Address of Shri Ashok Gehlot, Chief Minister, Rajasthan
49th N.D.C. Meeting, 1^st September 2001, Vigyan Bhavan, New Delhi.

Hon'ble Prime Minister, Chief Ministers, Central Ministers and Friends,

I am happy to participate in this meeting of the National Development Council which has been convened to discuss a host of issues like the Draft Approach Paper to the Tenth Five Year Plan (2002-2007), the report of the NDC Sub-Committee on the criterion for allocation of funds under major rural poverty alleviation programmes, the status report on the NDC Sub-Committee on transfer of Centrally Sponsored Schemes, placing Uttaranchal on the list of Special Category States and the Mid term appraisal of the Ninth Five Year Plan.

2. The state of Rajasthan has passed through three consecutive droughts with the total expenditure on relief operations surpassing Rs.2000 crores. Despite a number of difficulties, the relief operations were managed in a manner which has been appreciated widely. You may recall in this context sir that the efforts made by the State Government were appreciated by you also when you visited Rawatbhata on 17th March this year.

3. Sir, finding the necessary resources for our ambitious Ninth Five Year Plan has been an uphill task owing to a number of unforeseen exigencies. The State was saddled with a load of Rs. 6000 crores over five years on account of the fallout of the Fifth Pay Commission recommendations and lower receipts under externally aided programmes to the tune of Rs. 4500 crores on account of the sanctions imposed pursuant to the Pokhran blasts. Thus/ the resource shortfall vis-à-vis the Ninth Plan of Rs. 27650 crores came to a staggering order of around Rs. 12500 crores which is almost half the size of the Plan. Despite this/ through a combination of effective revenue raising and cost cutting measures/ the State hopes to recoup almost half of this loss and end the Ninth Plan with an outlay around the Rs. 20000 crore mark.

Although the ambitious original size of Ninth Plan could not be achieved/ the following reforms/innovative ideas have been initiated by our Government during the past two years and nine months:-

• A number of comprehensive policies related to water/ power, wind energy, population/ women and information technology were put in place.
• A State Water Resources Plan has been formulated with a basin-wise approach.
• The Water Resources Vision 2045 has been prepared for sustainable development and optimal utilisation of precious and limited natural water resources.
• Surveys for construction of water harvesting structures throughout the State were conducted through remote sensing.
• A law on "Rajasthan Farmers Participation in Management of Irrigation System" has been passed for implementing participatory irrigation management.
• Tehsilwise working plans for construction of water harvesting structures were finalised.
• The Power Sector Reforms Act, 1999 was brought into effect on 1st June, 2000 and the State Electricity Board was unbundled into five companies. Incidentally, Rajasthan has become the first state in the country to restructure the State Electricity Board (SEB) in a single stage operation.
• An independent Electricity Regulatory Commission has been set up with the powers of licensing and tariff determination.
• Focused efforts are under way in order to develop alternative sources of energy,
• The State Government has recently initiated a project of Rs.1529 crores with assistance from ADB for strengthening the urban infrastructure in the six major towns of the State.
• In the area of battling urban poverty and unemployment/ a beginning has been made with the Chief Minister's Employment Scheme launched in October, 1999 with a target of constructing kiosks for unemployed youth so as to offer them self-employment opportunities.
• An "Economic Development Board" has been constituted to provide expert advice on infrastructure development and other economic and industrial policy.
• A single window clearance scheme has been introduced to make investment easier for potential investors,
• An Information Technology Park and an Earth Station have been developed at Sitapura, Jaipur.
• With a view to develop the industrial sector in the state and attract investment from non-resident Rajasthanis outside the state and abroad, an International Rajasthani Conclave was organised in September/ 2000. The Rajasthan Foundation has since been constituted in order to carry forward this initiative.
• In the Road sector, private entrepreneurs have been attracted on BOT basis.
• The State has introduced Profession Tax and Turnover Tax in a bid to enhance State revenues.
• The District Poverty Initiative Project (DPIP) has been launched with financial assistance from the World Bank.
• The State has initiated an MLA Local Area Development Programme where each MLA is provided Rs. 60 lacs- per year for such development. The State has thus earmarked Rs. 120 crores per year for development aimed at catering to locally felt needs through this programme.
• The coverage of social security schemes has been considerably expanded. The number of beneficiaries under schemes for providing pensions to the old, the disabled, widows and destitutes has gone up from 2.20 lacs in 1997-1998 to 6.40 lacs in 2000-2001 and this is expected to reach the 8 lakh figure in 2001-2002. Not only this, the rate of pension has also been increased substantially from Rs. 100 for old age pensioners and Rs. 125 for widows and disabled to Rs. 200 per month. The budget provision on this account has also increased from Rs. 22.67 crores in 1997 to Rs. 196 crores in 2001-2002 although commensurate assistance from the Central Government has not been forthcoming despite our repeated requests.
• The State Government is giving highest priority to promoting the welfare of the SCs, STs, Minorities and other weaker sections of society. Several new programmes have been launched in order to benefit these sections of society in the State. Thus, with a view to providing economic assistance to a larger number of persons belonging to the SC/ST, OBC, minorities, safai karamcharis and the disabled, the State Government has considerably enhanced the amount of State guarantees in favour of the Corporations working in this area from a level of Rs. 9 crores in 1997-98 to Rs. 47 crores in the year 2000-2001.
• All persons living below the poverty line are provided free medical treatment at government hospitals. Such persons have been provided Medicare Relief Cards. There are a total of 23.5 lac Medicare Relief Card holders who are getting free treatment in the State.
• The Chief Minister's Jeevan Raksha Kosh has been launched to provide financial assistance to those who are living below the poverty fine and are suffering from serious diseases such as heart disease, cancer, kidney failure etc.
• The involvement of Panchayati Raj representatives has been ensured in educational administration in the rural areas. With their active support and full involvement of the NGOs, literacy and elementary education in the state have received a massive impetus with each of our 32 districts being covered either under the Lok Jumbish or DPEP programmes.

