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Address by Shri Mukut Mithi, Chief Minister, Arunachal Pradesh
49th N.D.C. Meeting
, 1st September 2001, Vigyan Bhavan, New Delhi.


Hon’ble Prime Minister, the Chairman of NDC,
Hon'ble Dy. Chairman, Planning Commission,
Hon’ble Union Ministers, my colleague Chief Ministers, Senior
Officers, Ladies and Gentleman,

We are meeting to consider the approach to the 10th Plan when the Indian economy -- and indeed the global economy - has slowed down. For those of us who are on the geographic and economic periphery for the nation, the effects of also down in the national economy can have an exaggerated impact, as our own State economies are small and lack the resilience to absorb shocks of any magnitude. Planning Commission has envisaged an annual growth rate of 8% of GDP (Gross Domestic Product) at the end of the Tenth Plan period. This vision necessarily calls for substantial investment. Hard decisions and missionary zeal will be needed to meet these visionary aims.

Arunachal Pradesh is endowed with rich natural resources; but they have yet to be developed to become real goods and economic assets to the State. The difficult hilly terrain, lack of basic infrastructure, remoteness and lengthy monsoon period limiting the working season to almost six months in a year make the development a slow and expensive process m my State. Almost all the economic activities other than subsistence agriculture are in Government hands. These physical and economic constraints have kept the State fully dependent on Central assistance to meet its requirement of resources for development. The State raises less than 10% of its plan and non-plan expenditure. Over die years, plan investment made was generally for building up infrastructure, returns on which are necessarily slow.

Agenda Item No. 1: Approach to Tenth Plan.

1.1 Sir, in my opinion, die recommendations of the Shulda Commission should form die basis for formulating the Xth Plan so far as development planning of the North East Region is concerned. There is no other way to close the developmental gaps that exist between the North-East Region and the rest of the country. This requires investments on an enhanced scale. In the course of the Ninth plan we witnessed a retreat from public investment. As you will be aware central assistance to our plan has been static in nominal terms for the last few years, and hence declining in real terms. More than two thirds of our plan goes towards die building of infrastructure-physical and for human resource development. The curtailing of investment has affected the creation of infrastructure adversely. As die approach paper candidly admits it has not been possible for the central government to attract adequate private investment in infrastructure. It is unrealistic to expect die states - particularly poor and backwards states with very low levels of economic activity -to succeed where the central government has not. Nor does it make economic sense to finance die building of infrastructure through borrowings. There are conflicting signals in this regard from the central ministries. Encouraged by the high rates of growth and investment envisaged in the approach paper I look forward to a substantially accelerated building of infrastructure with me requisite central financial support during die tenth plan.

1.2 While I frilly endorse me need for fiscal prudence and for increasing efficiencies of investments I would like to point out that we have no control over material costs, no control over energy costs, no control over transport costs, no control over capital costs, and very little control over wages. The only control we have is over die quantum of employment. Capacities created for executing work in one policy environment cannot be wound down overnight because the policy environment has changed. The Central Government's own experience is relevant.

1.3 We are conscious of the need to bring about an improvement of State finance through appropriate reforms and efficiency in resource use. We have already taken hard decisions like down-sizing the Government by way of filling up of only 50% vacancies that would arise on retirement of existing Govt. servants, bring down die subsidy by 50% over me next five years period with a view to eliminate them totally by die end of 2010 and to impose cuts ranging from 20% to 50% on Non-Plan expenditure like traveling expenses, maintenance of vehicles, overtime allowances, honorarium etc. Arunachal Pradesh has only three public sector units, perhaps lowest in any State. The State Government is also reviewing die functioning of die State owned Public sector undertakings towards arriving at a decision "about their retention or down sizing.

1.4 In order to augment State revenues,, we have already introduced Sales Tax on few items and the process of bringing additional items into the tax net has been initiated, electricity tariff has been doubled and passenger fares of Slate Transport service has been increased. Besides, introduction of user charges on various services pertaining to public utilities. Stamp Duty Act, Registration Act and increase in royalty on forest products are under active consideration of the State Government. However, due to our small population size of 1.1 million, and underdevelopment, all the measures adopted and in me pipeline to augment resources shall generate an additional revenue of not more than Rs.20 crore annually.

1.5 Till 1996, for Northeastern States particularly Arunachal Pradesh, forests used to be the major source of revenue earning. After the judicial intervention in 1996, development focus was shifted from timber to non-timber forest produce to protect forests and to allow them to play their ecological roles more effectivcly. Here, I would like to urge the Planning Commission to consider a compensation package for Arunachal Pradesh to make good me loss of revenue the State has to, bear primarily to serve the cause of ecological interests, which in rum serves the cause of global environmental interests.

1.6 Sir, in my State only about 5% of the total land area is flat land suitable for food crop cultivation. Our population being small, it is possible to attain self- sufficiency in food grain production by raising the crop intensity with appropriate measures supporting, among others, on going irrigation schemes. Remaining areas being hilly with varying slopes, and the State being agro-climatically suitable for raising fruit trees, we have decided to raise horticultural plantations in a big way. This will also help us in rehabilitating degraded Jhum land. Our aim is to achieve a level of self-sufficiency in food grain production by the end of 10th Plan and to become one of the fruit gardens of India by the end of 11th Plan.

