Besides continuing expenditure to create physical and social infrastructure, a ‘ Viksit Bharat ’ financing strategy requires higher savings, stronger private investments, prudent state finances and stronger cooperative federalism, Fifteenth Finance Commission chairman NK Singh said on Friday.
Delivering the keynote address on ‘Financing India’s Journey towards Viksit Bharat’ at the conference of state finance ministers and finance secretaries, he emphasized on the need for a new centre-state economic compact to implement the financing strategy. Singh is also president and life trustee of the Institute of Economic Growth (IEG). At the inaugural address, he stressed on the need to nudge states for a healthy competition among them to achieve development goals.
We must now endeavour to move towards competitive federalism where states can compete meaningfully on development parameters and share each other’s experience,” he said. Consultative mechanisms for a meaningful dialogue have for long remained elusive, he said. “Even during the Planning Commission era, meetings of the Development Councils were not interactive, it became a forum for seeking greater central support and paucity of finance,” he said. “The NITI Aayog Governing Council has fostered valuable discussions, and has nurtured new ideas notwithstanding that the hangover of the transition has yet to fully evaporate,” he said, endorsing the biennial conference, which aims to fill the gap and provide a meaningful platform for the center and the states to discuss broader issues of inter-dependence.
“Our meeting today signals a deepening of the Prime Minister ’s broader commitment to enhancing ‘ Cooperative Federalism’ .
He stressed on the need to boost domestic savings. The Union Minister for Finance & Corporate Affairs will be present during the conference. Several Chief Ministers and Finance Ministers from the States will participate along with senior State officials in the conference. The conference is also addressed by economic affairs secretary Anuradha Thakur who also highlighted the objectives of the conference. The conference is focusing on three thematic sessions — macroeconomic overview, financing agricultural transformation and financing the energy transition.
“Our gross domestic savings rate (combining households, private sector and government) is around 34% of GDP . We know that this is inadequate to sustain 7-8% growth needed for Viksit Bharat…, the rate must rise progressively. Our historical peak was around 38%. 2026, in New Delhi.
We should therefore aim for 38-40% to support the investment needed for Viksit Bharat,” he said.
The Ministry of Finance will organise a Conference of Finance Ministers and Finance Secretaries of States and Union Territories with Legislature on “Financing India’s Journey towards Viksit Bharat” on 18th and 19th Sept. The conference aims to bring together academic rigour and practical policy to deliberate on financing challenges and policy priorities for India’s development journey, a finance ministry official said asking not to be named.