5. Hon'ble Prime Minister, Rajasthan inherited backwardness since its formation. Our problems stemmed not only from the fact that we started at a disadvantage at the time of independence but we also could not keep pace with other states on account of our extended desert areas, recurrent droughts and a very low level of availability of infrastructure. We have a large international border which added to these problems. Despite these disadvantages, Rajasthan has been among the states which have shown a creditable performance on the development front and we approach the Tenth Plan in a spirit of cautious optimism and confidence in our resilience and determination in meeting the challenges ahead.

AGENDA ITEM NO.l :- Draft Approach Paper to Tenth Five Year Plan

6. The Approach Paper to the Tenth Five Year Plan has emphasised drawing up a reform plan instead of merely having a resource plan, framing policies conducive to attracting private sector investment and concerted governmental effort in improving and strengthening the social sector.

7. Traditionally, the level of per capita income is regarded as a sign of well being of the people and growth targets are therefore focused on growth in per capita income or per capita GDP. The

Approach Paper stipulates a doubling of the per capita income over 10 years with population expected to grow @ 1.6% annually in the Tenth Five Year Plan period. This would require concerted action in many areas which in turn will involve a radical change from present practices.

8. The Approach Paper also states that the Tenth Plan must establish specific and monitorable targets for some of the indicators of human development. It has been proposed that in addition to the 8% growth rate, these monitorable targets should also be kept in view.

9. In the Approach Paper, these monitorable targets in terms of key indicators of human development have been specified with a time frame given for achieving these targets. Here the strategy should be to try to achieve these targets as uniformly as possible in each of the individual States and UTs. If we fail to bring ail the areas on an equal footing in these key indicators, not only will the existing disparities continue, but there is every possibility that these may further increase. All of us would agree that an increase in regional disparities is not in the national interest. The Approach Paper should therefore be more specific in detailing the envisaged plan of action, particularly for the states which are problematic in these spheres, along with the special provisions which would be available to such states to help them reach the target levels in these key areas.

10. The Approach Paper mentions the need for substantial allocation of resources to the social sector for achieving these targets. For ensuring balanced development, the Tenth Plan should include a State-wise break-up of the broad development targets including targets for growth rates and social development. These state specific targets have to take stock of both the potentialities and constraints present in each state. This needs to be incorporated in the Approach Paper.

11. Although growth has strong and direct poverty reducing effects, the frictions and rigidities in the state economy can make these processes less effective and the Tenth Plan should therefore explicitly address the need to ensure equity and social justice. The paper stipulates that agricultural development be viewed as a core element in development. It gives next priority to the rapid growth of those sectors which would create quality employment opportunities.

12. The State Government is of the view that if agriculture alone is viewed as the core element the very purpose of such delineation would be defeated. Agricultural development is not possible without parallel development of the sectors of irrigation, power, forests and industry (agro related and based). Thus the core element of the Tenth Five Year Plan should be agriculture, irrigation, power, forests and agro related and agro based industries. Besides this, for a water deficient State like Rajasthan, providing drinking water to the population is also a priority. Therefore water supply should also be declared as part of the core element for Rajasthan.

13. While the eight percent annual growth target is an ambitious one, it must be realised that the twin burdens of the Fifth Pay Commission and the substantial reduction in external assistance following upon the sanctions imposed after the Pokhran blasts has put a great strain on state resources/ particularly with backward states like Rajasthan. Against this background, the achievement of an 8% growth rate implies a doubling of the current levels of efforts by the States both in the areas of revenue generation as well as expenditure control. The suggestion in the draft Approach Paper to reduce Central subsidies on programmes of rural development and shifting the responsibility of food procurement at support prices from the Centre to the states will cast an unbearably high burden on the States. There is therefore no alternative except for the Centre to step in wherever subsidies are retained and free the states from this burden. Only if this is done will it be possible to realise the goal of sustainable growth with equity.

