#dnaEdit: State govts and citizens unhappy with Swachh Bharat cess

Over a year after the high-profile launch of the Swachh Bharat Mission (SBM), the central government’s decision to impose a Swachh Bharat cess reflects its desperation to sustain the momentum of a scheme into which the Prime Minister had invested so much of his energy. The Prime Minister had hoped that the initiation of the novel scheme would bolster his welfarist credentials. The ground reality however has turned out to be somewhat different. The SBM has had little impact in cities though the government claims to have performed better in rural areas where an astounding 80 lakh toilets have been purportedly built. But the imposition of the cess also appears to be an indication that the government’s focus is shifting away from the SBM, and into getting the scheme to function in auto-pilot mode without having to worry about earmarking funds for it in every budget. However, the decision to levy a cess has proven to be unpopular among virtually all sections of people.

For one, the Centre is already levying a number of cesses like education cess on income, road cess on petroleum products, higher education cess on services, and clean energy cess on coal mining. The tax burden has made routine activities like eating out, making phone calls and purchasing rail/air tickets an expensive affair for consumers and in that process, curtailed spending. It is little wonder then that the business community has not taken kindly to the imposition of yet another cess. Among its vocal critics are state governments who have objected to the Swachh Bharat cess for being another of the Centre’s ploys to avoid sharing of taxation receipts with them. Unlike taxes, the Centre is not bound to share the proceeds from cesses and surcharges with the states. In the 2015-16 Budget, the Centre had converted the excise duty on petroleum products into road cess and wealth tax into surcharge. This denied state governments nearly Rs12,000 crore in revenue.

The Centre, despite accepting the 14th Finance Commission’s recommendation to increase the devolution of central taxation receipts to states from 32 to 42 per cent, has been accused of shifting the burden for funding centrally sponsored schemes to states. Even the SBM has been hit by this policy, with the Centre allocating Rs,5,236 crore for 2015-16, which was Rs12,100 crore less than the revised budgetary estimates for 2014-15. Some states complain that this has negated the benefits from greater revenue devolution. The Centre-state tussle over revenue sharing can have a dampening effect on welfare spending. Though the Centre is bound to contribute 75 per cent of the funds for individual household toilet building, the state governments have to cough up the remaining 25 per cent. The states are understandably chafed at the cess granting the Centre the luxury of preserving its revenue collection for purposes other than ensuring cleanliness. In contrast, states have to contribute their 25 per cent share from the existing revenue stream, despite the SBM being essentially a centrally sponsored scheme. Perhaps, the Centre can mollify the states by hiking the central share in SBM to 90 per cent.

The Centre-state tussle for greater share of revenues is an integral aspect of the federal structure. The welfare and spending priorities of the Centre and states can differ and it is therefore incumbent on the Centre to assume greater responsibility for operating centrally sponsored schemes. With the SBM closely identified with PM Modi, opposition-ruled states will need to be suitably incentivised. No doubt, the initiation of SBM was timely, considering the poor sanitation coverage in rural areas and the dismal condition of waste management in urban areas. Despite the rousing start, it has however struggled with implementation, monitoring and maintenance, which remains in the hands of state governments, panchayats and local communities. Even the corporate groups who owe allegiance to PM Modi have disappointed the government in making small contributions to the SBM.

The much-needed behavioural changes have not happened at the grass roots despite the selfies, celebrities picking up brooms, and the diktats to bureaucrats. The lack of hygiene and cleanliness is a long enduring problem, which cannot be eliminated overnight. PM Modi must stay committed to the mission for the long haul.