in a full - fledged manner. during the intervening period, it can also address issues arising from implementation of the recommendations of the finance commission. ( 7. 2 ) the principle of decentralisation works better when powers and functions are delegated based on which tier of governance is best suited to fulfil that responsibility. the constitution has already provided for delegation of certain functions to the urban and rural local bodies ; but it is seen that there is still good distance to traverse when it comes to devolution of funds to these local bodies. it is, therefore, essential that the state finance commissions are constituted every 5 years as per the mandate in article 243 - i of the constitution and arrangements are made for their robust functioning. although the provision under article 243 - i is identical to the provision under article 280, its implementation has fallen short. there could be reasons for the same, but they need to be addressed on priority. ( 7. 3 ) recent initiatives in fostering co - operative federalism have opened new chapters of cooperation between centre and states. the gst council is functioning on the principle of shared sovereignty. as dr. y. v. reddy and shri g. r. reddy point out in their book, the sacrifice of fiscal autonomy at both levels of government in favour of the council needs to be seen as a ‘ trade - off ’ so as to reap the benefits of tax harmonisation. indeed, the indian model of gst preserves the essence of indian federalism. india is, however, a union of states in which both the union and the states have to be fiscally strong. while this issue has to be addressed by the finance commission, the challenge for the gst council now is to realise the full potential of gst for enhancing tax - gdp ratio and work on other areas of our economy to enhance its competitiveness. for instance, can the gst council expand its scope and agree to work on other areas of reforms to generate national consensus? ( 7. 4 ) co - operative federalism should not, however, breed inertia. alongside co - operative federalism, there has to be competitive federalism. the ranking of states on the parameter of ‘ ease of doing business ’ has generated very healthy competition among states. indices developed by the niti aayog on health, water management, implementation of sdgs, etc. have the potential to generate similar healthy competition. the program of aspirational districts is another such model for competition and development

bank of japan ’ s january report of recent economic and financial developments1 bank of japan, communication, 22 january 2001. * the bank ’ s view * * japan ’ s economy continues to recover gradually, but the pace is slowing due to decelerating export growth. with regard to final demand, business fixed investment is on an increasing trend. the recovery in private consumption continues to be weak as a whole through lack of notable improvements in employment and income conditions, but there are somewhat positive signs in some indicators. as for public investment, the pace of decline is slowing. meanwhile, net exports ( real exports minus real imports ) are starting to decrease reflecting a slowdown in overseas economies such as the u. s. and east asia. housing investment is declining gradually. reflecting such developments in final demand, industrial production remains on a rising trend, but the pace is slowing considerably. inventories of some materials and electronics parts, of which demand from overseas is declining significantly, become somewhat excessive, but inventories as a whole still remain at a low level. meanwhile, corporate profits continue to improve. income conditions of households still remain severe but are not deteriorating as employment conditions are on an improving trend and wages are slightly above the previous year ’ s level. as for the outlook, public investment is expected to start increasing with the implementation of the new economic stimulus package by the government. in the corporate sector, firms still strongly feel that they have excess capacity and that they should reduce their debts to restore financial soundness. however, it is very likely that fixed investment in high - growth sectors, including those related to information technology services, will increase as corporate profits continue to recover. moreover, the improvement in corporate profits will increase household income and this in turn is expected to boost private consumption. however, the pace of recovery in household income will be modest for the time being, since firms ’ perceptions of excess employment still persist, and thus significant changes have not been observed in their efforts to reduce personnel expenses. reflecting the overseas slowing economies, a temporary decline in exports seems to be inevitable. imports are projected to continue increasing, particularly those of consumer goods, and capital goods and parts. hence, net exports are expected to decline. mainly due to these developments in exports, industrial production is expected to slow down and remain at around the current level for a while. overall, it is likely that the economy will continue a gradual upward trend led mainly by business fixed investment. in addition, the favorable financial environment created partly by the