Kelkar congratulates J&K for VAT achievement Rather seeks funds for tapping hydro-electric potential, natural resources Elucidating peculiar situation of J&K and the saga of sufferings people have gone through here during two decades of militancy, Chief Minister Mr. Omar Abdullah today made a strong case for liberal financial support by 13th Finance Commission. The Commission is presently here to discuss and ascertain financial requirements of J&K State.
The Chief Minister, in his elaborated speech at a meeting between high-level State Officers and the 13thFinance Commission Members, led by its Chairman, Dr. Vijay Kelkar, described the visit of the Commission as momentous. He presented a detailed account of the areas where the State is seeking 13thFinance Commission support. While my government will try its utmost to serve the people and solve their problems, our request to the Commission would be to be generous in supporting us, he added.
Mr. Abdullah said people of J&K suffered a lot during last 20 years and the administration, supposed to attend to the issues of governance in fulfilling day-to-day needs of the people, had to divert most of its resources, time and energy in dealing with militancy and terrorism. Most of our institutions suffered, he said and added that administration has been geared up to face new and difficult challenges and to put in extra effort so as to make up for lost time and opportunity.
The Chief Minister said when the whole country was marching ahead and making new strides on development front during economic liberalization, J&K lost this opportunity due to militancy. Our people have, however, shown exemplary courage and maturity in defeating sinister designs of dividing them. We continue to remain committed to the highest ideals of democracy, secularism and socialism, constituting the basic spirit of our Constitution, he maintained.He said, In this background, I see the visit of 13thFinance Commission to the State as very timely and God-sent opportunity at a time when people here are trying to emerge from the shadows of violence.
Referring to the agitation faced by the State in the summer of 2008, the Chief Minister said it completely crippled normal life and led to greater economic losses, besides inflicting a huge set back to education, services and other sectors. This followed the seven-phased Assembly Elections and later by five-phases of Lok Sabha elections, thus consuming seven months in 2008-09. The State experienced low level of economic activity, tax generation and employment, he said, adding impact of global meltdown also affected our economy and exports of carpets, handicrafts and walnut showed downward dip. He said this background is presented to help the Commission appreciate the problems, limitations, concerns and expectations the State has.
The Chief Minister sought 13thFinance Commissions support for implementation of the recommendations of the Task Force set up by Prime Minister Dr. Manmohan Singh under the chairmanship of Dr. C. Rangarajan for economic development of J&K, adding the Task Force has studied problems of the State in depth.
Referring to the potential of hydel power generation, tourism, forest ecology and environment sectors of the State, Mr. Abdullah urged the Commission to provide liberal finances for development of these sectors. He sought a corpus fund of Rs. 15,000 crore to finance the equity of the State in future hydroelectric power projects. He said that State also intends generation of 1,500 MWs over the 13thCommission Award period.The Chief Minister said the limitations imposed by Indus Water Treaty on J&K have hampered exploitation of this vital resource and Rangarajan Committee has emphasized exploitation of the States power potential in full. He sought support of Commission for hydel power generation, adding this would provide regular income to the State.
The Chief Minister also sought Rs. 725 crore for Dal development project and Rs. 419 crore for Wullar, Tsomoriri and Mansar-Surinsar lakes, besides liberal support for upgrading health and education sectors in the State. He also made strong case for additional support for infrastructure development and road communication. He sought Rs. 254 crore balance amount, out of Rs. 319 crore awarded by 12thFinance Commission for urban local bodies.
Referring to the implementation of 6thPay Commission, Mr. Abdullah said, I would like to make a mention of the additional financial burden that the State has to bear because of implementation of 6thPay Commission recommendations. We would request the Commission to steer the State clear out of the additional burden of Rs. 1700 crore per annum and arrears of Rs 4,200 crore by making a generous award. He also sought support for the States new pension scheme and grant of Rs. 1,500 crore to the State to wipe out the overdraft system with J&K Bank.
The Chairman, 13thFinance Commission, Dr. Vijay Kelkar said the Commission is looking forward to a productive exchange of ideas and dialogue on the terms of reference of the 13th Finance Commission and the memorandum prepared by the State. We look forward to our visit to Jammu, Kashmir and Ladakh regions to get an exposure to some of the unique development challenges faced by the people of the State. During our visit, we also look forward to a substantive policy dialogue with all stakeholders, he added.
Mr. Kelkar said the Terms of Reference of the 13thFinance Commission provide for considerable continuity and fresh ground to cover. Our overall approach will be on specific issues of importance to J&K and on physical consolidation, he said and added that Commission is meeting at a time when the world economy is going through an unprecedented crisis. However, there are some signs of improvement which have to be kept under watch for sustainability of these trends, he added.
