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Union government’s financial centralisation aimed at political centralisation: C.P. Chandrasekhar

This report was published in The Hindu on 16/09/2023

The push given by the Central government for financial centralisation is primarily to attain political centralisation, and such efforts will revoke the federal set-up enshrined in the Constitution and establish a centralised political setup, according to C.P. Chandrasekhar, former professor, Jawaharlal Nehru University.

The result is that the State governments’ fiscal and economic policy space is eroded. The fundamental character of the nation, India being a union of States, is challenged under the centralisation policies pursued by the Union government, he said while delivering the Professor K.K. George Memorial Lecture on ‘Can the Centre Hold? Engineered Inequality and India’s Development Trajectory’ here on Friday.

Mr. Chandrasekhar, who is currently senior research fellow at the Political Economy Research Institute, University of Massachusetts, Amherst, said the autonomous resource mobilisation capacities of States had been hit following the implementation of the GST regime.

States now depend on the Centre for nearly half of all their resources and have no control over more than two-thirds of their revenues. Such measures are leading to political centralisation. States are economically penalised by the Centre to such an extent that they cannot initiate and undertake development activities depending on their priorities. Repeated ideas like ‘one nation, one election’ and ‘single tax system’ are related to political centralisation, he said.

The lecture was jointly organised by the Centre for Socio-Economic and Environmental Studies, Kochi; School of Management Studies, Cochin University of Science and Technology; and K.N. Raj Study Centre for Planning and Centre-State Relations, Mahatma Gandhi University.