New Delhi, April 28
The Himachal Pradesh Government has proposed to the Centre to allow it to levy generation tax on hydel power produced in the state.

The state Chief Minister, Prof Prem Kumar Dhumal, who met Prime Minister Atal Behari Vajpayee here this morning to discuss issues concerning the state, including its financial difficulties, said the problem of the overdraft faced by the state was over. The two are believed to have discussed ways to shore up the state’s finances.

The Centre had intervened to solve the financial crisis facing the state last week after the state government exceeded its overdraft limit of Rs 180 crore. The RBI had issued instructions to banks not to clear the government bills.

Mr Dhumal indicated that the Centre was favourably considering the state government’s proposal on power generation tax which would raise the cost of power by about 10 paise per unit, but would do a lot of good to the state’s finances.

The Chief Minister blamed the previous Congress governments for the financial problems of the state, saying that the Congress government in 1989 had given a wrong picture of the state’s finances to the Ninth Finance Commission. He said that against the budget deficit of Rs 200 crore, the then Congress government had reported a deficit of Rs 8 crore in view of the coming elections. As the Finance Commission accordingly fixed the criterion for Central assistance, the state got less than its due. The government then had to resort market borrowing to meet expenditure and some loans had been taken at interest rates touching 33 per cent.

The Chief Minister said that after coming to power in 1998, the state government had strived hard to mobilise resources but these had gone to meet the deficit accrued. The government did not want to hide its tight financial position from the people and had brought out a white paper in 1999 which gave a picture of the state’s economy for the past 20 years.

Mr Dhumal said the salary burden on the state government had touched Rs 2,000 crore. While the pension liabilities had increased to Rs 450 crore, the interest liabilities were Rs 455 crore.

Indicating that revenue generated from hydel projects was a panacea for the financial problems of the state, Mr Dhumal said that he was hoping to get the due share from the Punjab and Haryana governments regarding the Bhakra, Pong and Beas projects. Against Himachal Pradesh’s share of 180 MW, the state was getting only 45 MW at present.