Chandigarh, September 28
Cautioning against the “race to the bottom” through competitive populism, the Prime Minister, Dr Manmohan Singh, asked the states to avoid excitement to have “headline-grabbing MoUs by offering fiscal and financial incentives which their finances cannot sustain.”

Stating that “the jury is still out on whether these policies of fiscal incentives and tax break really promote industrial development or not,” he advocated enabling a “common economy” and a single market to emerge and emerge strongly.

Though the Prime Minister did not name any state in his speech, the message was clear to all states which had been trying to outdo each other in an attempt to attract investors. Punjab, for example, had been on a spree of signing MoUs to accelerate its industrial development by offering both fiscal and financial incentives, including land at subsidised rates.

Besides, he stressed the need for the establishment of a cooperative mechanism so that inter-state barriers of all forms could get reduced and the available resources of the region in water and power were best utilised for re-establishing its leadership both in agricultural and industrial development. This had indirect reference to contagious and highly sensitive water and power-sharing disputes among northern states.

Inaugurating the Chief Ministers’ Conclave on North Indian Common Economy (NICE) at the Postgraduate Institute of Medical Education and Research here this morning, Dr Manmohan Singh also stressed the need to empower youth with capabilities for turning them into a national asset.

Talking about the themes of the conclave, which attracted participation from Punjab, Haryana, Himachal Pradesh, Jammu and Kashmir, Delhi, Chandigarh, Uttaranchal and Rajasthan, he wanted the states to focus more on e-governance for improving efficiency, transparency and customer satisfaction.

“The northern region needs to improve its human development indicators. You have to invest in your people. While we in Delhi are providing a supportive policy environment, you will have to do much more to capitalise on the emerging knowledge economy. You need not only better primary schools, but you need more colleges, technical institutions, vocational training programmes and research and development centres,” he said while complimenting Chandigarh, saying that “it is moving towards competency tests and certification of graduates so that it can become an IT hub. We need more such initiatives. I urge the Chief Ministers to pay special attention to human development challenges in the region.”

He asserted that a reason for the country’s optimism about sustaining the current growth process was its demographic profile as India was increasingly a country of young people. “We are home to 20 per cent of the world’s population of below 24 years. The youthful population will provide the human resource and their savings, the financial resource, for sustaining growth in the next 20 years.

However, we cannot simply assume that demographic trends will automatically translate into accelerated growth. People without capabilities, without education, without skills, without healthcare, without the required social and economic infrastructure need not be productive agents. Rather, they can be economic and social liabilities. People empowered by capabilities are translated into a national asset.”

The Prime Minister wanted the states to make their cities and towns modern and attractive by citing the example of the National Capital Region. “You need new urban centres. The region must see a wave of city development,” he remarked.

The Prime Minister held that it was the quality of governance that would differentiate one State from the other. “They must make the existing investment in the public sector more productive and make public services more effective and efficient”. He suggested the establishment of a forum for sharing inter-state experiences in development.

Earlier, Mrs Sushma Barlia, president, PHDCCI, in her address of welcome said that while the northern region accounted for 44 per cent of the population of the country, its contribution to industrial output was only 30 per cent. The region was falling behind in growth physical and social infrastructure and governance as compared to the south and the West. The North needed to grow faster and catch up with the other regions to contribute in greater strength to the overall Indian economy.

The northern states, she said, needed integrated growth. The PHDCCI, she said, was pushing for a common economic reform agenda as a rather novel experiment of public-private partnership. “Although a common economic agenda is desirable for the entire country, the PHDCCI is currently focusing on northern India,” she added.