Address by Shri Digvijay Singh, Chief Minister, Madhya Pradesh
49th N.D.C. Meeting, 1^st September 2001, Vigyan Bhavan, New Delhi.

Hon'ble Prime Minister, Hon'ble Deputy Chairman Planning Commission, Hon'ble Union Ministers and my fellow colleagues from other States,

The Tenth Five Year Plan (2002-2007) is scheduled to be launched on 1-4-2002 and we are meeting to discuss the Draft Approach Paper to the Tenth Five Year Plan. This meeting of the National Development Council is taking place after an interval of more than two and half years since we last met to discuss and approve the Ninth Five Year Plan document. The Mid Term Appraisal of Ninth Five Year Plan is before us. The experience of Ninth Five Year Plan is a mixed one and there are inter-State variations in the level of achievement of physical and financial targets. While there has been some progress, a lot remains to be done.

2. In the Economic Survey 2000-01, it was claimed "India has the distinction of being one of the fastest growing economies in the world". The release by the Central Statistical Organisation (CSO) of its revised estimate of Gross Domestic Product (GDP) in 2000-01 tells a different story. According to the latest estimate, the GDP growth in 2000-01, instead of being 6 per cent as anticipated, was only 5.2 per cent. The GDP growth rate of agriculture during the first four years of the Ninth Plan has been only 1.4 per cent per annum. The industrial sector too, during these years, has not performed better than in the past. Only the service sector maintained its tempo.

3. While we agree with the 8 per cent rate of growth of GDP target proposed for the Tenth Five Year Plan, achieving this target will require stupendous efforts both on the part of Centre and the State. It is necessary that the Central assistance to the State Plans should go up from the present 45 per cent. It is important that the investment in infrastructure should go to poorer and fast growing States like Madhya Pradesh.

4. The Government of Madhya Pradesh is committed to fiscal reforms. However, the fiscal performance of the State is dependent on resource transfer from Centre to State. Central assistance to States in the Ninth Five Year Plan came down to 45 per cent from 52 per cent in the Eighth Five Year Plan. Unless this trend is reversed, the States would be compelled to borrow to maintain a reasonable plan size. This would increase interest burden and thus worsen the Balance from Current Revenue (BCR). In such a situation the Centre should transfer the power to taxing intra-State services to the States as suggested by the Advisory Group on Tax Policy and Tax Administration for the Tenth Plan constituted by the Planning Commission.

5. I wish to convey my deep concern on the move by the Central Government of linking of Central Plan Assistance to fiscal performance of the States. The State of Madhya Pradesh has already initiated the process of fiscal reforms plans as recommended by the Eleventh Finance Commission to cover non-plan revenue deficit of the States. The Central assistance under Gadgil formula is on 70 per cent loan and 30 per cent as Grant in Aid. Thus State Government is already paying an interest on the loan, may it be Central Assistance. Therefore, to further impose any other embargo on the release of Central Assistance is not justifiable. Such issues which have a wide range of effect should be first discussed in the NDC and then after arriving at a consensus decision should be taken.

6. The Central Plan assistance at present comprises of 70 per cent loan and 30 per cent grants. The underlying assumption is-that the Plan outlay consists of 30 per cent revenue expenditure and 70 per cent capital expenditure. However, the plan outlay of every State consists of more revenue expenditure (approx. 70 per cent) and lesser capital expenditure. Keeping these facts in veiw the loan and grant component of the Central Plan assistance should be changed to atleast 50 : 50.

7. While on the subject of assistance to States from the Centre, I wish to urge that allocation under PMGY should be enhanced and the guidelines for PMGY should be amended to provide complete flexibility and freedom to States in prioritising and implementing projects under this programme.

8. The debt burden of the States is increasing at an alarming rate. One of the important components of this debt is loan from Centre. The rate of interest on these loans is quite high (12 per cent). In the present declining interest rate regime it would be appropriate to raise loans at lower interest rate and repay the old loans with higher interest rates.

9. Assistance for Plan Schemes is a significant component of financial transfers from the Union to the States. The modified Gadgil formula scarcely does justice to backward States. We have repeatedly urged that to redress regional imbalances. Central Plan assistance be made available to the backward States keeping in view only their size, population of SC and ST, incidence of poverty, human development indicators and deficiencies in infrastructure.

10. Most of the laws of the country with a potential for revenue are heavily loaded in favour of the Central Government and/or against the states and the most glaring example is the MM(D and R) Act, 1957. Even though the rights to minerals vests in the states, the Act places severe restrictions on the states' powers to derive benefits from these rights so much so that a basic provision like fixation of royalty has been retained by the Central Government notwithstanding the fact that the revenue from this accrues to the State Governments. This provision has been misused particularly by the Ministry of Coal. It is, thus, not surprising that the States' resources are grossly inadequate to fund scientific and systematic exploration of the mineral wealth using modern techniques which are fairly expensive. Since the Central agencies have to work in the territories within a State, except for Union Territories, it would not be inappropriate to expect that the Central survey agencies (GSI, NRSA, NGRI, etc.) intensify their activities and provide the States with reliable and detailed inventories of the mineral deposits within their boundaries.

