M A I N   N E W S

SIT examines Virbhadra
From Rakesh Lohumi
Tribune News Service

SHIMLA, May 22 — A three-member special investigation team (SIT) of the Vigilance Department examined Mr Virbhadra Singh, the Congress Legislative Party leader and a former Chief Minister, in connection with khair wood quota scandal for over two hours on Saturday evening. The examination was kept a closely guarded secret.

A case regarding alleged irregularities and favouritism in the allotment of khair wood quota to M/s Sagar Katha Udyog, Kala Amb, was registered last month. While Mr O.P. Yadav, a former Chief Secretary who dealt with the case as Secretary, Forests, and Mr Geeta Ram, the then Deputy Secretary, Forests, were named in the F.I.R., no political leader was booked in the sensitive case.

According to police sources, the team covered all aspects of the case, particularly the circumstances leading to the allotment of quota without taking up the matter with the Cabinet, during examination. Mr Virbhadra Singh was also shown the original notings on the file to verify cuttings, over-writings and insertions. The original documents will now be sent to forensic experts for examination.

The team headed by the Superintendent of Police (Vigilance) has already interrogated Mr Yadav and Mr Geeta Ram, twice. They have been charged with granting 6 per cent price benefit in the allotment of 25 per cent quota of khair wood to the private industrial unit without approval from the competent authority.

The allotment was made after the Congress government had lost the assembly poll in March, 1998. As per the notings on the file, the case for allotment of khair quota was initially to be put up before the Cabinet. However, on March 7, a day after the Congress lost elections, the matter was reviewed and 25 per cent quota was allotted without the approval of the Cabinet. Subsequently, an agreement was signed in this regard on March 23, 1998, a day before the Dhumal government assumed office.

Intriguingly, there was no mention in the file regarding grant of 6 per cent price benefit to the unit in the quota to be supplied by the State Forest Corporation. However, the final agreement included a clause as per which khair wood was to be supplied at 6 per cent lower rates. After the allotment, only 12.5 per cent khair wood was left for open auction, on the basis of which the rate at which the quota is to be supplied is determined. While 50 per cent quota was allotted to Mahesh Udyog, 12.5 per cent was set apart for Katha Bhattis.

The agreement, however, could never be implemented as the Dhumal government reviewed the decision and cancelled it. The Himachal Vikas Congress supremo, Mr Sukh Ram, had been pressurising the government to register a case in connection with the scandal, though it did not form part of the charge sheet submitted by his party against Mr Virbhadra Singh.

The government took over two years to register a case and, by coincidence or design, it is being pursued at a time when Mr Sukh Ram has already drifted apart from the BJP and his rival faction headed by Mr Mohinder Singh is accusing him of hobnobbing with the Congress. 

States oppose Centre’s move

NEW DELHI, May 22 (PTI) — The majority of states today strongly opposed the Centre’s move for a monitoring mechanism on state fiscal reforms to effect a statutory cap on borrowing and expenditure through a Fiscal Responsibility Act.

The move to alter the terms of reference of the 11th Finance Commission just before it is due to submit its final report by June-end, was ‘‘unusual and unilateral’’, West Bengal Finance Minister Asim Dasgupta said claiming that this was two-thirds of the states’ view irrespective of the party affiliations.

This ‘‘unnecessary step’’ would delay release of funds worth Rs 11,000 crore to states this year as proposed by the interim report of the commission, Mr Dasgupta said summing up the outcome of the one-day meeting of state finance ministers.

‘‘We are totally opposed to a centralised and imposed monitoring of state reforms particularly if it is linked to IMF-World Bank conditionalities, he told reporters adding states in the Northeast, east, south and some in the north have criticised this last minute addition.

Earlier in his opening remarks, the commission chairman A.M. Khusro said the commission was taking note of written views sent by some of the state governments on the Commission’s proposal.

Mr Khusro maintained that while some states felt that a monitorable fiscal reform programme should bring about a modicum of fiscal responsbility at the Centre, others apprehended that additional terms of reference at this juncture may cause a delay in submission of the final report.

Defending the Centre’s proposal, Mr Khusro said the additional term of reference was aimed at reduction of the revenue deficit of state, which had burgeoned to 2.1 per cent of GDP in 1999-2000 from zero per cent in 1970-71.

This was also aimed at linking allocations to states progress in implementation of fiscal reform programme, he said, adding some states had proposed such a linkage of non-plan revenue grants from 2001-02 onwards.

Mr Dasgupta maintained that state reform was a state subject and the Centre had no right to impose in it.

Mr Khusro said some state governments suggested creation of a fiscal performance fund from central tax resources which could be used by both the Centre and states depending on their performance on reforms.

He admitted some state governments had strongly felt that grants-in-aid under Article 275 of the Constitution should not be tagged with conditionalities.

Giving no clear cut view of the commission’s thinking on this controversial issue, Mr Khusro said all the suggestions by states including setting up of a joint committee for monitoring of reforms of both the Centre and states would be kept in view while ‘‘crystallising’’ its recommendations.

Mr Khusro said the commission has been voicing its concern over the deteriorating financial position of both the Centre and states and has been impressing upon them to undertake urgent fiscal reform measures.

The fiscal deficit of the Centre and states have nearly doubled to 3.3 per cent and 2.1 per cent of GDP respectively in 1970-71 to 5.6 per cent and 4 per cent respectively in 1999-2000.

‘‘This is reflective of the overshooting expenditure especially on account of increased outgo due to pay revision, pension and interest payments,’’ he said welcoming fiscal correction measures initiated by some state governments.

He said the revenue deficit as a percentage of revenue deficit for all states in 1999-2000 was estimated at 56.86 per cent as compared to 25.66 per cent in 1990-91, which is indicative of the fact that the larger part of the borrowing were utilised for consumption purposes.