Opposition parties’ misgivings about the newly-created ‘Union Ministry of Cooperation’ are “exaggerated and misplaced”, the Fifteenth Finance Commission Chairman NK Singh said on Thursday.

“This (new Ministry) is not a new creation. Much before this ministry was formed, there already existed for a very long time a department of cooperation under Agriculture Ministry. This is now transferred to a new Ministry without any additionally or change of functions,” SIngh said in reply to a question post his lecture on ‘Federalism in the Pandemic’ at the NCAER organised India Policy Forum 2021.

Singh maintained that many of the apprehensions over erosion of state autonomy on account of creation of the new Ministry were unfounded.

The question posed to Singh related to the opposition parties contention that the creation of new Ministry of Cooperation at the central level could “harm federalism and state autonomy” given that subject of cooperation falls in the State list as per Schedule VII of the Constitution.

Electricity reforms

To another question on whether the inability of some States to reform electricity subsidy policy for agriculture becoming a hurdle for initiatives like ‘Uday’, Singh agreed on this and highlighted that States that do not reform their electricity sector will never be able to have a healthy state of State Finances.

“The giant elephant in the room of any State Finance is the management of State electricity sector. States that are recalcitrant and continue to pursue policy that is fiscally irresponsible to free power to agriculture are going to pay heavy penalty in days to come”, Singh said.

Such recalcitrant States are bound to not only lose out on the resources that has been given, but also face consequences of losing productivity and losing long term growth capabilities, he said.

“Recalcitrant States will inevitably pay heavy price if they show tardiness in electricity subsidy policy reforms”, Singh added.

Vaccine procurement

On vaccine procurement policy, Singh said that the current vaccine buying policy shows the success of cooperative federalism. He also said the Centre was always in a better position to negotiate on the terms of procurement of vaccines.

Singh said that a complication was created earlier after few States believed that they could do a much better job than what the central government could accomplish.

“In the end it’s the central government which should have been and was always in a much better position to do so. It was a learning curve, but I think we have reached the right equilibrium in this,” Singh said in his lecture.

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