The Chairman said people of the State face complex security and militancy challenges telling upon both growth and human development and per capita GSDP here is lower than the national level.However, the State has maintained higher than national average female: male sex ratio for 0-6 years age group and infant mortality rate is significantly lower than the national average here, he said and added that a development strategy to accelerate growth and employment and deliver income and human development benefits is significant.
Mr. Kelkar congratulated State for successfully introducing VAT and said, this illustrates the potential that broad-based taxes like VAT have to improve buoyancy and stability of own tax revenue collections. He also complemented the State for exercising control over its expenditure. They also appreciated the State Government for devolving important functions and functionaries including primary school teachers and anganwari workers to the Panchayats. The Commission stressed the need for finalizing annual accounts of States PSE and instituting a sinking fund recommended by the 12thFinance Commission.
The Chairman assured the State Government that the Commissionwould give the most careful consideration to the suggestions made by it on its terms of reference as well as to proposals for horizontal devolution, area parameter and minimum essential needs as well as fixing a guaranteed minimum devolution for the Centre to the States.
The meeting was attended by Deputy Chief Minister, Mr. Tara Chand, Minister for Finnace, Law and Parliamentary Afafirs, Mr. Abdul Rahim Rather, Minister for Education, Peerzada Mohammad Sayeed, Minister for Rural Development, Mr. Ali Mohammad Sagar, Minister for Tourism, Mr. Nawang Rigzin Jora, Minister for Industries and CA&PD, Mr. S. S. Slathia, Minister for Health, Mr. Sham Lal Sharma, Chief Secretary, Mr. S. S. Kapur, Chairman, Finance Commission, Dr. Mehmood-ur-Rehman, Economic Advisor to Government, Mr. Jalil Ahmad Khan, Financial Commissioner, Home, Mr. Samuel Verghese, Financial Commissioner, Planning, Mr. S. L. Bhat, Principal Secretaries and Commissioner/ Secretaries of all departments.
The Commission Members which participated in the meeting included Dr. Sanjiv Mishra, Prof. Atul Sharma, Dr. Indira Rajaraman, Mr. B. K. Chaturvedi and Secretary, Mr. Sumit Bose, besides Economic Advisor, Dr. Ratin Roy.
Commissioner/Secretary, Finance, Mr. Sudhanshu Pandey made a power-point presentation in the meeting, highlighting various aspects of financial requirement in power, forest, health, education, rural development, tourism, public works, agriculture, heritage conservation, internal security, housing and urban development and other sectors.
Earlier, the Commission interacted with the Chief Minister and his Cabinet colleagues as well as senior officers of the State. The representatives of local bodies, political parties and trade and industry associations also met the Commission which arrived here yesterday for a six-day visit of J&K. The Commission in different groups is visiting various projects from July 2 to July 4, 2009.
The Commission will finalize its recommendations by October 2009.
MEANWHILE: Minister for Finance, Law and Parliamentary Affairs, Mr. Abdul Rahim Rather has said that peculiarity of J&Ks chronic backwardness and diverse geo-climatic and topographic factors call for enhanced financial support from 13th Finance Commission. He said State needs liberal assistance for exploiting its rich hydro-electric potential and natural resources. The Finance Minister said this while giving a resume of the memorandum the State has submitted to the 13th Finance Commission for liberal financial award. Referring to the formidable challenge of development, Mr. Rather said the State has to reconstruct an economy ravaged by two decades of militancy and terrorism and at the same time deliver quickly on growth intensification and poverty alleviation. This is the most sustainable solution to restore peace and order in the State. The systems and processes of fiscal federalism that work for rest of the country are not necessarily optional in J&K for socio-political and economic reasons, he added. Specifying J&Ks distinct economic disadvantages arising out of remoteness and poor connectivity, a weak resource base, poor infrastructure and a threatening law and order situation due to militancy, the Finance Minister said all these factors have resulted in a classic backwardness trap of low economic activity, employment and income generation. Mr. Rather said the State has already submitted a detailed memorandum to the Commission explaining broad features, issues and problems peculiar to the economic structure of the State and also important features of the States finances. Separately, we have uploaded budgetary, financial and other details as per formats prescribed by the Commission. I am sure that the contents of our memorandum will receive due consideration by the Commission at the time of finalization of their awards, he hoped. While referring to the 20,000 MW hydroelectric generation potential, Mr. Rather said a case has been made for compensation to the State for losses on account of Indus Water Treaty by way of liberal funding for indigenous power generation. Despite 20,000 MW potential in hydel energy, we cannot harness it optimally because of the restrictions imposed by Indus Water Treaty, which deprives the State of its right over usage of the waters of Indus, Jhelum and Chenab in perpetuity, he said and added that the Treaty also deprives the State from using our waters for irrigation except to limited acreage of 13.96 lakh which is about to be exhausted in near future. He urged the 13th Finance Commission to address this issue afresh and find a just and lasting solution. We feel that pending a final quantification of a proper compensation package, the