Thursday, July 24, 2008

West Bengal Chief Minister’s Intervention in NDC Meet

The following is the text of speech made by Buddhadeb Bhattacharjee, Chief Minister of West Bengal, at the National Development Council meeting held in New Delhi on December 19, 2007 for finalisation of the Eleventh Five Year Plan.

WE appreciate the convening of this 54th National Development Council meeting on finalisation of the document on Eleventh Five Year Plan (2007-2012). While broadly endorsing the approach of “inclusive growth” as elaborated in this revised Eleventh Plan document, I take this opportunity of drawing your attention to a few areas which have not been given due importance in the document.

Although it has been recognised in this document that reasons behind poverty of a person is his limited endowment of land, capital, labour and skill, yet no substantial commitment, except for passing reference, has been made to increasing the land endowment for the poor, i.e., to land reforms. I must mention that the impressive growth rate of 4-5 per cent in agriculture achieved in West Bengal over a period spread over more than two decades has been largely contributed by our vigorous implementation of land reforms programme, supported by provision of other non-land inputs such as irrigation, improved seeds, etc., by involvement of the local people through the Panchayats.

The findings of the 59th round of National Sample Survey data, which have been referred to in the document, point out that only 27 per cent of the total number of cultivator households received credit from formal sources. This is a matter of serious concern. To achieve the targeted 4 per cent growth in agriculture during the Eleventh Plan, we must assure that the kisan credit card facility is extended to every agricultural household with adequate disbursement of credit.

The plan document has very correctly identified the specific constraint for increasing productivity in West Bengal as flood/water-logging and improper drainage. The funding pattern of AIBP should be modified so as to provide central assistance in the form of grant to the extent of 75 per cent of the project cost to tackle the flood and water-logging problem as well as to extend irrigation facilities.

The scheme for Special Economic Zones (SEZs) requires a fresh look. Industry groups should be identified in the first instance which are to be covered under the scheme, instead of extending it to all and sundry. As the minimum land requirement is prescribed, there should be an upper ceiling of land as well for a particular type of SEZ. Within that ceiling, percentage of land area to be compulsorily utilised for industries as against other uses should also be carefully worked out and prescribed.

It is high time that the industrial incentive scheme of the central government is kept limited to North-Eastern states and Jammu & Kashmir only, as otherwise the neighbouring states have not been getting a level-playing field.

The investment in infrastructure has been proposed to be increased from 5 per cent of GDP in 2006-07 to 9 per cent by 2011-12. To achieve an annual growth rate of 9 per cent, we have to invest much more in infrastructure. It has been estimated in the document that to achieve the targeted annual average growth rate of 9 per cent over the Eleventh Plan Period, the aggregate capital formation in infrastructure over the same period should be to the tune of Rs 20 lakh crore, of which 30 per cent is to come from the private sector, directly as well as through PPPs, where desirable and feasible. In this connection, I would mention that the construction of Delhi-Kolkata dedicated railway freight corridor, the deep sea port and the shipyard as well as the modernisation work of the existing airport in the state needs to be expedited.

To achieve 10 per cent growth in industries sector, the manufacturing sector and particularly the micro and small enterprises (MSE) sector has been projected to grow at 12 per cent. The working group has estimated terms loan and working capital requirement for the MSE sector to the tune of Rs 2.96 lakh crore during the Eleventh Plan. It has been mentioned in the document that the percentage of net bank credit available to MSE sector has been declining. To meet the projected credit requirement for this sector we are required to have sufficient number of specialised SSI bank branches in all potential areas and devise appropriate ways to incentivise lending to this sector. Otherwise, it would not be possible to achieve the target of creating 70 million employment opportunities during the Eleventh Plan.

In this context, I would strongly suggest the need for revising the policy of high interest rate regime of bank loans to industry, particularly to the SME sector, and agriculture. Since the rate of inflation has been reported by the government of India to have fallen over the last one year or so, the rate of interest on bank loan should also be correspondingly reduced together with ensuring adequate availability of credit particularly for agriculture and industry. Otherwise, supply-side bottlenecks will be created which will not only stand in the way of employment generation, but may, in fact, lead to ‘cost-push’ inflation.

I would also mention that National Small Savings Scheme, which is of special social significance in encouraging saving propensity, as well as providing protection to savings of common people, should be protected in terms of attractiveness of all the major small savings schemes in relation to competing saving instruments.

In this context, I would like to point out that while there is a need for limiting the fiscal deficit of the states for ensuring long-term sustainability of their finance, applying the limit mechanically to the states regardless of their initial conditions would unduly restrict the resources mobilisation by the states for financing their annual plans with concomitant adverse impact on growth and employment generation, more so when the states are making serious efforts to improve their finances and deploy additional resources for social and infrastructure sectors.

We appreciate the increase in the proposed outlay under Sarva Shiksha Abhiyan (SSA) programme envisaged during the Eleventh Plan period. It would have been better if, in the interest of universalisation of secondary education and employment generation, secondary, vocational and technical education could also be brought within the scope of SSA and the sharing pattern between the centre and states be restored to the ratio of 75:25.

There was a commitment in the NCMP of UPA government for transferring with funds, the centrally sponsored schemes to the state subjects. This commitment may be fulfilled without further delay. To begin with, at least state-specific flexibility should be provided in the guidelines of all these schemes for paying adequate attention to the local characteristics of each state.

There has been a frank admission in the document that the previous 5-year plans have failed to include many disadvantaged groups, especially the Muslims, into the development net. I had advocated a sub-plan approach for the minorities in my submission before the NDC on December 9, 2006. I would still insist on this, since any half-hearted attempt will fail to bring about a significant change to their lot.

Adequate focus has not been given in the document on reduction of abject urban poverty. The allocation under Swarna Jayanti Sahari Rojgar Yojana (SJSRY) and particularly that under the wage employment component of the programme has been too meagre. It requires massive enhancement to make even fractional dent on urban poverty.

While giving my response on the Approach Paper to the Draft Plan, I had mentioned that the Sunderban delta with its fragile eco-system and the three international rivers – the Ganga, the Teesta and the Ichamati should be treated on a separate footing. I had sought for central support for socio-economic development of Sunderban region, tackling the gigantic problem of Ganga-Padma erosion, the Ichamati drainage problem with cross-border implications and for early completion of Teesta project. I take the opportunity to reiterate my demand on these issues.

In the end, I would mention that if, with joint efforts of the centre and the states, Goods and Services Tax is introduced in the centre and in the states, then there may be revenue gains towards the end of the Plan period, with corresponding implication for the size of the Eleventh Plan.

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