Speaking at the Indian Economic Summit, Naidu also asked for enhanced revenue support for the states from the Centre and said that 50 per cent of the Centre's total revenue receipts should be given to the states in a phased manner.Naidu said the restriction on borrowing by states under Article 293 of the Constitution should be removed as it acts as a major impediment in the financing of major products.Stating that decentralisation is essential to survival in the new millennium, Naidu said he believed that giving greater borrowing powers to the states would work because voters would chose candidates who follow fiscal discipline and the capital markets would discipline governments that do not follow fiscal prudence.

Financial and other decision making powers should be transferred to states as the decision making was slow in a centralised system, he added Though state governments are now raising capital through a number of corporations, it is necessary to prune the barrier to enable them to negotiate directly with international financial organisations to inject the much-required funds for developmental projects, he said.

Naidu said he was already holding talks with the Centre. Performance of state governments should not be made the criteria for increased disbursal of funds to the states, Naidu said."Decentralisation can strengthen the states and they can in turn contribute to a healthy federal government," he said.Predicting the end of the Nation state, Naidu pointed out that globalisation as well as localisation will lead to diminishing federalism.

While in the future only strong states would make a strong Centre, it is important now that we continue political decentralisation with economic autonomy, he added.

President of the Upper House of the German Parliament and minister president of the Free State of Saxony, Germany Kurt Biedenkopf said that federalism leads to decentralisation of power it it is on a workable basis and further leads to an increase in plurality and diversity and a reduction in threat to civil liberties.Biedenkopf said that societies than can manage complexities optimally will be winners in the future.