Commission may allocate a sum of Rs. 15,000 crore exclusively for full funding about 1,500 to 2,000 MW of hydel capacity under the State sector so that we are not required to raise any loans from the market, he explained. Elaborating on need for genuine conservation and developmental needs of forests, Mr. Rather requested the Commission to allocate special resources for maintenance and upkeep of these national and global assets as the meager plan and non-plan resources of the State cannot do justice to the full requirements of maintenance, upkeep and development of these forests. The State used to earn Rs.100 crore from extraction and sale of timber from these forests with potential to increase the revenue further. In view of the ban imposed by the Supreme Court, the revenue from forests has considerably dwindled, Mr. Rather said. Flagging the trio of handicrafts, tourism and fruit industry as the three important plus points of J&Ks fragile economy, Mr. Rather said the State has been endowed with numerous attractive tourist destinations which attract lakhs of visitors. For this, we have to maintain high class infrastructure and facilities at all such places and on tourist routes. We continuously need to upgrade these facilities, he said. Strongly putting forth case of promoting handicraft sector, which is a major foreign exchange earner, Mr. Rather said government is striving to strengthen its revenue-earning base and sustaining wide base of employment. On developing fruit industry of the State, the Finance Minister said even though apple production is worth Rs.1,700 crore, massive government support is needed to sustain the industry. Mr. Rather said the total tax collection has been among the best in the country. The total tax collection as a ratio of our GSDP is 7.1 per cent in comparison to all-states average of 6.2 per cent. The ratio of total tax and non-tax revenue collection as a ratio of GSDP is 10.2 per cent in comparison to corresponding all-states average of 7.5 per cent, he added. On the issue of criteria of devolution of resources, Mr. Rather requested the Commission to kindly keep in mind that the average per capita cost of sustenance in J&K would work out to be amongst the highest in the country. This factor would also be responsible for a large BPL population of 22 per cent in our State, as per BPL survey conducted in 2008, he said, adding cost of sustenance and BPL population should be recognized as important consideration for devolution of resources. He also said that the remoteness of J&K State from the main centres of economic activities involving extra cost of transportation should also be factored into devolution mechanism. While dealing with the matters pertaining to FRBM Act, Mr. Rather said due regard should also be given to the two adverse factors of global meltdown and Sixth Central Pay Commission. On the issue of grants allocated to Panchayats, Mr. Rather said due regard should be given to peculiar law and order conditions prevailing in the State. We intend to hold panchayat elections as early as possible. Any delay on this account should not be taken as a willful breach of the condition, he said, while urging the 13th Finance Commission to find a way to release the amounts of grant-in-aid for the panchayats recommended by the 12th Finance Commission, which have been withheld as panchayat elections could not be held during the period of award of the 12th Finance Commission. The Finance Minister said the government has already projected sectoral needs of other crucial sectors in the memorandum to the 13th Finance Commission and asked for sympathetic consideration of the Commission on roads, agriculture, education, health and housing. We have also projected special needs of buildings and computerization for judiciary, legislature complex, MLAs hostel, Secretariat, district administration and other field offices, he said. Mr. Rather also flagged before the Commission issues dealing with creation of corpus for introduction of New Pension Scheme, one time 13th Finance Commission support for correcting overdraft with J&K Bank and bailing out the State from the adverse impact on account of the Central Sixth Pay Commission Award.
Kelkar congratulates J&K for VAT achievementThe Chief Minister, in his elaborated speech at a meeting between high-level State Officers and the 13thFinance Commission Members, led by its Chairman, Dr. Vijay Kelkar, described the visit of the Commission as momentous. He presented a detailed account of the areas where the State is seeking 13thFinance Commission support. While my government will try its utmost to serve the people and solve their problems, our request to the Commission would be to be generous in supporting us, he added.
Mr. Abdullah said people of J&K suffered a lot during last 20 years and the administration, supposed to attend to the issues of governance in fulfilling day-to-day needs of the people, had to divert most of its resources, time and energy in dealing with militancy and terrorism. Most of our institutions suffered, he said and added that administration has been geared up to face new and difficult challenges and to put in extra effort so as to make up for lost time and opportunity.
The Chief Minister said when the whole country was marching ahead and making new strides on development front during economic liberalization, J&K lost this opportunity due to militancy. Our people have, however, shown exemplary courage and maturity in defeating sinister designs of dividing them. We continue to remain committed to the highest ideals of democracy, secularism and socialism, constituting the basic spirit of our Constitution, he maintained.He said, In this background, I see the visit of 13thFinance Commission to the State as very timely and God-sent opportunity at a time when people here are trying to emerge from the shadows of violence.