14. The Draft Approach Paper deals with resources and other measures for financing the Tenth Plan. Although the points discussed in this chapter relate primarily to financing of the Tenth Plan at the Central Government level, certain issues are also relevant for the States. Issues such as downsizing, charging appropriate user charges, reduction of subsidies, freezing of non-plan expenditure excluding interest payments and pay and allowances etc. have to be viewed in a wider perspective. It may not be possible for any State to take all these measures in isolation. A national consensus on these issues needs to be evolved, as has been rightly observed in the Approach Paper. This needs a lot of research, public awareness, public education and persuasion. These issues should, therefore, be deliberated upon in the National Development Council in order to evolve a national consensus and strategy on this.

15. It has been stated that States do not take adequate measures for repair and maintenance of assets. In this context reference is invited to the recommendations of Ninth and Tenth Finance Commissions. These two Commissions, while considering maintenance expenditure in terms of a normative approach, realised that the required level of funds could not be provided for this. These Finance Commissions thus provided funds which were less than the requirements based on this normative approach. Due to increased salary and wage expenses, the States find it difficult to spare adequate funds for repair and maintenance of assets. Rajasthan has been pressing for allowing a certain proportion of Plan Funds to be used for the purposes of maintenance expenditure and the suggestions endorsing this in the draft Approach Paper are therefore very welcome. There is need for a holistic approach which combines both maintenance and addition functions so as to afford the population the greatest possible benefits of development at least cost.

16. In the area of agriculture and land management, the Approach Paper has proposed a reduction in the subsidies on fertiliser and power. While the need for limiting and focusing these subsidies is widely realised, I think a blanket approach towards subsidy removal will be as harmful as the present malaise. Rajasthan has been one of the first states to go in for comprehensive power sector reforms but the need to continue with fertiliser and power subsidies for the small and marginal farmers remains as strong as before. The mechanism by which these subsidies can be better focused and targeted so as to prevent their misuse by the rich and powerful sections of agrarian society, possibly by fashioning these as consumer rather than producer subsidies can be further explored. Similarly, there is need to include crops like Guar and Moth as well as horticultural crops under the Minimum Support Price mechanism so that small and marginal farmers in dryland areas are benefited. Again, the subsidies provided under programmes of watershed and wasteland development should be set against realistic levels of unit cost as otherwise the entire investment is likely to be lower than the threshold required for sustaining development.

17, A major constraint in Rajasthan's growth is that, against a requirement of 10.4% of the country's area and 5.5% of its population, it has only about 1% of the country's water resources. While the development of water resources has always been a priority for Rajasthan and notable successes have been achieved in the area of water harvesting and conservation, our efforts have nevertheless been hampered due to non-availability of adequate resources. The Approach Paper identifies the Accelerated Irrigation Benefit Programme as a potentially important instrument in this regard but it needs to be pointed out that while the AIBP extends only 2/3 of the project cost from Central sources and that too excluding establishment costs, the NABARD pattern provides for 90% project assistance without such limiting stipulations. Given the centrality of this need in a state like Rajasthan, there is ample justification for implementing the AIBP on the NABARD pattern here. In the alternative, given its greater than average water deficiency status Rajasthan should be considered as a special category state for the purposes of this programme.

Industrial Development and Labour Policy

18. The Approach Paper emphasises the need for sectoral growth here at a rate of over 10% to achieve the Tenth Plan target of 8% growth of GDP. The State Government subscribes to the view that industry will have to take on much stronger international competition as the domestic market is now essentially free of quantitative restrictions under the agreement with WTO and that the public sector's distinct entity will decline substantially because of the disinvestment process during the Tenth Plan period. Not only this, the growing trend towards high capital intensity in the manufacturing sector dictates that labour absorption capacities remain substantial and elastic only in the service sector which is intrinsically more people centred. There is therefore a special need to address the requirements of this sector.

19. We are of the view that sustained industrial development can only be based on a focused improvement in the physical and human resource infrastructure available to this sector. This would not only imply the development of technical education particularly in backward states like Rajasthan which lag far behind in this sector but also include putting in place an appropriate facilitation policy for creation of common facilities for management of the environment and control of pollution.

20. As far as the amendments proposed in the labour laws are concerned, the State is of the view that while such laws may be considered for amendment, the amendment should be such as to ensure that the labourer is not deprived of his livelihood and that this is effected after obtaining the states' consent.

