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Uma for correcting imbalances

By Our Staff Correspondent

BHOPAL, JUNE 8. The Madhya Pradesh Chief Minister, Uma Bharti, has urged the Twelfth Finance Commission to devise a rational mechanism for devolution of funds from the Centre to the States keeping in view the widening disparities in the country in the post- economic liberalisation phase.

The Chief Minister made this assertion and underlined the need to adopt a clear-cut strategy for correcting imbalances at a meeting attended by the Finance Commission Chairman, C. Rangarajan, and other members of the Commission. The State Ministers, Chief Secretary and other senior officers were present at the meeting held at Mantralaya here today.

The Chief Minister proposed a strategy to bring the backward States into the mainstream of development. The strategy envisages that the Finance Commission should give substantial Plan deficit grant to equalise the per capita Plan outlay across States; secondly, devolution criterion should reflect the regional inequalities in terms of socio-economic progress and the economic infrastructure; thirdly, the preservation of natural resources should be adequately compensated in the absence of which surplus from the backward States flows to the developed States; and fourthly the Commission should devise a debt management policy to enable backward States to have liberal access to market borrowings. The loan component of the Central Plan assistance, including the externally- aided projects, should be reduced from 70 per cent to 50 per cent, the Chief Minister said emphasising that 50 per cent of the net proceeds of the Centre should be devolved to the States.

The Chief Minister also suggested that the Commission should impose penalties for non-compliance of legal obligations by the Centre to raise royalties on coal and minerals in the form of extra earmarked devolution. Ms. Bharti said that environmental concerns have not been included in the terms of references of the Finance Commission. Making a case for compensating States with higher than average forest cover, the Chief Minister pointed out that 31 per cent of the forest cover in Madhya Pradesh as against 23 per cent of the national average costs substantially to the State in terms of maintenance and lost opportunities. Therefore, the State should be compensated. She suggested creation of a Green Fund for compensating States with substantial forest cover.

The Chief Minister drew the attention to the fact that bifurcation of Madhya Pradesh and creation of Chhattisgarh had an adverse impact on the finances of the reorganised State. The most serious implication was in the bifurcation of the State Electricity Board, which has raised the average cost of generation of electricity to Rs. 1.27 per unit as against Rs. 0.77 in Chhattisgarh. Emphasising on this point, she sought compensation for the losses on this count.

The Chairman of the Twelfth Finance Commission said in his address that the Commission would evolve a scheme of fiscal transfers which will give due weightage to the requirements of the States.

The Chief Secretary, B.K. Saha, said that the royalties on minerals and coal should be made ad valorem so that States rich in minerals and coal could benefit from buoyancy in prices.

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