GST mechanism doesn’t command states’ trust, says former RBI Governor YV Reddy : 04-04-2019

He also talked about centrally-sponsored schemes implemented by respective state governments, as well as issues of public debt.

Due to the way the goods and services tax (GST) mechanism is functioning, it does not command the trust of the states, said former RBI governor YV Reddy on Wednesday, at a discussion during the launch of his book ‘Indian Fiscal Federalism’, organised at the Indian Institute of Management, Ahmedabad (IIM-A).
According to Reddy, the future of GST depends on how both the states and the Centre would gain, and cooperation from all the states. “Before 2014, people used to debate on the model of different states, i.e. Gujarat, Tamil Nadu, Andhra Pradesh etc, but now people are talking about ‘one nation, one policy’. At the moment, we are at the crossroads,” said the former chairman of the 14th Finance Commission.
Reddy, who is also professor of management practice at IIM-A, also raised questions on empowering the NITI Aayog, saying that empowering it means empowering the Union government and ultimately a ‘political body’. He pointed out that the decision should be taken based on India’s future population and not based on the population of 1971. He also talked about centrally-sponsored schemes implemented by respective state governments, as well as issues of public debt.
Source : Economic Times