21. The State of Rajasthan has vast mineral resources, but the Approach Paper has not mentioned anything about strengthening this sector. With its mineral wealth, Rajasthan can combat the problem of unemployment if sufficient funds are provided for the utilisation of this mineral wealth. For the state to adopt the latest technology in the mining sector, an enhancement in the allocation of Central Plan assistance for this purpose becomes an unavoidable necessity.

SOCIAL INFRASTRUCTURE Education

22. The State Government agrees with the suggestion in the Approach Paper that education for all must be one of primary objectives of the Tenth Plan. Universalising access to primary education and improvement of basic school infrastructure should be the main thrust of the Tenth Plan. The suggestion that provision of one teacher for every group of 40 children for primary and upper primary schools, and opening primary schools/alternate schooling facilities within one kilometre of every habitation is noteworthy. In fact, Rajasthan has already begun taking steps in this direction by opening over seventeen thousand Rajiv Gandhi Pathshalas during the last two years. We will be opening more such pathshalas in the coming years. The principle of providing a teacher for every group of 40 children for the primary and upper primary schools and opening of primary schools / alternate schooling facilities within one kilometre of every habitation have been kept in mind while opening these Rajiv Gandhi Pathshalas. In this context, it may also be mentioned here that all the powers or recruitment of teachers and the administrative control of these institutions have been vested in the local panchayats.

23. While the State Government has made innovative efforts in introducing self financing schemes of IT education at the secondary and senior secondary levels, it has noted with concern the regressive efforts made by certain sections of the polity to promote fundamentalist considerations in the field of value education. Such saffronisation and related retrograde measures need to be guarded against. At the same time, it has to be realised that the resource support for this sector needs to be kept grant based and not loan based as the gestation period in such social sector projects is quite long and the benefits which accrue often do not give a substantive return in terms of purely financial parameters. If we consider other components of the social sector such as Health, Nutrition and Rural Water Supply, it will be seen that the same considerations hold good in these cases also. In particular if, as suggested for Rural Water Supply, user charges are proposed to be levied on capital costs as well/ this is bound to place a very heavy burden on the rural poor, particularly in a state like Rajasthan where physical and environmental conditions render the cost of reaching any such service to a widely dispersed population both difficult and expensive.

24. Hon'ble Prime Minister, the Government of India introduced a new scheme, namely the Pradhan Mantri Gramodaya Yojana (PMGY) in the year 2000-2001 for Rural Drinking Water, Primary Health, Primary Education, Nutrition and Shelter, To this has now been added Rural Energy. I would like to mention that this scheme, as we understood it/ was a 100% centrally funded scheme, but the directives received indicate that 70% shall be by way of loan and only 30% as grant. Sir, there should be no question of introducing any element of debt in this social sector scheme. While announcing this scheme, there was no prior indication of this. I would therefore request this august House to recommend that we treat the PMGY as a cent per cent grant scheme like the PMGSY.

ECONOMIC INFRASTRUCTURE

25. The Approach Paper touches upon reforms in the power sector along with providing a thrust to the development of non-conventional energy sources. Rajasthan has already begun a series of reforms aimed at unbundling and strengthening the generation, transmission and distribution sectors. Separate generation, transmission and regional distribution companies have been created and capacity is being augmented and losses reduced in all these areas with the help of a loan from the World Bank. The state has already added 750 MW of generation capacity in the last 2 ½ years and plans to add a further 1000 MW by December, 2003. Thus, the capacity installed in this five year period will almost equal half that installed in the first 50 years since the creation of the State.

26. In the area of harnessing non-conventional sources of energy also, rapid strides have been made with the conceptualisation of the 140 MW Solar Combined Cycle Project at Mathania and the successful implementation of a number of wind energy projects.

27. Looking to the extremely high capital costs in this sector, there is a need to provide for substantively higher allocations under the Accelerated Power Development Programme both in terms of total resources available as well as the allocation made to states which have taken specific steps to implement reforms in this sector.

Railways

28. The Prime Minister in his speech while chairing the Planning Commission meeting to finalise the approach to Tenth Five Year Plan/ laid stress on the development of Railways as a thrust area. I am constrained to state that the railway network in Rajasthan is quite inadequate. As we all know, for bulk commodity transport over long distances/ there is no alternative to railways for a vast country like India. Keeping the steep rise in the price of petroleum products in view/ an expansion of the railway network in the State is urgently necessary. Presently, nearly 60 to 65% of the commercial and the 80% of the passenger traffic uses road transport. May I request therefore that total gauge conversion of railway lines in the state be taken up on priority and sufficient funds be allotted for this? This will lead to a substantial increase in the capacity of trade along with faster movement. Rajasthan presently lags behind the national average in terms of length of railway line available per 1000 sq. km. of area. This gap is significant particularly in the western part of the state. This gap also needs to be bridged considering the strategic needs of the area.