Referring to the agitation faced by the State in the summer of 2008, the Chief Minister said it completely crippled normal life and led to greater economic losses, besides inflicting a huge set back to education, services and other sectors. This followed the seven-phased Assembly Elections and later by five-phases of Lok Sabha elections, thus consuming seven months in 2008-09. The State experienced low level of economic activity, tax generation and employment, he said, adding impact of global meltdown also affected our economy and exports of carpets, handicrafts and walnut showed downward dip. He said this background is presented to help the Commission appreciate the problems, limitations, concerns and expectations the State has.
The Chief Minister sought 13thFinance Commissions support for implementation of the recommendations of the Task Force set up by Prime Minister Dr. Manmohan Singh under the chairmanship of Dr. C. Rangarajan for economic development of J&K, adding the Task Force has studied problems of the State in depth.
Referring to the potential of hydel power generation, tourism, forest ecology and environment sectors of the State, Mr. Abdullah urged the Commission to provide liberal finances for development of these sectors. He sought a corpus fund of Rs. 15,000 crore to finance the equity of the State in future hydroelectric power projects. He said that State also intends generation of 1,500 MWs over the 13thCommission Award period.The Chief Minister said the limitations imposed by Indus Water Treaty on J&K have hampered exploitation of this vital resource and Rangarajan Committee has emphasized exploitation of the States power potential in full. He sought support of Commission for hydel power generation, adding this would provide regular income to the State.
The Chief Minister also sought Rs. 725 crore for Dal development project and Rs. 419 crore for Wullar, Tsomoriri and Mansar-Surinsar lakes, besides liberal support for upgrading health and education sectors in the State. He also made strong case for additional support for infrastructure development and road communication. He sought Rs. 254 crore balance amount, out of Rs. 319 crore awarded by 12thFinance Commission for urban local bodies.
Referring to the implementation of 6thPay Commission, Mr. Abdullah said, I would like to make a mention of the additional financial burden that the State has to bear because of implementation of 6thPay Commission recommendations. We would request the Commission to steer the State clear out of the additional burden of Rs. 1700 crore per annum and arrears of Rs 4,200 crore by making a generous award. He also sought support for the States new pension scheme and grant of Rs. 1,500 crore to the State to wipe out the overdraft system with J&K Bank.
The Chairman, 13thFinance Commission, Dr. Vijay Kelkar said the Commission is looking forward to a productive exchange of ideas and dialogue on the terms of reference of the 13th Finance Commission and the memorandum prepared by the State. We look forward to our visit to Jammu, Kashmir and Ladakh regions to get an exposure to some of the unique development challenges faced by the people of the State. During our visit, we also look forward to a substantive policy dialogue with all stakeholders, he added.
Mr. Kelkar said the Terms of Reference of the 13thFinance Commission provide for considerable continuity and fresh ground to cover. Our overall approach will be on specific issues of importance to J&K and on physical consolidation, he said and added that Commission is meeting at a time when the world economy is going through an unprecedented crisis. However, there are some signs of improvement which have to be kept under watch for sustainability of these trends, he added.
The Chairman said people of the State face complex security and militancy challenges telling upon both growth and human development and per capita GSDP here is lower than the national level.However, the State has maintained higher than national average female: male sex ratio for 0-6 years age group and infant mortality rate is significantly lower than the national average here, he said and added that a development strategy to accelerate growth and employment and deliver income and human development benefits is significant.
Mr. Kelkar congratulated State for successfully introducing VAT and said, this illustrates the potential that broad-based taxes like VAT have to improve buoyancy and stability of own tax revenue collections. He also complemented the State for exercising control over its expenditure. They also appreciated the State Government for devolving important functions and functionaries including primary school teachers and anganwari workers to the Panchayats. The Commission stressed the need for finalizing annual accounts of States PSE and instituting a sinking fund recommended by the 12thFinance Commission.
The Chairman assured the State Government that the Commissionwould give the most careful consideration to the suggestions made by it on its terms of reference as well as to proposals for horizontal devolution, area parameter and minimum essential needs as well as fixing a guaranteed minimum devolution for the Centre to the States.
The meeting was attended by Deputy Chief Minister, Mr. Tara Chand, Minister for Finnace, Law and Parliamentary Afafirs, Mr. Abdul Rahim Rather, Minister for Education, Peerzada Mohammad Sayeed, Minister for Rural Development, Mr. Ali Mohammad Sagar, Minister for Tourism, Mr. Nawang Rigzin Jora, Minister for Industries and CA&PD, Mr. S. S. Slathia, Minister for Health, Mr. Sham Lal Sharma, Chief Secretary, Mr. S. S. Kapur, Chairman, Finance Commission, Dr. Mehmood-ur-Rehman, Economic Advisor to Government, Mr. Jalil Ahmad Khan, Financial Commissioner, Home, Mr. Samuel Verghese, Financial Commissioner, Planning, Mr. S. L. Bhat, Principal Secretaries and Commissioner/ Secretaries of all departments.