11. The achievement of 8 per cent growth rate of GDP will require sharp focus on agriculture development. In order that the agriculture sector grows at the required 4 per cent rate, substantial increase in capita¹ formation in farm sector is necessary. The Draft Approach Paper does not indicate how 4 per cent growth of the sector will be achieved as against 1.4 per cent growth during the Ninth Five Year Plan. The first phace of economic reforms missed a few Indian States because of inadequate focus on agriculture. Agri-business can be a major engine of growth for States like Madhya Pradesh and this will also spread the benefits of economic reforms to the countryside which is essential for the political sustainability of reforms.

12. Since an overwhelming population of land holders are small or marginal, agricultural production systems followed by them have to be diversified into other activities capable of generating higher returns, like organic farming, animal husbandry, horticulture, sericulture, fisheries etc. Biggest challenge before us is to make an unviable land holding sustainably viable.

13. Private sector investment in agriculture needs to be encouraged in areas like agriculture research, post harvesting management and marketing. There is need to rationalise agriculture research, based on identified Agro-climatic zones. Research and extension linkage needs to be strengthened and capacity building of extension workers done to increase their out reach. Agricultural productivity can be improved through the development of a strong extension net-work plus community led agriculture extension. However, all this can be achieved only through refocus of resources towards this direction.

14. The State of Madhya Pradesh has been running a hugely successful watershed development programme entirely managed by the people under the Rajiv Gandhi Mission for Watershed Development. We have also changed the guidelines for implementation of Union Ministry of Agriculture's NWDPRA to a participatory mode which has been taken up as a cue for changing the countrywide guidelines. We propose to continue and intensify this effort. There is a need to make the watershed programme of Agriculture and Rural Development Ministry.

15. There is an urgent need to closely target the Rural Development schemes. There is no Justification to provide funds under EAS to such States where local labour is not available. On the other hand there is large scale migration of labour from agriculturally less advanced States like Madhya Pradesh, Orissa, Bihar, Rajasthan etc. In Madhya Pradesh to provide 100 days of assured employment to all the registered labourers numbering about 29.24 lakhs, allocation of rupees 1462 crores is required per year. As against this, the allocation during 2000-2001 was only rupees 96.23 crores, down by 40 per cent vis-a-vis the allocation for 1998-99 which was rupees 161,99 crores. We urge that this scheme should be demand driven.

16. There is a strong need to converge various available schemes under the Rural Development Department to strengthen poverty alleviation efforts. The infrastructure programmes such as EAS, JGSY, Watershed development etc. should be so implemented as to converge with initiative taken under beneficiary oriented schemes such as SGSY.

17. While we generally agree with the suggestions made in the Approach Paper on Public Distribution System and food security, we suggest that subsidy on food grains be utilised for infrastructure development of PDS, i.e. for construction of warehouses, establishment of fair price shops and compensation to loss bearing fair price shops particularly in tribal areas, for rural poor and shelter less people the scheme of Grain Bank, 'Annakosh' and Food for Work Programme will be very useful. Food Security Policy should not confine only to supply of food grain, but should be made effective tool for removing malnutrition and creating normal livelihood.

18. The costs of maintaining ecological balance should be shared by all and Madhya Pradesh must be compensated by Union Government at least in proportion to the excess of forest land by the national average. In the interest of national wealth and future generations we are willing to extend vegetal cover further if funds are provided to us for compensatory afforestation in the degraded forest areas of our State.

19. Forest under Forest Conservation Act meant as defined by Indian Forest Act, 1927, but based on Government of India guidelines, revenue land and private holdings recorded as forest have come under the purview of this Act. The definition of forest has further been expanded vide Hon'ble Supreme Court judgement of 12th December, 1996 by incorporating the dictionary meaning of forest land. It is suggested that the word "forest" be defined to bring clarity. The suggested definition is "forest land will mean land which has been notified as R.F. and P.P. under the Indian Forest Act, 1927".

20. In Madhya Pradesh the State Government conferred ownership rights to the Gram Sabhas through the primary MFP Co-Operative Societies in pursuance to Panchayats (Extension to the Scheduled Area), 1996. This has caused a revenue loss of approximately Rs. 100 crores to the State. Now the net profit from MFP trade is being given to Primary Co-Operative Societies, 50 per cent of which is being distributed in cash to MFP collectors, 20 per cent being utilised for regeneration of the forest and 30 per cent being used for development of village infrastructure. We request Government of India to compensate the State suitably for the revenue loss caused in the process of people's empowerment.