Roads

29. Road connectivity in Rajasthan is much below the national average of road length per hundred square km. of area. The density of road at about 36 km. per 100 sq, km. of area is only about 60% of the national average of 62 kms. Since the state's economy is still largely agrarian in character and the settlement pattern is rural oriented, roads constitute a critical element of the transportation infrastructure, Rajasthan therefore needs to be given a special dispensation in terms of enhanced allocations under the centrally sponsored schemes in this sector so that road density can at least reach the national average and dispersed populations living in far flung areas obtain ready access to this essential infrastructure.

30. In keeping with the spirit of the Approach Paper, the State Government has already initiated an ambitious Rs. 600 crore project to maintain, modernise, strengthen and upgrade 24000 Kms. of roads in the State with loan assistance from NABARD. Government of India may like to support this initiative through the issue of appropriate instructions so that work can get under way without any delay.

Centrally Sponsored Schemes (CSSs)

31. Government of Rajasthan generally agrees with the comments made by CAG regarding Centrally Sponsored Schemes. The number of programmes implemented by Government of India are too many and often more or less similar in nature. At the grass root level it becomes quite difficult to remember the details of all the schemes along with their guidelines and target group definitions. It also becomes difficult to explain the minor differences to the target group. For example, under housing schemes like IAY (new), IAY (upgraded) and PMGY, subsidy and loan is provided to poor people but the amounts of subsidy and loan differ from scheme to scheme. The target groups are also somewhat different. This gives rise to a lot of confusion. It is therefore suggested that similar types of schemes should be clubbed together. This will help in better implementation with a reduction in the related administrative expenses.

32. Government of India should also give sufficient flexibility to the State Governments for implementing Centrally Sponsored Schemes so that they can select and implement the schemes which are more relevant to them looking to their social, economic and geographical conditions. As suggested in the Approach Paper, Government of Rajasthan agrees that the number of Centrally Sponsored Schemes should be reduced and similar type of schemes should be clubbed.

33. Government of Rajasthan also suggests that for Centrally Sponsored Schemes, the Government of India should provide the funds as 100% grant and in case this is not acceptable, all the schemes should be funded on a uniform pattern of 90% grant and 10% loan. Besides this, all the CSSs, except those funded to the extent of 100% by Government of India, should be on the ratio of 90:10 funding pattern, 90% being Central share and 10% that of the State.

34. Generally the second or last instalment in any programme is released in the month of March. It is therefore not possible to spend the amount in the same month. However, if more than 15% of the funds are carried over to the next financial year, deductions are made by Government of India. Therefore, releases should be made in time so as to avoid such contingencies.

35. Again, in a number of schemes, there are far too many prescribed conditionalities. In a highly diversified State like Rajasthan, following the conditions given in guidelines uniformly sometimes leads to the failure of the scheme itself and the basic objective is defeated. There should therefore be inbuilt flexibility in the schemes to accommodate varying local conditions.

36. Suggestions made in the Approach Paper regarding Watershed and Wasteland Development are agreed too. As for SGSY it has been suggested that it should be transformed into a micro-finance programme to be run by banks with no subsidy on the lines of the Rashtriya Mahila Kosh. In this context it is suggested that it will be better if this is first implemented on a pilot basis in some selected Panchayat Samitis.

37. Mr. Prime Minister sir, you will recall that in November, 1999 I had initiated a dialogue with the Central Government to restart the Food For Work programme. I am grateful to you and the Government of India for finally acceding to my request and launching the programme in January, 2001 in the context of the drought situation faced by the State at the time. However, towards July we got a feeling that the programme would again end by September. I am happy to note that in your speech on the occasion of Independence Day you announced that a broad based Food For Work programme called the Sampurna Gramin Rozgar Yojana will be launched at a cost of Rs. 10,000 crores for providing additional guaranteed employment in rural areas. For this, 50 lac tonnes of foodgrains worth Rs. 5,000 crores is to be provided to the State Governments every year. I would only request that the necessary guidelines for the scheme may be issued immediately so that implementation of the programme can commence without delay. It would be appropriate in this context, looking to the looming spectre of massive unemployment, for the Central Government to initiate an employment guarantee scheme at the so as to mitigate the hardship being faced particularly by our youth in obtaining gainful and productive employment.

38. Under the various schemes of rural development namely, SGSY, JGSY, EAS and IAY, the allocations made by Government of India are continuously decreasing over the last three years. The overall allocation needs to be enhanced in the all these schemes. To cite an example, in the year 2001-2002, the total allocation under EAS is Rs. 5275.44 lacs for the State of Rajasthan where the number of BPL families in rural areas/ as per the survey of 1997, is 20.98 lacs. With this allocation therefore, one member of a BPL family will get employment for only 2.5 days in the complete year. Hence, the allocation needs to be increased substantially.

