M A I N   N E W S

8 states toe Naidu line
Punjab, Haryana join call for more fiscal powers
Tribune News Service

NEW DELHI, Aug 21 — Led by Andhra Pradesh and joined by Punjab and Haryana, leaders of eight states today came together under a common platform to demand a better financial deal from the Centre.

Reacting strongly to the Centre’s decision to accept the recommendations of the Eleventh Finance Commission (EFC), representatives of the eight states led by the Andhra Pradesh Chief Minister, Mr N. Chandrababu Naidu, gave a memorandum to the Prime Minister, Mr Atal Behari Vajpayee, in which they said the EFC had not adequately addressed the resource requirements of the different states in the country. The states representatives also met the Chairman of the EFC, Prof A.M. Khusro, and the Finance Minister, Mr Yashwant Sinha.

The Chief Ministers of Andhra, Punjab, Haryana, Assam, Manipur and Kerala along with the Deputy Chief Minister of Maharashtra and the Law Minister of Tamil Nadu urged the Prime Minister to convene a special meeting of the Inter-State Council where the major issue of fiscal federalism could be deliberated in depth and a national consensus evolved.

The memorandum dealt point by point with the various recommendations of the EFC, including the one that put a ceiling of 37.5 per cent on the Central fiscal transfers to the states. They urged the government to treat 37.5 per cent as a minimum share to be transferred to the states.

The points of contention were:

— The award of the EFC to devolve 29.5 per cent of net central taxes as the state’s share was against the Centre’s assurance of raising it to 33.5 per cent. It has resulted in unfair imbalance of transfer.

— The normative approach to assess the revenue receipts and expenditure of the states to arrive at the non-Plan revenue deficits should be done away with and the quantum of funds under tax devolution increased to that extent. Interest of special category states could be protected through a different set of criteria.

— Recent population figures-based criteria for determining the devolution of taxes and duties and other grants-in-aid would penalise states which have done well in curbing the population and in terms of reference the commission should adopt the figures of 1971.

— Resource transfer from the Centre to states lean heavily in terms of per capita income, which means states have to pay a price for efficiency.

— Revenue performance of states, based on their own tax and non-tax efforts should become the benchmark for deciding on the quantum of debt relief available to them.

The Chief Ministers hoped the Centre would consider these points favourably and take suitable steps to incorporate them before implementing the award of the EFC.

The memorandum also made a few other suggestions, including protecting the budget provision for 2000-01 as the award of the EFC had adversely affected the fiscal stability of a majority of the states. Financial support from the Centre to the beleaguered states in the form of a special debt rescheduling scheme along with reduction in interest rates; special assistance package for special category states; suitable financial assistance for states affected by factors created by external threat to the country; incentives to state governments which devolve more funds to the local bodies; and a special fund with sufficiently large annual allocation to be allotted to states which perform better were among the suggestions.

Addressing the meeting, a day after the Finance Secretaries of 13 states finalised its agenda, Mr Naidu said the meeting was convened in an effort to ensure justice to all states with regard to resource transfer from the Centre.

He reiterated that today’s meeting was entirely apolitical as was reflected in the presence of Chief Ministers belonging to various parties.

The Punjab Chief Minister, Mr Parkash Singh Badal, observed that the EFC recommendations amounted to penalising efficiency and would lead to a new form of discrimination among the states. Stressing the need for providing incentives to efficient states, Mr Badal observed that the EFC recommendations proved that planners had gone wrong in addressing the challenges before the nation.

Criticising the central government for evolving arbitrary criteria with regard to the allocation of Plan resources, he said premium cannot be placed on non-performance. The Punjab Chief Minister urged that EFC recommendations may be kept in abeyance till they were considered by the Inter-State Council and devolution till such time may be made on a provisional basis.

The Haryana Chief Minister, Mr Om Prakash Chautala, said the Centre had failed in coming to the rescue of the states who had come under heavy burden following the recommendations of the Fifth Pay Commission. He felt that the Chief Ministers of all states should have been consulted before accepting the recommendations of the EFC which he said, were more theoretical rather than being practical.

The Chief Ministers of Kerala, Manipur and Assam — Mr E.K. Nayanar, Mr Nipamacha Singh and Mr P.K. Mahanta — along with the Deputy Chief Minister of Maharashtra, Mr Chhaggan Bhujbal, and the Law Minister of Tamil Nadu, Mr Alladi Aruna, also put forward their points at the meeting.

Aspirant PM Naidu fires salvo
From T.R. Ramachandran
Tribune News Service

NEW DELHI, AUG 21 — Cyber savvy Andhra Pradesh Chief Minister Nara Chandrababu Naidu fired his first but a calculated salvo here today by throwing his hat in the national political arena as a Prime Ministerial aspirant in the years to come.

Willing to bide his time with age on his side, Naidu succeeded in garnering the support of no fewer than six of his colleagues from various parts of the country against the recommendations of the Eleventh Finance Commission (EFC) will harm the eonomically progressive states.

Mr Naidu, the wily politician who comfortably managed a second term as the chief executive officer of Andhra Pradesh, has caused tremendous discomfiture to Prime Minister Atal Behari Vajpayee and the BJP-led National Democratic Alliance government by publicly criticising the EFC for adopting an inconsistent criteria in the transfer of central revenues to the states.

He argued that states performing well on the basis of national parameters are being penalised compared to those whose performance has been inconsistent and indifferent in terms of development and giving a push to economic reforms.

That other states across the political spectrum, including the partners of the NDA, have thrown their weight behind Mr Naidu for balanced resource distribution has unnerved the BJP leadership which is working overtime in trying to infuse confidence among the alienated backward classes and minorities.

This assumes importance for the saffron brigade with assembly elections in several key states in the Hindi heartland and the South scheduled to be held in the first half of the next year.

Mr Naidu, who on the other hand is comfortably enconsed as the Chief Minister of Andhra Pradesh for another four years, is unobtrusively positioning himself politically for the country’s leadership stakes. He is moving out of his den to garner wider support on issues which acutely affect the states as all of them, including Punjab are facing a serious resource crunch.

Without dabbling in political oneupmanship, Mr Naidu is preying on the susceptibilities of states on the question of securing larger share of financial resources from the Centre. And he has the ear and backing of not only the opposition parties like the Congress and the Left but also regional parties like the Shiromani Akali Dal, the Dravida Munnetra Kazhagam, the Asom Gana Parishad, the Indian National Lok Dal and the Nationalist Congress Party among others.

Mr Naidu’s own Telugu Desam Party is a crucial factor in keeping the BJP-led government afloat as it is extending support from outside. He is facing problems in Andhra Pradesh because of an agitation by the Congress and other opposition parties against the power reforms initiated by him.

By taking up the cause of all states in a collective manner with regard to the recommendations of the EFC, Mr Naidu is trying to deflect attention in his own state by crossing swords with the Centre for equitable distribution of financial resources. What the BJP finds rather disconcerting is that so many Chief Ministers are rallying behind the Andhra Pradesh Chief Minister.