The Hindu : National : Higher allocation for States promised

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Friday, Dec 24, 2004

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National

Higher allocation for States promised

By Our Special Correspondent

NEW DELHI, DEC. 23. The Rajya Sabha yesterday returned by voice vote the Appropriation Bill no. 4, 2004 for supplementary demands after the Union Finance Minister, P. Chidambaram, assured members that the allocation of funds for States would be raised as per the 12th Finance Commission's recommendations.

During a discussion on the demand for grants, Mr. Chidambaram said that the United Progressive Alliance (UPA) Government's aim was to make India an "economic powerhouse through cooperative federalism."

On the demand from the All-India Anna Dravida Munnetra Kazhagam and the Telugu Desam Party members for higher allocation to the State Governments, he said: "My heart is in the right place and so is my head, but the States must spend money." Many States had unspent balances. He also expressed unhappiness at the delay in project implementation.

He, however, did not address the Opposition and the Left members' concerns on unemployment, price rise and the equitable distribution of the benefits of liberalisation.

The supplementary demands were for the priority areas set by the UPA Government in education, food and health and "frontline areas" of research and human resource development. Mr. Chidambaram assured members that the Government was committed to the road project.

Revenue and fiscal deficits

To a query from Jairam Ramesh (Congress) on the road map for managing revenue and fiscal deficits, Mr. Chidambaram said that he was hopeful of achieving the minimum target of 0.5 per cent reduction in revenue deficit and 0.3 per cent in fiscal deficit.

On the gross and net Non-Performing Assets , he said it was the "dharma" of the banks to lend honestly. "If some loans fail, it was a part of business."

Mr. Chidambaram said that although the forex reserves were the highest ever at $ 130 billion, one of his concerns was the liquidity induced inflation which would have to be managed.

To Sanjay Nirupam's (Shiv Sena) concern at the "unnatural" buoyancy in the share market, he said he was watching the situation.

He did not believe it was a "bubble building up," but would ask the Securities and Exchange Board of India and the Department of Company Affairs to initiate action against "vanishing companies" which were still listed.

On the delay in the setting up of the desalination plant at Chennai, he said the Centre had offered funding, design and implementation support to the Tamil Nadu Government but only if it had a role in the Special Purpose Vehicle.

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