39. Looking to the diversified nature of the State, it will be in the fitness of things if some percentage of scheme assistance is given as an untied fund. This fund should be utilised for bridging any gaps that may emerge on implementing the project under varying field conditions.

40. There should also be inbuilt provisions for concurrent evaluation in each of these programmes so that shortcomings are identified and attended to during the course of implementation itself.

Governance Reforms

41. The State Government does not agree with the suggestion that Finance Commission Grants and other developmental funds to local Bodies should not be given to the states unless effective powers are transferred to them. To this, I would like to bring to the notice of this august House that the State Government has already transferred Primary and Upper Primary level schools besides some institutions in the Medical and Health sector to the Panchayati Raj Institutions. Efforts are being made to transfer some more sectors but the process of transferring these sectors to the panchayats/local bodies is time consuming and thus if this condition is imposed, implementation of a number of developmental schemes would be hampered. The State is of the view that this condition should not be imposed during the Tenth Five Year Plan period. The State Government is itself actively considering providing PRIs with revenue raising powers so as to make them more self-reliant.

42. Realising the enormous public trust reposed in the new Government which returned to power with such an overwhelming majority, the new Government has initiated several far reaching reforms with a view to providing transparent responsive and accountable governance. These include the issue of Citizens' Charters by various departments of the Government, the enactment of a Right to Information Bill, adoption of the Chief Vigilance Commissioner System and steps for the abolition of "Inspector Raj" to name but a few. Again, for the first time ever in the State, Commissions have been setup for Human Rights, Women, and the Minorities.

43. The State Government has recently constituted Missions on "Elementary Education and Literacy", "Water Management", "Population", "Tourism Development" and "Social Security" and Task Forces on "Management of Finances", "Agriculture, Rural Development and Welfare of Agricultural Labour", "Information Technology", "Strengthening of Panchayati Raj and Urban Local Bodies" and "Sustainable Development". I propose that a 100 per cent untied grant should be provided by the Central Government to achieve the goals envisaged for these missions/ task forces.

AGENDA ITEM N0.2 :- Report of the NDC Sub-Committee on the Criterion for Allocation of Funds under major Rural Poverty Alleviation Programmes

44. As regards the NDC Sub-Committee's report on allocation of funds for Rural Poverty Alleviation programmes, I have to say that our State has constantly questioned the criteria of calorie based consumption being used for identification of the rural poor. It is no secret that this is tilted against backward states like Rajasthan where the staple cereals consumed are coarse grains like bajra, jowar and maize. Since these offer a relatively higher calorie content per unit cost as compared to wheat for example, states like Rajasthan are always placed at a disadvantage in that the poverty line, in terms of a fixed calorie level/ moves downwards in cash terms as compared to other states where the staple consists of higher value cereals. Given this position, even the allocation of a 3.88% share as suggested by the Expert Group in 1993-94 is far too low given our backwardness and the host of economic and environmental disadvantages that we face. Unless this is raised further, it will never be possible for the state to match up to more developed areas in the country in terms of providing both infrastructure as well as a sound market base for continued growth and development.

45. The sub committee's recommendation of special assistance to blocks where there is acute distress or poverty is however a welcome suggestion and I feel that DDP and DPAP blocks/ as well as those where the SC or ST population is more than 50 per cent of the total should be given such assistance.

AGENDA ITEM N0.3 :- Status Report on the NDC Subcommittee on Transfer of Centrally Sponsored Schemes

46. The NDC Sub-Committee on transfer of Centrally Sponsored Schemes has not submitted its report as yet.

47. However, we are of the general view that sufficient flexibility should be given to State Governments for implementing these schemes so that they can select and implement the schemes that are more relevant to them looking to their social, economic and geographical conditions. I would also recommend that the basis of calculation for the transfer of funds along with the Centrally Sponsored Schemes should be the actual transfers of the immediately preceding financial year with an annual increase of 15-20%. I would further suggest that these funds be transferred in a single instalment at the very beginning of the financial year to the States' Consolidated Fund so that sufficient flexibility is available with the state governments in terms of availability of resources to meet the needs of these programmes.

This is being suggested in view of our experience that around 35% to 40% of the annual central allocations under CSS is released by the Central Government in the last quarter of the financial year with 20% being released in the month of March itself. This naturally results in a "carry over" of around 25% of the allocation to the next financial year with the result that deductions are made from the first instalment in that year. This cycle leads to a continuous shortage of funds in the system thus stowing down the implementation of these programmes.

