre. It needs to be pointed out Mr Modi has not demanded people stop paying taxes or that Gujarat secede; he has only suggested a new political contract -- impracticable as it may be -- between a State Government and the Centre. How this amounts to sedition defies logic. Rather, there are two facets to the debate that Mr Modi has sought to trigger. First, with the locus of economic reform increasingly moving to provincial capitals, a sharp differential is becoming apparent between better-performing States and economic laggards. <b>This is true for India, of course, where Gujarat and Tamil Nadu may legitimately wonder why they are being treated on a par with chronic underachievers</b>. It is even more true for China, where surpluses from the prosperous coastal provinces become subsidies for the northern rust belt and are a source of heartburn.
<b>Second, it is not as if Mr Modi is arguing that revenue collected from the territory of Gujarat not be spent on, for instance, building roads or educating children in less well-off West Bengal. His hostility and justifiable anger is against the Centre, which refuses to cut its administrative costs, persists as a profligate and wasteful bureaucracy and essentially burns money it collects as taxes. Under the UPA Government, fiscal irresponsibility and populist spending have scaled new heights</b>. It is now quite clear, for example, that the National Rural Employment Guarantee Programme is a monumental failure, with local officials and political workers siphoning huge sums. The outlay of the NREGP is going to finance many election campaigns in 2009, including that of Congress candidates. Mr Modi is well within his rights to ask why the Gujarati taxpayer -- or, for that matter, the Indian taxpayer -- should have to bankroll this. Looked at another way, Gujarat's contribution to the Centre is going to pay for more than half the Rs 71,000 farm loan waiver that the Congress has conjured up.
<b>It is an open secret that as a rent-seeking entity, and a roadblock of monolithic proportions, the Government of India is the single biggest impediment to economic growth in India. Under the UPA, this verity has reached its extreme conclusion</b>. If the Government had controlled its wild spending, inflation would have been under control, interest rates would not have needed to be raised to the extent they have been, and the economy's momentum would not have slackened. The Centre may then have had more money to hand back to the States. This is Mr Modi's point. It is not seditious; it is commonsensical.
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The Pioneer Edit Desk
States earn, Centre binges: Won't do
While Congress spokespersons have responded with characteristic overstatement in demanding Mr Narendra Modi's trial on charges of sedition, it would be prudent to examine the Gujarat Chief Minister's recent remarks and place them in the context of Centre-State fiscal relations. Mr Modi's contention is that Gujarat, as one of India's economic powerhouses, contributes Rs 40,000 crore to the national exchequer. In turn, the Centre gives Gujarat only 2.5 per cent of that amount in terms of development assistance and the like. The Gujarat Government sees this as patently unfair. Mr Modi has rhetorically asked the Union Government to sign an agreement for one year, a period in which no funds will be transferred from Gujarat to the national exchequer and the State Government will forego all aid and assistance from the Centre. It needs to be pointed out Mr Modi has not demanded people stop paying taxes or that Gujarat secede; he has only suggested a new political contract -- impracticable as it may be -- between a State Government and the Centre. How this amounts to sedition defies logic. Rather, there are two facets to the debate that Mr Modi has sought to trigger. First, with the locus of economic reform increasingly moving to provincial capitals, a sharp differential is becoming apparent between better-performing States and economic laggards. <b>This is true for India, of course, where Gujarat and Tamil Nadu may legitimately wonder why they are being treated on a par with chronic underachievers</b>. It is even more true for China, where surpluses from the prosperous coastal provinces become subsidies for the northern rust belt and are a source of heartburn.
<b>Second, it is not as if Mr Modi is arguing that revenue collected from the territory of Gujarat not be spent on, for instance, building roads or educating children in less well-off West Bengal. His hostility and justifiable anger is against the Centre, which refuses to cut its administrative costs, persists as a profligate and wasteful bureaucracy and essentially burns money it collects as taxes. Under the UPA Government, fiscal irresponsibility and populist spending have scaled new heights</b>. It is now quite clear, for example, that the National Rural Employment Guarantee Programme is a monumental failure, with local officials and political workers siphoning huge sums. The outlay of the NREGP is going to finance many election campaigns in 2009, including that of Congress candidates. Mr Modi is well within his rights to ask why the Gujarati taxpayer -- or, for that matter, the Indian taxpayer -- should have to bankroll this. Looked at another way, Gujarat's contribution to the Centre is going to pay for more than half the Rs 71,000 farm loan waiver that the Congress has conjured up.
<b>It is an open secret that as a rent-seeking entity, and a roadblock of monolithic proportions, the Government of India is the single biggest impediment to economic growth in India. Under the UPA, this verity has reached its extreme conclusion</b>. If the Government had controlled its wild spending, inflation would have been under control, interest rates would not have needed to be raised to the extent they have been, and the economy's momentum would not have slackened. The Centre may then have had more money to hand back to the States. This is Mr Modi's point. It is not seditious; it is commonsensical.
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