The setting up of NITI Aayog that replaced the 65-year-old Planning Commission marks the demise of the “command and control” economy heralding the beginning of cooperative federalism, Union finance minister Arun Jaitley said on Wednesday.
"A particular scheme can be relevant for one state but not suitable for another. In the process, the states will be more financially empowered and get more central funding," Jaitley said.
There also has to be what he called competitive federalism signifying competition among states for investments, he said while addressing Bengal Global Business Summit in Kolkata.
But even as states fight for investments they should also ensure that private sector gets its return on its investments. That only can ensure that private sector continues with its investment cycle, Jaitley said in the presence of West Bengal chief minister Mamata Banerjee.
“Almost every state is realising the importance of creating an investor-friendly environment. The basis of our growth has to be our ability to attract investments. We should create not only an environment that attracts investments but that also has to promise profitable return on that investment. Industry will expect a return on investment and therefore our entire environment has to be such that it ensures investments should lead to greater investments.”
Jaitley’s comment assumes significance at a time when the private sector has so far complained of shifting goalposts, retrospective laws and events like taking back of coal mines after being allotted, that have frustrated projecting profits from projects.
Jaitley also made a case for higher share of manufacturing in the share of economy of states like West Bengal as “it is manufacturing in which people are going to shift from underemployment in rural agriculture sector”.
“That is the greatest challenge in the next two years,” he said.
The Make in India initiative has been a flagship project of the central government that promotes domestic manufacturing.
Regarding implementation of Goods and Services Tax, Jaitley said no state would stand to lose a single rupee as revenue, and West Bengal, being a 'consuming' state, substantial amount of revenue would accrue in the first year of GST roll-out.
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