48. Finally, these funds should be transferred as a 100% grant as CSSs usually relate to the socio-economic development of disadvantaged sections of our society and it is well appreciated that schemes for the benefit of these sections have a long gestation period and !ow bankability in terms of the repayment and endurance capacities of the beneficiaries. With Area Development Programmes, a further problem with loan funds is that while the investment has to be funded by the state, the benefits, as and when they accrue, go to those who often do not share any of the repayment liability. In consequence, such loans become the liability of the State Government and add to an already high debt burden.

AGENDA ITEM N0.4 :- Placing Uttaranchal on the list of Special Category States

49. We welcome the proposal for placing Uttaranchal on the list of Special Category States, but I would urge this Council to consider at the same time the repeated requests made by Rajasthan for inclusion in this category. Stretching over an area of 3.42 lakh sq. kms. Rajasthan also fulfils all the conditions for being declared a Special Category State. Rajasthan is today the largest state in the country in terms of area. More than 61 percent of this area is a desert. A hostile physical environment, a long international border, deficient and erratic rainfall, recurrent drought and overall lack of water resources, (the State has only about 1 percent of the water resources of the country) and the high unit cost of providing any service in view of the large area with scattered habitation are major constraints for accelerated economic development. Viewed in terms of these problems as well as the frequently used socio-economic and quality of life indicators, inclusion of Rajasthan in the list of 'Special Category States' becomes a totally justified imperative.

AGENDA ITEM N0.5 :- Mid term appraisal of the Ninth Five Year Plan

50. The Ninth Five-Year Plan of the State was finalised at Rs.27650.00 crores at current prices. With the current resources position, the State will not be able to achieve this plan size. With the increased levels of current expenditure of the State Government, the balance from current revenues has become negative and the borrowings by the State Government have become the main source of funding for the Plan. This has resulted in an enhanced debt burden and consequently debt-servicing liabilities have grown.

51. Estimations made of resources to fund the Ninth Plan which were undertaken at the time of finalisation of the Plan have not been realised due to a number of reasons:

• Implementation of recommendations of Fifth Pay Commission (additional expenditure on this account is approximately Rs. 6000.00 crores over five years)
• Non-transfer of Centrally Sponsored Schemes along with resources;
• Non-availability of expected additionalities in the share of central taxes due to adoption of the alternative scheme of devolution recommended by the Tenth Finance Commission;

• Mobilising the additional resources required to fill the resource gap in the last four years of the Plan proved difficult as the State Government had to limit its revenue collection efforts in the face of three consecutive droughts. Also, the total expenditure on famine relief operations during the past three droughts has been of the order of Rs. 2000 crores.

52. In spite of these constraints, the State has mobilised more resources than what was committed at the time of discussions held for the finalisation of the Ninth Five Year Plan. The state's own tax revenue as a percentage of GSDP has improved despite drought during the last three years. In the year 1998-99, State's own tax revenue as a percentage to GSDP was 5.41%. This increased to 6.04% in 1999-2000 and is expected to be 6.70% in 2000-2001.

SUGGESTIONS

53. We are now in the last six months of the Ninth Plan and there is perhaps little scope for corrective measures for many of the problems, I have outlined in the remaining period of the current Five Year Plan. We must however ensure that we address these issues squarely and adequately for the Tenth Plan. These should include the following:

1. Amendment in the pattern of Allocation of Central Assistance (Modified Gadgil Formula)

54. We have been demanding that the system of allocation of Central Assistance should be reviewed. The development of different states has been uneven on account of historical reasons. One of the primary objectives of planned development being removal of regional imbalances, Central assistance should be provided to different states in proportion to the need for investment so as to help underdeveloped states to, at least, come up to the level of the developed states. A part of the overall plan assistance should be earmarked and set apart for the states which remain deficit on revenue account even after the devolution of central taxes and grants as recommended by the Finance Commission, The modified Gadgil Formula with highest weightage to population factor (60%) gives undue weightage to states with high density of population, whereas states like Rajasthan with a larger area and therefore higher per unit cost of delivery of services are put to great disadvantage.

55. Therefore there is an urgent need to introduce greater progressiveness into the formula in order to help the backward states attain the standards achieved by the more advanced states. I would therefore suggest a restructuring of the pattern of central assistance for the Plan, with due weightage to factors like area, distances over which services are delivered, special problems such as desert and geographical conditions, per capita plan outlay compared with the national average, the state's own efforts in mobilisation of resources, low credit-deposit ratio and distance from the national average index of infrastructure development etc. Without consideration of these factors, we may fail in our attempts to achieve the objective of bridging the development lag and accentuate inter-regionaI disparities and imbalances. I would also urge that the pattern of Central Assistance which is presently 70% loan and only 30% grant should at the very least be changed to 50% loan and 50% grant from the Tenth Plan onwards. Along with this, plan assistance loans outstanding as on 31st March, 2001 in whole or at least in part, should be converted into a block loan with a moratorium of five years repayment and thereafter reduction in the rate of interest payable in accordance with the currently prevailing bank rate.

