PM Modi lauds 'Centre-State bhagidari' for undertaking THESE FOUR major reforms during COVID-19 pandemic - check details here

Centre-State Bhagidari: The COVID-19 pandemic has come with a new set of challenges in policy making for governments across the world. In India, especially,  raising enough resources for public welfare while ensuring sustainability was a big challenge. This has further led to several reforms in the country. Yesterday, Prime Minister Narendra Modi has taken on to LinkedIn to share a blog post on reforms, 'centre-state bhagidari' and innovative policy making in times of the COVID-19 pandemic.

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In case of a country with continental dimensions, policy instruments at the national level to promote reforms by states is a challenging feat. However, the Prime Minister expressed in faith the federal structure and stated that they moved ahead with the spirit of 'Centre-State bhagidari'. In his blog post, the Prime Minister emphasised on the fact that the country formulated an economic response to the COVID-19 pandemic, and they wanted to ensure that their model do not follow a ‘one size fits all’ model.

The Prime Minister's blog post said, "In this back-drop of financial crunch seen across the world, do you know that Indian states were able to borrow significantly more in 2020-21? It would perhaps pleasantly surprise you that states were able to raise an extra Rs 1.06 lakh crores in 2020-21." In this context there has been mainly four reforms in the country. They are as follows:

1) ‘One Nation One Ration Card’ policy - By means of this reform, state governments ensured that all ration cards in the State under the National Food Security Act (NFSA) were seeded with the Aadhaar number of all family members and that all Fair Price Shops had Electronic Point of Sale devices. This initiative has been extremely beneficial for the migrant workers who are able to draw their food ration from anywhere in the country. Moreover, this policy led to a financial benefit as due to this policy there was the elimination of duplicate members. 17 states completed this reform and were granted additional borrowings amounting to Rs. 37,600 crores.

2) Improving ease of doing business - Under this reform, the states had to ensure that the renewal of business-related licences under 7 Acts must be made automatic, online and non-discretionary on mere payment of fees. Furthermore, implementation of the computerised random inspection system and prior notice of inspection to reduce harassment and corruption under a further 12 Acts was another requirement. This reform is of particular help for the medium and small enterprises who suffer the most due to the 'inspection raj'. 20 states completed this reform and were allowed additional borrowing of Rs. 39,521 crores.

3) Floor rates of property tax and of water and sewerage charges, in consonance with stamp duty guideline values for property transactions and current costs respectively, in urban areas - This is for the welfare of the urban poor and middle class for supporting better infrastructure and stimulating growth.  Property tax is also progressive in its incidence and thus the poor in urban areas would benefit the most. This reform also benefits municipal staff who often face delay in payment of wages. 11 states completed these reforms and were granted additional borrowing of Rs. 15,957 crores.

4) Introduction of Direct Benefit Transfer (DBT) in lieu of free electricity supply to farmers - The requirement was for formulation of a state-wide scheme with actual implementation in one district on a pilot basis by year end. A component was also provided for reduction in technical and commercial losses and another for reducing the gap between revenues and costs (0.05% of GSDP for each). This improves the finances of distribution companies, promotes conservation of water and energy and improves service quality through better financial and technical performance. 13 states implemented at least one component, while 6 states implemented the DBT component. As a result, Rs. 13,201 crore of additional borrowings was permitted.