View: Federal finance must globalise, with states allowed a bigger share of investments
governments in their national economies is rising, both through policy and expenditure. In India, of the total gov expenditure of 30% of GDP, two-thirds is carried out by state governments, including some spending financed by the Centre. To hobble state finances, in this context, is to express a strong death wish.
Indeed, FPIs in government debt can invest in state government debt. But they do not. They have utilised hardly 2.6% of the permissible limit for state government securities. Why, then, is the Centre chary of letting state governments aggressively market a part of the debt they are eligible to raise abroad, particularly to migrants from their states?
India is the world's biggest recipient of migrant remittances — $125 billion in 2023. Mexico, the second-highest, got about half as much. NRI deposits have been the mainstay of emergency foreign borrowings for India, time and again. Remember Resurgent India Bonds (RIBs) to tide over India's post-nuclear test isolation of 1998? India Millennium Deposits (IMDs) of 2000? And the foreign currency non-resident special deposits to tide over the taper tantrum of 2013?
Migrant workers have a calculus that is a little more generous than that of FPIs, when it comes to investing in their home states. Why prevent state governments from tapping into this fount of generosity?
Kerala's Calicut International Airport faced a peculiar problem. Built as it is on top of a hill, to extend the runway to accommodate large aircraft, enormous amounts of earth had to be piled