21. Eight per cent GDP growth target entails over 10 per cent rate of growth in industrial sector. During the Eighth and Ninth Plan periods taken together, the industrial sector grew at only about 7 per cent. While we agree with the suggestion that Tenth Plan must focus on creating an industrial policy environment in which private sector companies can become efficient and competitive, we feel that the employment criterion should not be lost sight of for achievement of socio-economic objectives. There is need to chalk out a strategy for revival of sick small scale units. Special attention has to be paid to the unregistered sector and service industry. Programmes for development of rural industries can usefully be integrated with rural development/poverty alleviation programmes.

22. We support the Disinvestment in Central and State PSUs but urge that the process of disinvestment should be transparent and the funds raised through disinvestment should be used for improving Human Development Index of the people.

23. We support the suggestion to take a fresh look at the structure of labour laws. We should not lose sight of the impact of the economic reforms on creation of jobs. As against the growth rate of job seekers at 2-5 per cent, annual Job creation has dropped from 2.1 per cent during the Eighties to a mere 0.8 per cent during the Nineties. During the last three years the rate of job creation has further declined to only 0.5 per cent. The result is that unemployment is growing at an alarming rate which in turn is leading to growing lawlessness. A joint concerted effort on the part of the Centre and the States is required to meet this challenge.

24. The great powers of Science and Technology need to be used for fulfilling the basic human needs, particularly taking note of locale-specific situation which relates to food, health, water, energy, employment and shelter etc. Industry-research link should be further strengthened to increase human welfare. We in Madhya Pradesh have identified Information Technology as a thrust area. We are focussing our attention on e-Governance, e-Education and enabling e-Commerce. There is huge untapped potential in bio-technology and bio-diversity.

25. The Approach Paper lists performance in the field of education as one of the most disappointing aspects of our developmental strategy. In a major shift away from previous trend, Madhya Pradesh has achieved a 20 per cent rise in literacy between 1991-2001. This vindicates the mission mode adopted by the Government of Madhya Pradesh for basic education and literacy as a 'shiksha mission'. Female literacy has also gone up by an impressive 22% - from 28% to 50%. The community based initiatives like Education Guarantee Scheme, 'Padhna-Badhna Andolan' have delivered impressive results. We have also transferred control over schools and teachers to local bodies as also suggested in the Approach Paper.

26. Realising the urgent need to build health action from below, Madhya Pradesh Government has launched 'Swasth Jeevan Sewa Guarantee Scheme' to leverage policy reforms towards decentralisation, build community capacities and converge financial, technical and human resources to improve health services in the State. The State Government has announced its policy of population stabilisation with a view to checking population growth and promoting the small family norm.

27. We in Madhya Pradesh are taking steps to ensure that every village has 'Jan Swasthya Rakshak' and trained Birth Attendant as this is the only viable means of ensuring minimum health care to the people in remote rural areas. Strengthening of ISM dispensaries can also contribute significantly to health care services by extending out-reach in the rural areas. We request the Union Government to extend financial and technical support in our endeavour.

28. According to the World Development Report 2000, India's total expenditure on education and health services was not more than 4.1 per cent of GDP, whereas for the world as a whole this was 7.31 per cent. Even in the low-income group countries, expenditure on education and health services was 4.9 per cent of their GDP. In order to achieve expected results in health and education sectors, investment will have to be stepped up.

29. We agree with the suggestion given in the Draft Approach Paper that nutritional problems need to be tackled across a broad front. In Madhya Pradesh concerted efforts are being made to reduce mal-nutrition particularly among women and yong children. A Nutrition Policy with District level plan of action is under implementation to this end.

30. Along with providing access to drinking water sources, quality of water available and recharging of water sources also needs urgent attention. States should receive liberal financial assistance for urban water supply projects.

31. .We must target by which every house hold shall have toilet.

32. Reforms in the power sector is need of the hour. We feel that steps towards privatisation of distribution should be taken only after studying the experience of other States. Policy of allowing direct sale to bulk consumers by the producers will adversely affect the financial health of the SEB. People's participation would go a long way in encouraging use of non-conventional energy sources in remote and inaccessible areas.

33. We generally agree with the approach suggested in the Draft Approach Paper regarding roads. While we welcome launching of Pradhan Mantri Gram Sadak Yojana', we suggest that more freedom and flexibility should be given to the States in formulating and implementing projects under this scheme. Over-centralisation should be avoided in the interest of better and faster results.

34. For a land-locked State like Madhya Pradesh, deliverance from poor infrastructure is an urgent need and we look forward to full assistance from Central Government in our efforts in this direction.

35. Socio-economic development of SC, ST and women should be an integral part of the development strategy of the Tenth Five Year Plan. Schemes and programmes aimed at uplifting them socially and economically should get high priority.

