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Journalism of Courage
New Delhi, Nov 23: Deputy Chairman of the Planning Commission K C Pant on Thursday expressed concern over the deterioration in fiscal health of states and said state-level public sector enterprises must contribute to the resource mobilisation effort of the states.
“The fiscal mess in the states was created due to the rising non-Plan expenditure combined with reluctance to raise additional resources… Reforms must be initiated to ensure that state-level public enterprises contribute to the resource mobilisation efforts of the states,†Pant said at the inauguration of India States’ Reform Forum 2000 here.
Pant said government must consider disinvestment of public enterprises, which have outlived their utility in the current context. “While many states may not like it, the Planning Commission would like to encourage more performance-linked schemes out of the Central Plan allocation to states,†he said adding that the Accelerated Power Development Programme introduced this year would make funds available only to reforming states.
Pant said bilateral and multi-lateral financial agencies should give greater emphasis to providing assistance to less developed states that are reform-oriented. “Available information on private investments indicates that external assistance has been flowing to those states which are more developed with better infrastructure,†he said.
State-wise figures on credit-deposit ratios indicate that institutional finance flows are also concentrated in just a few larger and more developed states, Pant said adding this was a worrying trend as it signalled diverging growth prospects of developed and developing states.
Pant said the Planning Commission had created a Project Preparation Facility to assist states which have been less successful in attracting external and institutional finance in professional preparation of project proposals with outside expertise.
He said states were also encouraged to sign MoUs with Ministry of Finance for a programme of fiscal reforms, to be supported by temporary and medium term accommodation by the Centre in overcoming financial difficulties.
Speaking on the occasion, Chief Minister of Andhra Pradesh Chandrababu Naidu said second generation reforms must focus on physical infrastructure, human capital, good governance and inequalities.
Naidu said Centrally Sponsored Schemes should be abolished and the central taxes should be pooled to provide 50 per cent devolution to states. “Additional excise duties and surcharges need to be curbed and the Planning Commission role should be changed,†he said.
Comparing the state of the Indian economy with that of China, Naidu said even though the economic liberalisation began in 1991 there were as many as 29.65 lakh cases pending in different High Courts across the country and growth rate during 1990-98 was 6.10 per cent as against 11.10 of China during the same period.
Naidu said that some of the outdated controls relating to legislation on pesticides and seeds, labour laws, contract labour and infrastructure should be addressed as part of the second generation reforms. While China has set a time-frame of three years to reduce the size of its government machinery by half, the recommendations of the Fifth Pay Commission to bring about a 30 per cent reduction in staff over a ten-year period was not being properly implemented, he said.
