Political Analyst Prashant Kishor's Predictions for Modi 3.0
Curbs on States' Financial Autonomy: Kishor anticipates significant efforts to restrict the financial independence of states, potentially limiting their ability to allocate resources and pursue independent policies.
Petroleum under GST: The inclusion of petroleum, currently exempt from the Goods and Services Tax (GST), would centralize revenue collection and potentially reduce the financial autonomy of states. This move, long sought by the industry but resisted by states due to potential revenue losses, would amplify states' reliance on the central government for funds.
Delayed Devolution of Resources: Kishor predicts that the central government may delay the transfer of funds to states, further straining their financial autonomy.
Tighter Fiscal Norms: Fiscal Responsibility and Budget Management (FRBM) norms, which regulate states' borrowing and spending, could be tightened, further limiting their financial flexibility.
Increased Global Assertiveness: India's foreign policy under Modi 3.0 is expected to exhibit heightened assertiveness in geopolitical engagements, potentially bordering on arrogance according to diplomatic circles.
Kishor's Assessment of Modi's Popularity and Electoral Prospects:
Despite these potential changes, Kishor believes there is no widespread resentment towards Prime Minister Modi and anticipates a comfortable victory for the Bharatiya Janata Party (BJP) in the upcoming elections, with a seat count of approximately 303.
States' Revenue Sources:
Kishor highlights the significance of petroleum, liquor, and land as major revenue streams for states. The inclusion of petroleum under GST would significantly impact states' financial capacity.
Economic Implications:
The inclusion of petroleum products under GST could have far-reaching economic implications. The current highest GST slab is 28%, while petroleum products are often taxed at rates exceeding 100%. This suggests that if petroleum is incorporated into GST, the tax burden on consumers may be reduced. However, the financial implications for states, which rely heavily on petroleum-related revenue, remain uncertain.
Global Diplomacy:
Kishor's prediction of increased global assertiveness aligns with the recent shift in India's foreign policy posture, characterized by greater proactive engagement and a willingness to challenge established norms.
