The Hindu : `Economic power shifting to States'

Online edition of India's National Newspaper
Monday, Dec 01, 2003

Southern States

Southern States - Andhra Pradesh-Hyderabad

`Economic power shifting to States'

By Our Staff Reporter

Hyderabad Nov. 30. The balance of economic power is slowly but surely shifting towards the States from the Central Government, under the influence of economic reforms initiated in 1991, said Reserve Bank of India Governor, Y. Venugopal Reddy, here on Sunday.

Speaking at the Centre for Economic and Social Studies after releasing a book titled "Andhra Pradesh Development: Economic Reforms and Challenges Ahead," Dr. Reddy said that the States had to invest in physical and human infrastructure to make themselves attractive to investments. This implied development of power, roads and communications, simplifying administration and improving law and order. It also implied improving public health delivery, literacy levels and educational infrastructure as well as other human development indices, Dr. Reddy said.

Globally too, provincial economies are increasingly coming under scrutiny by international financial players. The condition of provincial finances was central to national economic health in countries as diverse as Argentina and China. Even though State finances in India were under the control of the Central Government, liberalisation and globalisation were loosening that control and giving increased leverage to dynamic State Governments, he said.

Commending the book, which is a collection of 22 essays by the CESS faculty on various aspects of Andhra Pradesh's economy, to policy makers, students and lay readers alike, Dr. Reddy said that it contained "world class articles" and provided a deep insight into the working of the State economy. He complimented CESS for the quality of its research and added that RBI could take inputs from it on issues of infrastructural development, agricultural credit and institutional bottlenecks.

The former finance secretary, B.P.R. Vithal, said that the book took a dispassionate look at the state of the State's economy. It would provide enough material both to those who were critical of the reform process as well as to those who were its architects to support their contention and debunk the others.

From his own experience, Mr. Vithal said that economic progress had been unprecedented in the past few years since the economic reforms in the State. However, despite all the economic progress, Andhra Pradesh still remained behind Kerala and Karnataka on most indicators while being ahead of Madhya Pradesh. Ch. Hanumantha Rao, Chairman, CESS, and S. Mahendra Dev, Director of CESS, spoke about the book and its findings.

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