M A I N   N E W S

States’ poor finances discussed
Economic Advisory Council holds meeting
Tribune News Service

NEW DELHI, Jan 8 — The need for states to share responsibility for fiscal consolidation figured prominently at today’s first meeting of the reconstituted Economic Advisory Council chaired by the Prime Minister, Mr Atal Behari Vajpayee.

At the meeting, attended among others by leading economists, the Union Finance Minister, Mr Yashwant Sinha, the RBI Governor, Mr Bimal Jalan, and the Deputy Chairman of the Planning Commission, Mr K.C. Pant, it was pointed out that there was a need for states to levy adequate user charges as majority of these were facing serious structural weaknesses.

Disproportionate increase in revenue expenditure, inadequate growth in tax and non-tax incomes and a very high level of debt of the states were some of the major issues raised at today’s meeting, Secretary in the Prime Minister’s office, Mr N.K. Singh, told mediapersons after the meeting.

The Prime Minister said the fiscal situation of states was a matter of concern and asked economists to suggest corrective policies in this regard.

“Rationalisation and reduction of subsidies, both direct and indirect, must be an integral part of this effort”, he said. The challenge of fiscal consolidation needs to be addressed within the constitutional federal structure and without socially disruptive measures, he said.

Apart from the poor state of finances in the states, the Prime Minister said the fiscal deficit was also at an “unacceptably” high level and there was an urgent need to reduce it by cutting government expenditure and improving revenue collection.

Mr Vajpayee pointed out that expeditious restructuring and disinvestment of public sector undertakings and financial sector reforms, including the problem of weak commercial banks and high level of non-performing assets, were two areas which would receive priority attention.

The Prime Minister sought a greater consensus among the economists on the issue of disinvestment of Government shares in public sector units.

The economists were of the view that to deal with the mounting NPAs of the PSU banks, there was a need to set up an asset reconstruction company besides strengthening legal structure and the debt recovery tribunal.

Mr Vajpayee said the government was determined to make India an information technology power. Problems relating to the sector and issues relating to technological convergence between telecom, broadcasting and IT needed to be addressed, he added.

Successful entrepreneurs from the Silicon valley had told him that given the right policy framework, India had the potential for attracting large investments in this area. This could be used to address the problems of poverty, illiteracy and health in rural areas. “We must grasp this opportunity without losing time”, he said.

He said the sub-group under the Minister of Information and Broadcasting would submit its report on the Telecommunication Regulatory Authority of India related issues by the middle of January.

The Prime Minister also announced that the corporatisation programme of major ports had been finalised and the massive golden quadrilateral highway project linking four metropolitan cities would be expedited. He said the project completion would be advanced by a year so that it was ready before the scheduled year, 2004.

He said around 500 km of the 5,950 golden quadrilateral highway had already been completed and further work on about 1000 km would be started soon. The rest of the work would be undertaken in the next two years, he said.

Mr Vajpayee said his government would shortly decide on giving some important airports on long-time lease to allow private participation in the civil aviation sector.