2. Transfer of funds for Externally Aided Projects

56. In the various external loan-based projects of the State Governments, the Government of India often receives funds from the funding agencies at a nominal rate of interest, but these funds are then passed on to the States as Additional Central Assistance in the usual loan-grant mix in the ratio of 70:30. The interest rate that is being charged for the loan component is presently 12.5 per cent. It is not clear why the external aid-based projects are passed on to the States at such a high rate of interest. The time-trend of fluctuation in foreign exchange rates cannot justify charging of such high rates of interest. It is time that a transparent interaction between the Centre and the States takes place on this issue and the interest rate charged to the States for these external loans is brought down so as to be close to or even equal to the central bank rate as the level of risk of default is very similar. Where grant assistance is concerned this should be directly passed on to the State as this is presumably for those projects which are not viable with debt.

3. Border Area Development Programme and the Indira Gandhi Nahar Project

57. The Indira Gandhi Nahar Project is a gigantic endeavour to transform the economy of the desert region lying desolate for centuries. The State Government has been striving for its early completion. On completion it will provide succour to the residents of the desert as also the border areas. It would considerably increase foodgrain production in the state, provide sustenance to the live stock population and drinking water to the people of the area. The project will also check desertification, provide environmental protection and enable substantial development of the area. To complete this project we need more support from Central Government.

58. The strategic importance of speedy completion of this project leading to a growth of human settlements in hitherto uninhabited border areas cannot be over emphasised. This project needs substantial funds for completion so as to derive full benefits from the expenditure already incurred. Unfortunately, central assistance for this project from the Border Area Development Programme has been gradually discontinued despite my repeated requests made earlier. Therefore, I would sincerely urge that you intervene in the matter without any further delay and restore assistance to the project at least at the level of Rs. 60 crores per year which had been reached three years ago.

4. Recommendations of the Sarkana Commission

59. The Inter-State Council in its fifth meeting held on 22.1.1999 approved the recommendation of the standing committee that all the 33 recommendations contained in Sarkaria Commission's report relating to Economic and Social Planning may be placed before the NDC by Planning Commission in its next meeting for consideration. It was also approved by the Inter-State council that there should be a standing committee of the NDC on the same pattern as exists in the Inter-State council for continuous consultation and consideration of all matters to be taken up for consideration in the NDC. The Planning Commission however has not yet placed the recommendations of the Sarkaria Commission before the NDC.

5. Transfer of CSSs

60. As I have detailed earlier, the transfer of CSSs to the states as a 100% grant is an overdue necessity. I do not think this requires any further elaboration.

6. Augmentation of state resources

61. If the ambitious growth target of 8% per annum is to be realised, the resources available with the states will have to be augmented in sufficient measure. This can be done by allowing greater market borrowings, towering the proportion of the loan component in Plan assistance, cutting down the interest rate payable on such loans so that this is not higher than the central bank rate and routing all such fund transfers exclusively through the states’ Consolidated Fund. In addition, the percentage share of loan against Small Savings should be raised from 80 to 100 per cent and since these loans are given on the net balance principle they should be converted into loans in perpetuity. External aid received in grant form should be passed on to the states on the same terms. Again, keeping in view the recommendation of the Inter-State Council's third meeting/ the share of the states in central taxes should be increased to 33.33 per cent.

7, Review of the Classification of Plan and Non-Plan Expenditure

62. Expenditure incurred on maintenance of assets created with Plan Funds as well as that incurred on providing the regulatory underpinnings for development should also be part of the Plan and form part and parcel of "total planning". An artificial and often ad-hoc classification of much of such expenditure under non-plan heads affects the process of development adversely.

Conclusion

63. Finally I would like to draw the attention of this august House to the disturbing findings of a study recently conducted by the National Population Commission ranking 569 districts of the country with regard to a composite of socio-economic and quality of life indicators. This study shows that 72% of Rajasthan's districts fall between the ranks of 401 and 569 with the remaining 28% also ranking between 301 to 400.

Our poor position in the district rankings vis-a-vis other states of the country is the surest indicator of the poor state of social and economic infrastructure that most of the inhabitants of the state have to contend with. It is, therefore, all the more imperative that Rajasthan be placed in the special category of states for the purposes of Central Plan Assistance.

64. Mr. Prime Minister Sir, the planning process in this country was aimed primarily at removing regional imbalances and disparities along with promoting growth and development. However, where a backward and disadvantaged state like Rajasthan is concerned, we find that the gap between us and the relatively more advanced states in the country is growing rather than diminishing. There is therefore need to reorient the planning process drastically so as to address this issue squarely. In this context at the cost of repetition, I would again urge you and this august body to consider our long standing and eminently justified demand for being included in the special category states.

Jai Hind !