The Commission Members which participated in the meeting included Dr. Sanjiv Mishra, Prof. Atul Sharma, Dr. Indira Rajaraman, Mr. B. K. Chaturvedi and Secretary, Mr. Sumit Bose, besides Economic Advisor, Dr. Ratin Roy.
Commissioner/Secretary, Finance, Mr. Sudhanshu Pandey made a power-point presentation in the meeting, highlighting various aspects of financial requirement in power, forest, health, education, rural development, tourism, public works, agriculture, heritage conservation, internal security, housing and urban development and other sectors.
Earlier, the Commission interacted with the Chief Minister and his Cabinet colleagues as well as senior officers of the State. The representatives of local bodies, political parties and trade and industry associations also met the Commission which arrived here yesterday for a six-day visit of J&K. The Commission in different groups is visiting various projects from July 2 to July 4, 2009.
The Commission will finalize its recommendations by October 2009.
MEANWHILE: Minister for Finance, Law and Parliamentary Affairs, Mr. Abdul Rahim Rather has said that peculiarity of J&Ks chronic backwardness and diverse geo-climatic and topographic factors call for enhanced financial support from 13th Finance Commission. He said State needs liberal assistance for exploiting its rich hydro-electric potential and natural resources. The Finance Minister said this while giving a resume of the memorandum the State has submitted to the 13th Finance Commission for liberal financial award. Referring to the formidable challenge of development, Mr. Rather said the State has to reconstruct an economy ravaged by two decades of militancy and terrorism and at the same time deliver quickly on growth intensification and poverty alleviation. This is the most sustainable solution to restore peace and order in the State. The systems and processes of fiscal federalism that work for rest of the country are not necessarily optional in J&K for socio-political and economic reasons, he added. Specifying J&Ks distinct economic disadvantages arising out of remoteness and poor connectivity, a weak resource base, poor infrastructure and a threatening law and order situation due to militancy, the Finance Minister said all these factors have resulted in a classic backwardness trap of low economic activity, employment and income generation. Mr. Rather said the State has already submitted a detailed memorandum to the Commission explaining broad features, issues and problems peculiar to the economic structure of the State and also important features of the States finances. Separately, we have uploaded budgetary, financial and other details as per formats prescribed by the Commission. I am sure that the contents of our memorandum will receive due consideration by the Commission at the time of finalization of their awards, he hoped. While referring to the 20,000 MW hydroelectric generation potential, Mr. Rather said a case has been made for compensation to the State for losses on account of Indus Water Treaty by way of liberal funding for indigenous power generation. Despite 20,000 MW potential in hydel energy, we cannot harness it optimally because of the restrictions imposed by Indus Water Treaty, which deprives the State of its right over usage of the waters of Indus, Jhelum and Chenab in perpetuity, he said and added that the Treaty also deprives the State from using our waters for irrigation except to limited acreage of 13.96 lakh which is about to be exhausted in near future. He urged the 13th Finance Commission to address this issue afresh and find a just and lasting solution. We feel that pending a final quantification of a proper compensation package, the Commission may allocate a sum of Rs. 15,000 crore exclusively for full funding about 1,500 to 2,000 MW of hydel capacity under the State sector so that we are not required to raise any loans from the market, he explained. Elaborating on need for genuine conservation and developmental needs of forests, Mr. Rather requested the Commission to allocate special resources for maintenance and upkeep of these national and global assets as the meager plan and non-plan resources of the State cannot do justice to the full requirements of maintenance, upkeep and development of these forests. The State used to earn Rs.100 crore from extraction and sale of timber from these forests with potential to increase the revenue further. In view of the ban imposed by the Supreme Court, the revenue from forests has considerably dwindled, Mr. Rather said. Flagging the trio of handicrafts, tourism and fruit industry as the three important plus points of J&Ks fragile economy, Mr. Rather said the State has been endowed with numerous attractive tourist destinations which attract lakhs of visitors. For this, we have to maintain high class infrastructure and facilities at all such places and on tourist routes. We continuously need to upgrade these facilities, he said. Strongly putting forth case of promoting handicraft sector, which is a major foreign exchange earner, Mr. Rather said government is striving to strengthen its revenue-earning base and sustaining wide base of employment. On developing fruit industry of the State, the Finance Minister said even though apple production is worth Rs.1,700 crore, massive government support is needed to sustain the industry. Mr. Rather said the total tax collection has been among the best in the country. The total tax collection as a ratio of our GSDP is 7.1 per cent in comparison to all-states average of 6.2 per cent. The ratio of total tax and non-tax revenue collection as a ratio of GSDP is 10.2 per cent in comparison to corresponding all-states average of 7.5 per cent, he added. On the issue of criteria of devolution of resources, Mr. Rather requested the Commission to kindly keep in mind that the average per capita cost of sustenance in J&K would work out to be amongst the highest in the country. This factor would also be responsible for a large BPL population of 22 per cent in our State, as per BPL survey conducted in 2008, he said, adding