State governments have made it clear that they would use the forum of Inter-State Council to get more and more from the centre. This emerges easily from the demand voiced at the meeting of the standing committee of the council in the capital on Tuesday for direct access to external commercial borrowing (ECB) market, the strong position taken on imposition of a consignment tax by them and the resistance to the proposal for the introduction of an agricultural income tax by the centre. The fact that a consensus has eluded the standing committee on Article 356 as well as the question of royalty on minerals also reflected the assertiveness of state governments.

With liberalisation and particularly with different state governments taking a lot of initiative in respect of wooing foreign investors, a relaxation of the centre's authority would seem to be in order on the tapping of the ECB route and the pricing of diverse minerals. Maybe, if the centre can exercise the same degree of control as it does in respect of foreign investment proposals, a situation of anarchy can be averted on either matter. A confrontation between the centre and the Gujarat government that has emerged on fuel pricing is best avoided in the interests of healthy federal relations. But on the question of states independently imposing a consignment tax, the introduction of an agricultural income tax and on the application of Article 356, clearly the centre must have a larger say.

The multiplicity of taxes and levies is totally inconsistent with the essence of liberalisation, which is competitive production and supply of several goods. When there is a strong case for fewer levies, if the states are allowed to impose a consignment tax, the purpose of reform will be defeated. Also when the farming community needs to be brought within the tax net, the centre must have the authority to introduce an agricultural income tax. On Article 356, while safeguards are certainly necessary to prevent the centre's misuse of the provisions, it should not be diluted to the point where the centre will be rendered helpless precisely when it has to act tough. On mineral pricing also, state governments should not use it solely as a revenue resource. While revenue is short everywhere, still care should be taken to ensure than there is no exploitation of the users.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.