The compliance burden imposed by states on enterprises is too thick for them to flourish and generate formal employment
ndia’s former prime minister Indira Gandhi saying “strong states lead to a weak nation" and then Andhra Pradesh chief minister N.T. Rama Rao saying “the central government is a conceptual myth" were merely extreme views in a long Indian debate on the relative roles of the state and central governments. This debate, seeded by the introduction of dyarchy in 1919, became an important part of the three-year task for the 299 remarkable people who started writing our Constitution in 1946. The tricky state and Centre intersection has traffic jam potential. Massive, uncoordinated and punitive regulatory cholesterol after independence made life difficult for employers. The goods and services tax (GST) cleared some of it, though covid’s pain is challenging finances, guarantees and borrowing now. But the case we need to make is that states need to act more boldly in rationalizing, simplifying and digitizing employer compliances for India to attract factory refugees from China and create a fertile habitat for formal non-farm job creation.