cost of sustenance and BPL population should be recognized as important consideration for devolution of resources. He also said that the remoteness of J&K State from the main centres of economic activities involving extra cost of transportation should also be factored into devolution mechanism. While dealing with the matters pertaining to FRBM Act, Mr. Rather said due regard should also be given to the two adverse factors of global meltdown and Sixth Central Pay Commission. On the issue of grants allocated to Panchayats, Mr. Rather said due regard should be given to peculiar law and order conditions prevailing in the State. We intend to hold panchayat elections as early as possible. Any delay on this account should not be taken as a willful breach of the condition, he said, while urging the 13th Finance Commission to find a way to release the amounts of grant-in-aid for the panchayats recommended by the 12th Finance Commission, which have been withheld as panchayat elections could not be held during the period of award of the 12th Finance Commission. The Finance Minister said the government has already projected sectoral needs of other crucial sectors in the memorandum to the 13th Finance Commission and asked for sympathetic consideration of the Commission on roads, agriculture, education, health and housing. We have also projected special needs of buildings and computerization for judiciary, legislature complex, MLAs hostel, Secretariat, district administration and other field offices, he said. Mr. Rather also flagged before the Commission issues dealing with creation of corpus for introduction of New Pension Scheme, one time 13th Finance Commission support for correcting overdraft with J&K Bank and bailing out the State from the adverse impact on account of the Central Sixth Pay Commission Award.
Rather seeks funds for tapping hydro-electric potential, natural resources
Elucidating peculiar situation of J&K and the saga of sufferings people have gone through here during two decades of militancy, Chief Minister Mr. Omar Abdullah today made a strong case for liberal financial support by 13th Finance Commission. The Commission is presently here to discuss and ascertain financial requirements of J&K State.
The Chief Minister, in his elaborated speech at a meeting between high-level State Officers and the 13thFinance Commission Members, led by its Chairman, Dr. Vijay Kelkar, described the visit of the Commission as momentous. He presented a detailed account of the areas where the State is seeking 13thFinance Commission support. While my government will try its utmost to serve the people and solve their problems, our request to the Commission would be to be generous in supporting us, he added.
Mr. Abdullah said people of J&K suffered a lot during last 20 years and the administration, supposed to attend to the issues of governance in fulfilling day-to-day needs of the people, had to divert most of its resources, time and energy in dealing with militancy and terrorism. Most of our institutions suffered, he said and added that administration has been geared up to face new and difficult challenges and to put in extra effort so as to make up for lost time and opportunity.
The Chief Minister said when the whole country was marching ahead and making new strides on development front during economic liberalization, J&K lost this opportunity due to militancy. Our people have, however, shown exemplary courage and maturity in defeating sinister designs of dividing them. We continue to remain committed to the highest ideals of democracy, secularism and socialism, constituting the basic spirit of our Constitution, he maintained.He said, In this background, I see the visit of 13thFinance Commission to the State as very timely and God-sent opportunity at a time when people here are trying to emerge from the shadows of violence.
Referring to the agitation faced by the State in the summer of 2008, the Chief Minister said it completely crippled normal life and led to greater economic losses, besides inflicting a huge set back to education, services and other sectors. This followed the seven-phased Assembly Elections and later by five-phases of Lok Sabha elections, thus consuming seven months in 2008-09. The State experienced low level of economic activity, tax generation and employment, he said, adding impact of global meltdown also affected our economy and exports of carpets, handicrafts and walnut showed downward dip. He said this background is presented to help the Commission appreciate the problems, limitations, concerns and expectations the State has.
The Chief Minister sought 13thFinance Commissions support for implementation of the recommendations of the Task Force set up by Prime Minister Dr. Manmohan Singh under the chairmanship of Dr. C. Rangarajan for economic development of J&K, adding the Task Force has studied problems of the State in depth.
Referring to the potential of hydel power generation, tourism, forest ecology and environment sectors of the State, Mr. Abdullah urged the Commission to provide liberal finances for development of these sectors. He sought a corpus fund of Rs. 15,000 crore to finance the equity of the State in future hydroelectric power projects. He said that State also intends generation of 1,500 MWs over the 13thCommission Award period.The Chief Minister said the limitations imposed by Indus Water Treaty on J&K have hampered exploitation of this vital resource and Rangarajan Committee has emphasized exploitation of the States power potential in full. He sought support of Commission for hydel power generation, adding this would provide regular income to the State.
The Chief Minister also sought Rs. 725 crore for Dal development project and Rs. 419 crore for Wullar, Tsomoriri and Mansar-Surinsar lakes, besides liberal support for upgrading health and education sectors in the State. He also made strong case for additional support for infrastructure development and road communication. He sought Rs. 254 crore balance amount, out of Rs. 319 crore awarded by 12thFinance Commission for urban local bodies.
