States need to have better control on long-term credit flow, can recapitalise finance corporations: NITI Aayog

New Delhi: State governments need to capitalise their credit institutions to get access to long-term finance and have better control over their credit flow, a NITI Aayog official said. The states have no control over the long-term finance right now but nobody is stopping them from recapitalising finance corporations which will allow them to on-lend at attractive rates to entrepreneurs, NITI Aayog special secretary Yaduvendra Mathur said. “States can’t just wait that something will come from the Centre then we will move ahead. It is a proactive world now and a proactive world is about choice, taking actions and the state governments are choosing to take big course correction action,” he said. [caption id=“attachment_6013191” align=“alignleft” width=“380”] Representational image. Reuters.[/caption] “We need the state governments to have access to one of the factors input, which is credit, long-term credit which the state governments right now have no control,” Mathur said at the ‘Indian States Summit 2019’ organised by the Indian Chamber of Commerce here. He said that the state governments need to seriously invest in their credit institutions and have a better hold on their credit flow. Nobody is stopping the state governments from recapitalising their finance corporations, and through this, they can on-lend at an attractive rate to their entrepreneurs, Mathur said. Right now the states have no control over the availability of long-term credit. Land, labour, electricity, basic infrastructure are under the control of states but when it comes to financing or capital needs, they have no role to play as banks are owned by the central government, Mathur said. Also, there are issues related to ease of doing business are of great concern with respect to states, however, policy tweaking has happened over the past several years on the export potential of states. Earlier, the role of the state governments was rather minimal in designing the national export strategy. The Commerce Ministry and other Central government agencies were really not into greater dialogue with state governments. But now every state government is being asked to prepare its own export strategy. As a result, about 17-18 states governments have come out in the public domain with their export strategies, the NITI official said. “The Commerce ministry, DPIIT, NITI Aayog—we are all engaging with the states and have discussed export index to rank the states. Mathur said that the state governments need to support their industries so that they can compete in the global market because unless they are channelised to the global value chain, India will not be able to deliver the results that are desired to a reach a $5 trillion economy. “So we will encourage state governments to design their own industrial policies and supporting structure so that they can compete globally and realise their export potential,” he added.