36. We are of the firm opinion that formulation of schemes particularly in areas such as health, education and agriculture should be left to the States. The Centre should only lay down broad priorities and give grant upfront for transferred CSS. There should be a system of monitoring and review at the Central level.

37. We see de-centralisation as the strategic architecture for democracy to become articulate in our country. Madhya Pradesh adopted decentralisation as the overarching policy framework for strengthening democracy at the grass roots and provide accountability and responsive governance. Through the Rajiv Gandhi Missions we developed a framework for community-led initiatives to broaden democracy and participatory governance. The Watershed Management Mission in Madhya Pradesh catalysed a 'Pani Roko Abhiyan' in the context of the drought early this year. In the area of health-care, we introduced stakeholder management through the 'Rogi Kalyan Samities', which levy user charges and improve the condition of public hospitals. We are the only State to transit to a system of District Government where the powers of the State Government have been delegated to the District level Government through the District Planning Committees. From the fiscal year 2002 we are going in for de-centralised planning with priorities identified as District level. The NDC may consider whether the time has not come for some plan devolution to sub-State Planning Bodies so that these organisations may gain financial autonomy and be perceived as respectable instrument of self governance.

38. We support the suggestions given in the Draft Approach Paper regarding governance reforms. Madhya Pradesh has gone in for major right-sizing measures such as doing away with daily wage workers, reducing the number of vehicles and reducing establishment expenditure and abolishing more than 60,000 posts. Our austerity measures will continue so that we generate adequate resources for investment in infrastructure and human resources development. We are committed to make the bureaucracy more responsive and accountable. We have introduced the Right to Information three years ago and it is being given a legal status. We have Citizens Charters in operation and a computerised Public Grievance framework.

39. We welcome the suggestions given in the Draft Approach Paper that plan funds should be provided for critical repair and maintenance activities. We also agree with the suggestion that preference should be given to completion of existing projects than to new projects. We support the proposed monitorable targets for Tenth Plan and beyond as the key indicator of development.

40. We suggest direct participation of States in the working of NDC through Standing Committee for determination of quantum of public investment in different sectors, support to State plans, pattern/forms of Central assistance for State plans and formula for allocation of Central assistance, scope and nature of Centrally Sponsored Schemes, so that the States' needs are adequately reflected in national priorities and sharing of national resources. States should be left free to determine their own Plan size keeping in view their priorities and resources availability and the Central Government should avoid the temptation to determine choice/ influence investment through earmarking.

CRITERIA FOR ALLOCATION OF FUNDS UNDER MAJOR RURAL POVERTY ALLEVIATION PROGRAMMES

The Expert Group's estimate of poverty effects Madhya Pradesh adversely. While we are in favour of State specific poverty lines for estimation of poverty, but because of infirmity of data the number of poor has been swelled in the relatively more progressive States. By simply changing the methodology and using unreliable data, a major change has been introduced, adversely affecting the interests of backward States like Madhya Pradesh. At this crucial stage, when the revitalised panchayat Raj Institutions are beginning to take root, it would be unfair and unwise to reduce the share of Rural Development Funds to our State. Till such time as reliable data are available, it is requested that the Task Force methdology should not be abandoned simply for the sake of statistical refinement. A 15 per cent adjustment is not the right answer to this problem.

TRANSFER OF CENTRALY SPONSORED SCHEMES (CSS)

Proliferation of Centrally Sponsored Schemes pre-empts a large part of the State's resources for Central initiatives and fetters the discretion of the States to choose programmes and schemes appropriate to their need. However, the past experience of transfer of CSS has not been very happy and encouraging because the Union Government have been unable to provide requisite funds for transferred CSS or the same has been compensated by less than normal growth of Central assistance. It is suggested that the Centre should only lay down priorities and give grant upfront for transferred CSS. As needs of different States are different, formulation of Schemes should be left to the States. In today's situation where after enactment of 73^rd and 74^th amendments of the Constitution certain activities have been transferred to PRIs, it would only be proper that matters which pertain to State and in some cases even to sub-State level are not dealt and decided at the national level. The proposals put up by the Planning Commission in the meeting of NDC Committee .held on 3^rd August, 2001 were not in keeping with the spirit of the decision in this matter, taken by NDC in 1997. Out of Rs. 23,000 crores CSS only schemes worth Rs. 400 crores have been identified to be transferred to the States.

PLACING UTTRANCHAL ON THE LIST OF SPECIAL CATEGORY STATES

While we do not have any objection to Uttaranchal being placed in the list of Special Category States, I would like to draw attention to the fact that large parts of non-Special Category States such as Madhya Pradesh suffer from the same bottlenecks as would make any State eligible to be included in this category. This august body should consider compensating such States also in a suitable manner.