Referring to the implementation of 6thPay Commission, Mr. Abdullah said, I would like to make a mention of the additional financial burden that the State has to bear because of implementation of 6thPay Commission recommendations. We would request the Commission to steer the State clear out of the additional burden of Rs. 1700 crore per annum and arrears of Rs 4,200 crore by making a generous award. He also sought support for the States new pension scheme and grant of Rs. 1,500 crore to the State to wipe out the overdraft system with J&K Bank.
The Chairman, 13thFinance Commission, Dr. Vijay Kelkar said the Commission is looking forward to a productive exchange of ideas and dialogue on the terms of reference of the 13th Finance Commission and the memorandum prepared by the State. We look forward to our visit to Jammu, Kashmir and Ladakh regions to get an exposure to some of the unique development challenges faced by the people of the State. During our visit, we also look forward to a substantive policy dialogue with all stakeholders, he added.
Mr. Kelkar said the Terms of Reference of the 13thFinance Commission provide for considerable continuity and fresh ground to cover. Our overall approach will be on specific issues of importance to J&K and on physical consolidation, he said and added that Commission is meeting at a time when the world economy is going through an unprecedented crisis. However, there are some signs of improvement which have to be kept under watch for sustainability of these trends, he added.
The Chairman said people of the State face complex security and militancy challenges telling upon both growth and human development and per capita GSDP here is lower than the national level.However, the State has maintained higher than national average female: male sex ratio for 0-6 years age group and infant mortality rate is significantly lower than the national average here, he said and added that a development strategy to accelerate growth and employment and deliver income and human development benefits is significant.
Mr. Kelkar congratulated State for successfully introducing VAT and said, this illustrates the potential that broad-based taxes like VAT have to improve buoyancy and stability of own tax revenue collections. He also complemented the State for exercising control over its expenditure. They also appreciated the State Government for devolving important functions and functionaries including primary school teachers and anganwari workers to the Panchayats. The Commission stressed the need for finalizing annual accounts of States PSE and instituting a sinking fund recommended by the 12thFinance Commission.
The Chairman assured the State Government that the Commissionwould give the most careful consideration to the suggestions made by it on its terms of reference as well as to proposals for horizontal devolution, area parameter and minimum essential needs as well as fixing a guaranteed minimum devolution for the Centre to the States.
The meeting was attended by Deputy Chief Minister, Mr. Tara Chand, Minister for Finnace, Law and Parliamentary Afafirs, Mr. Abdul Rahim Rather, Minister for Education, Peerzada Mohammad Sayeed, Minister for Rural Development, Mr. Ali Mohammad Sagar, Minister for Tourism, Mr. Nawang Rigzin Jora, Minister for Industries and CA&PD, Mr. S. S. Slathia, Minister for Health, Mr. Sham Lal Sharma, Chief Secretary, Mr. S. S. Kapur, Chairman, Finance Commission, Dr. Mehmood-ur-Rehman, Economic Advisor to Government, Mr. Jalil Ahmad Khan, Financial Commissioner, Home, Mr. Samuel Verghese, Financial Commissioner, Planning, Mr. S. L. Bhat, Principal Secretaries and Commissioner/ Secretaries of all departments.
The Commission Members which participated in the meeting included Dr. Sanjiv Mishra, Prof. Atul Sharma, Dr. Indira Rajaraman, Mr. B. K. Chaturvedi and Secretary, Mr. Sumit Bose, besides Economic Advisor, Dr. Ratin Roy.
Commissioner/Secretary, Finance, Mr. Sudhanshu Pandey made a power-point presentation in the meeting, highlighting various aspects of financial requirement in power, forest, health, education, rural development, tourism, public works, agriculture, heritage conservation, internal security, housing and urban development and other sectors.
Earlier, the Commission interacted with the Chief Minister and his Cabinet colleagues as well as senior officers of the State. The representatives of local bodies, political parties and trade and industry associations also met the Commission which arrived here yesterday for a six-day visit of J&K. The Commission in different groups is visiting various projects from July 2 to July 4, 2009.
The Commission will finalize its recommendations by October 2009.
