Prime Minister Narendra Modi on Tuesday, June 22, shared his blog post on reforms, centre-state bhagidari, innovative policy making during Covid times. The blog is posted on LinkedIn platform. 

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In a tweet the Prime Minister said: “Reforms by Conviction and Incentives...my @LinkedIn post on innovative policy-making in the time of COVID-19, powered by the spirit of Centre-State Bhagidari.

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The PM has mentioned in his blog that the Covid-19 pandemic has come with whole new set of challenges to Governments across the world in terms of policy-making. India is no exception. Raising enough resources for public welfare while ensuring sustainability is proving to be one of the biggest challenges.

He has also mentioned that “It would perhaps pleasantly surprise you that states were able to raise an extra Rs 1.06 lakh crores in 2020-21. This significant increase in availability of resources was made possible by an approach of Centre-State bhagidari.”

“For a federal country of continental dimensions, finding policy instruments at the national level to promote reforms by State Governments is indeed challenging. But we had faith in the robustness of our federal polity and we moved ahead in the spirit of Centre-State bhagidari, he has penned.

Talking about the Aatmanirbhar Bharat package in May 2020, he said the Government of India announced that State Governments would be allowed enhanced borrowing for 2020-21. An extra 2 per cent of GSDP was allowed, of which 1 per cent was made conditional on the implementation of certain economic reforms. This nudge for reform is rare in Indian public finance.

This was a nudge, incentivising the states to adopt progressive policies to avail additional funds. The results of this exercise are not only encouraging but also run contrary to the notion that there are limited takers for sound economic policies.

He has elaborately discussed the four reforms to which additional borrowings were linked (with 0.25 per cent of GDP tied to each one) had two characteristics. These four reforms are One Nation One Ration Card, ease of doing business, floor rates of property tax and of water and sewerage charges, and Direct Benefit Transfer.