Economist Bibek Debroy urges states to contribute in defence, railways, highway projects

State governments should contribute in funding for defence, national highways and railways projects, said Bibek Debroy, Chairman, Economic Advisory Council to Prime Minister (EAC-PM). When the Centre provides funds for healthcare, which is a state subject, should states not contribute their bit for defence, railways and national highways, Debroy wondered.

"Railways is important, the national highway is important. If they are important then just as Union government should contribute on health, even as health happens to be (on the) state list. "By the same token, state governments should also contribute for their share in defence, national highways, railways," he said at an event organised by industry body Assocham.

Noting that India as a country is excessively centralised, Bibek Debroy said, "in other words, I think we have come to a cusp when we need to debate the present package of the central sector and centrally sponsored schemes (CSS)".

Stressing that fiscal consolidation is important, he said there is a need to prioritise and decide areas that are important from point of view of public administration. Pointing out that India's tax to GDP ratio is low at 17 per cent, Debroy said, "As long as we have tax exemptions we will not have simplified tax structure".

Debroy also said that for a country like India, the largest contribution to growth and productivity will probably come about from more efficiently using the land, labour and capital, thus they must be used more efficiently. "Our titling systems are pretty pathetic, there are states in India where cadastral surveys are obsolete and unless we update them unless we have some kind of reasonable titling system it would be extremely difficult to use land efficiently," he said.

(With inputs from agencies.)