MEANWHILE: Minister for Finance, Law and Parliamentary Affairs, Mr. Abdul Rahim Rather has said that peculiarity of J&Ks chronic backwardness and diverse geo-climatic and topographic factors call for enhanced financial support from 13th Finance Commission. He said State needs liberal assistance for exploiting its rich hydro-electric potential and natural resources. The Finance Minister said this while giving a resume of the memorandum the State has submitted to the 13th Finance Commission for liberal financial award. Referring to the formidable challenge of development, Mr. Rather said the State has to reconstruct an economy ravaged by two decades of militancy and terrorism and at the same time deliver quickly on growth intensification and poverty alleviation. This is the most sustainable solution to restore peace and order in the State. The systems and processes of fiscal federalism that work for rest of the country are not necessarily optional in J&K for socio-political and economic reasons, he added. Specifying J&Ks distinct economic disadvantages arising out of remoteness and poor connectivity, a weak resource base, poor infrastructure and a threatening law and order situation due to militancy, the Finance Minister said all these factors have resulted in a classic backwardness trap of low economic activity, employment and income generation. Mr. Rather said the State has already submitted a detailed memorandum to the Commission explaining broad features, issues and problems peculiar to the economic structure of the State and also important features of the States finances. Separately, we have uploaded budgetary, financial and other details as per formats prescribed by the Commission. I am sure that the contents of our memorandum will receive due consideration by the Commission at the time of finalization of their awards, he hoped. While referring to the 20,000 MW hydroelectric generation potential, Mr. Rather said a case has been made for compensation to the State for losses on account of Indus Water Treaty by way of liberal funding for indigenous power generation. Despite 20,000 MW potential in hydel energy, we cannot harness it optimally because of the restrictions imposed by Indus Water Treaty, which deprives the State of its right over usage of the waters of Indus, Jhelum and Chenab in perpetuity, he said and added that the Treaty also deprives the State from using our waters for irrigation except to limited acreage of 13.96 lakh which is about to be exhausted in near future. He urged the 13th Finance Commission to address this issue afresh and find a just and lasting solution. We feel that pending a final quantification of a proper compensation package, the Commission may allocate a sum of Rs. 15,000 crore exclusively for full funding about 1,500 to 2,000 MW of hydel capacity under the State sector so that we are not required to raise any loans from the market, he explained. Elaborating on need for genuine conservation and developmental needs of forests, Mr. Rather requested the Commission to allocate special resources for maintenance and upkeep of these national and global assets as the meager plan and non-plan resources of the State cannot do justice to the full requirements of maintenance, upkeep and development of these forests. The State used to earn Rs.100 crore from extraction and sale of timber from these forests with potential to increase the revenue further. In view of the ban imposed by the Supreme Court, the revenue from forests has considerably dwindled, Mr. Rather said. Flagging the trio of handicrafts, tourism and fruit industry as the three important plus points of J&Ks fragile economy, Mr. Rather said the State has been endowed with numerous attractive tourist destinations which attract lakhs of visitors. For this, we have to maintain high class infrastructure and facilities at all such places and on tourist routes. We continuously need to upgrade these facilities, he said. Strongly putting forth case of promoting handicraft sector, which is a major foreign exchange earner, Mr. Rather said government is striving to strengthen its revenue-earning base and sustaining wide base of employment. On developing fruit industry of the State, the Finance Minister said even though apple production is worth Rs.1,700 crore, massive government support is needed to sustain the industry. Mr. Rather said the total tax collection has been among the best in the country. The total tax collection as a ratio of our GSDP is 7.1 per cent in comparison to all-states average of 6.2 per cent. The ratio of total tax and non-tax revenue collection as a ratio of GSDP is 10.2 per cent in comparison to corresponding all-states average of 7.5 per cent, he added. On the issue of criteria of devolution of resources, Mr. Rather requested the Commission to kindly keep in mind that the average per capita cost of sustenance in J&K would work out to be amongst the highest in the country. This factor would also be responsible for a large BPL population of 22 per cent in our State, as per BPL survey conducted in 2008, he said, adding cost of sustenance and BPL population should be recognized as important consideration for devolution of resources. He also said that the remoteness of J&K State from the main centres of economic activities involving extra cost of transportation should also be factored into devolution mechanism. While dealing with the matters pertaining to FRBM Act, Mr. Rather said due regard should also be given to the two adverse factors of global meltdown and Sixth Central Pay Commission. On the issue of grants allocated to Panchayats, Mr. Rather said due regard should be given to peculiar law and order conditions prevailing in the State. We intend to hold panchayat elections as early as possible. Any delay on this account should not be taken as a willful breach of the condition, he said, while urging the 13th Finance Commission to find a way to release the amounts of grant-in-aid for the panchayats recommended by the 12th Finance Commission, which have been withheld as panchayat elections could not be held during the period of award of the 12th Finance Commission. The Finance Minister said the government has already projected sectoral needs of other crucial sectors in the memorandum to the 13th Finance Commission and asked for sympathetic consideration of the Commission on roads, agriculture, education, health and housing. We have also projected special needs of buildings and computerization for judiciary, legislature complex, MLAs hostel, Secretariat, district administration and other field offices, he said. Mr. Rather also flagged before the Commission issues dealing with creation of corpus for introduction of New Pension Scheme, one time 13th Finance Commission support for correcting overdraft with J&K Bank and bailing out the State from the adverse impact on account of the Central Sixth Pay Commission Award.
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