Former Governor of Reserve Bank of India Y V Reddy on Wednesday said that while the Goods and Service Tax (GST) does not pose “any major threat” to Centre-state relations, its roll-out by the Narendra Modi government “does not command the trust of the states”.
The economist was speaking at the Indian Institute of Management-Ahmedabad at the unveiling of his new book ‘India’s Fiscal Federalism’.
“In the last three years, the way GST has been administered, it does not command the trust of the states,” said Reddy said. “The trust deficit has increased with regard to the administration of the GST. Yes or No?” he asked, directing the question at GR Reddy, advisor (finance) to the Government of Telangana, who was sitting beside. GR Reddy responded in the affirmative. “I am sure something will be done,” the former RBI governor continued, expressing hope.
During the discussion on the book, when Gujarat Chief Secretary JN Singh sought to know if the GST could lead to any conflict between Centre and States, YV Reddy said, “Broadly speaking, my sense of the GST is that both Centre and State will gain. Centre has gained more than the state… It is not a zero sum game. The scope for disagreement among states is less, but it is not impossible.”
YV Reddy, who was also the chairman of 14th Finance Commission, said even if something went wrong between the Centre and states, the finance commission mechanism can set it right. “I do not see any major conflict,” he said.
Stating that the dialogue on development has gone from state-based models to a national model in the past two years, he said said, “The development debate till two years ago was ‘Is it the Tamil Nadu model of development, is it Bihar model of development or is it he Gujarat model of development’. Now the dialogue is One Nation One Policy.”