Rise of the states
Earlier advertisements from state governments rarely went beyond the statutory tenders or appointments. If at all they were typically related to tourism such as Kerala’s ‘God’s own country’ campaign some years ago. That has now changed with states advertising their potential as an investment destination.
State’s share in the Centre’s tax receipts have risen from 32% to 42% based on recommendations of the 14th Finance Commission. As per a recent Credit Suisse report, the cumulative spending of states is now 1.6 times that of the Centre.
How each state will use the increased tax allocations will be an interesting trend to watch. Initially the proceeds may go towards cleaning up State Electricity Board losses or reigning in borrowing. But eventually the extra money in the hands of states will find its way into the economy.
