The Hindu : Karnataka News : `Power sector deficit, biggest challenge'

Online edition of India's National Newspaper
Wednesday, Sep 15, 2004

Karnataka

Karnataka

`Power sector deficit, biggest challenge'

By Our Special Correspondent

BANGALORE, SEPT. 14. The Deputy Chief Minister, Siddaramaiah, has said that the State was on the threshold of fiscal correction, though a long and arduous road lay ahead.

Speaking after releasing the Karnataka Public Finance Management and Accountability (PFMA) Study Report (2004) here on Tuesday, Mr. Siddaramaiah, who is also Finance Minister, said that prudent management of the fiscal deficit over the next five years would be the principal task of the Government's fiscal reform programme.

"The risks are high in the future," he said adding that the power sector deficit of Rs. 3,000 crores during 2003-04 posed the single biggest challenge to the State's fiscal stability. "If left unchecked, this can seriously jeopardise the State's fiscal sustainability and all efforts for rapid economic development." He stressed the need for eliminating transmission and distribution (T&D) losses.

Decisions

Another risk factor that could defeat the fiscal reform objectives was that major fiscal decisions in the public domain were not always made within the framework of the Fiscal Responsibility Act. The risk of unaffordable public debt, growing wage and pension outgo, unaffordable cost-time overruns and high-risk contingent liabilities, if unchecked, could easily precipitate fiscal stress. "Fiscal discipline must be the first principle that we must all follow," the Deputy Chief Minister said.

Noting that bringing about good governance would require sustained efforts on the part of the political executive, the civil service, non-governmental organisations and citizens' groups, Mr. Siddaramaiah said the principal challenge to the development of the State was that of providing good governance in every arena of public life. Good governance was possible if the Government made conscious choices to advance reforms that benefited a large number of people over the medium term. "The greater good of the greatest number over the medium and the long term will depend critically on a wide range of reforms in public finance."

Fiscal reforms

He said the PFMA system was the vehicle that would provide an institutional basis to sustain, strengthen and deepen reforms. "Our Government is committed to strengthening the fiscal reform process further." For the first time in eight years, the State had presented a budget for 2004-05 with a revenue surplus. It was a small, but significant, milestone in the path of fiscal consolidation. Mr. Siddaramaiah also recalled several reforms introduced during 1994-99 when he was Finance Minister.

Michael Carter, Country Director, World Bank, welcomed the gathering; Stephen Howes, Lead Economist, World Bank (India), presented the Karnataka PFMA study; G. Gurucharan, Secretary, Finance, spoke on the Government's fiscal reform and action plan; K.K. Misra, Chief Secretary to the State Government, chaired the session.

The State Government and the World Bank have jointly prepared the Karnataka PFMA Study.

Printer friendly page
Send this article to Friends by E-Mail

Karnataka