1.7 The approach paper inter-alia suggests that during the tenth plan Swarna Jayanti Gram Swarojgar Yojana (SJGSY) should be transformed into a micro finance programme to be run by the banks and other financial institutions with no subsidy. Here, I may submit that the existing credit linkage of the funding of this programme has been a major hindrance in deriving full benefit from the scheme, Large parts of Arunachal Pradesh are still outside banking coverage. This problem of credit linkage has been dealt with in the report of the Committee on Credit Support to North Eastern Region headed by Dr. Jayanta Madhav, Chairman of North East Development and Financial Corporation, Guwahati, where it has been suggested that the Government of India may allow the State Governments to pool funds from SJSY, JGSY, EAS etc., for taking up infrastructure development and economic activities without credit linkage. The credit linkage with subsidy can be considered when the facilities of road transport, marketing infrastructure and storage facilities for surplus agriculture produce have been developed. It would not be advisable to burden poor beneficiaries with loans where there is no scope of marketing of their surplus produce to earn income. The poor people should not be brought in the clutches of indebtedness, as acknowledged in the approach paper itself. I would therefore, suggest that this ground reality must be kept in view while formulating the 10 Plan programmes.

1.8 I appreciate the move of the Planning Commission to bring about a convergence of all die Rural Poverty Alleviation Programmes. But about the suggested payment of wages mainly in the form of food grains I shall have to apprise the Council that this will not be workable in Arunachal Pradesh as transportation of food grains and its storage at different locations is not feasible in our State due to inaccessibility and lack of storage facilities. For Arunachal Pradesh and other remote hill areas of North East, wage payment should be in the form of cash only. In formulating the 10th Plan programme appropriate flexibility should be allowed keeping in view lack of communication infrastructure in Arunachal Pradesh.

1.9 Forests of Eastern Himalayas particularly Arunachal Pradesh display phenomenal bio-diversity and is designated as one of the twelve mega bio-diversities hot spots in the World. It was in consideration of this fact that the Prime Minister had announced setting up of a National Institute of Bio-diversity Studies in Arunachal Pradesh as a part of the new initiatives for the development of North-East Region. The State Govt. has already selected a suitable site for this institute in consultation with the Ministry of Environment and Forests. I am given to understand that the Union Finance Ministry has some reservations and that is why implementation of the project is delayed. There is not a single national institute in my state. Moreover, Arunachal Pradesh is the most deserving candidate for setting up of tin's institute. And Prime Minister's announcement must be honoured. Sir, I seek your kind intervention to ensure establishment of the Institute as early as possible.

1.10 Arunachal Pradesh has 82% of its geographical area under forests. It is mandatory under the provisions of Forest (Conservation) Act, 1980 to carry out compensatory afforestation in double the area diverted for non-forestry purpose. Shukia Commission in its report 'Transforming the North East' has recommended that Rubber and Tea, both indigenous to the North East, must be defined as forest species and permitted to be cultivated on degraded forestlands without the compulsion of undertaking compensatory afforestation in double the area in non-forestlands. We hardly have any land outside forests for compensatory afforestation. Therefore, I would urge that follow-up action in tills regard be taken to ease die process of development particularly land based occupation in the North East.

1. 11 Amnachal Pradesh has made significant progress in the field of Education. The literacy rate in the State has increased from 25% (1981 Census) to 55% as per 2001 Census. However, unlike other States almost all educational institutions in the State are Government Institutions. The schools in Arunachal Pradesh in most locations were started in ordinary basha type (OBT) structure made up of bamboo and wood. Most of these structures have outlived their useful Site. Repair works done intermittently are not cost effective. Construction of permanent/semi-permanent buildings started in places could not be carried through within the limited availability of funds under the State Plan. Increasing salary liability due to opening of new schools towards an attempt for full coverage of children has created a situation where the State Government is now finding it difficult to provide funds even for me salaries of existing teachers. The inadequacy of these physical facilities is a hindrance to proper functioning and qualitative improvement of education in the State. Thus for ensuring access to universal elementary education, the State needs special support from the Central Government.

1.12 The State has the only University in the name of Arunachal University. The State Govt. has been urging the Government of India to convert it into a Central University as we have been finding it extremely difficult to provide adequate support to the University to meet even its salary component not to speak of building up appropriate infrastructure and introduction of more disciplines of study. If we have to achieve the 10th plan objectives, such necessities will have to be adequately funded.

1.13 Private hospitals and other health care supports are almost non-existent in Arunachal Pradesh. Thus, entire burden of health care support is on the State Government. Escalating health care cost is making it extremely difficult for the State Government to bear this burden. Again sparse population now requires us to relax the norms of setting up of health institutions. We are required to go for one Sub-Centre per 2000 population, one Public Health Centre for every 15000 population and one Community Health Center for every 40000 population. Sir, we have not always been able to benefit from the well" intentioned but sometimes inflexible schemes of the central government. Schemes designed for the national population density of 324 persons per square kilometer cannot work in the same way in a state with a population density of 13 persons per square kilometer. Unless these rigidities are imaginatively addressed the full benefit of central initiatives will not flow to us. I would request for the Central support in this regard.

1.14 The hydro-electric potential of Arunachal Pradesh, if realized, can not only solve many of the energy problems of Northeast region but also give the State investible resources for accelerating its development, apart from reducing energy prices. I would suggest that me realization of die hydel potential of Arunachal be included in the 'core' plan.

1.15 The road density in Arunachal Pradesh is only 17 KM per 100 Sq. KM against the national average of 73 KM per 100 Sq. Kms. This itself speaks of the extent of the problem of accessibility in my State. The State has to bear the unique burden of air dropping food items in inaccessible areas incurring huge expenditure, which cannot be avoided unless surface connectivity is established.. In this context we welcome the Pradhan Mantri Gramin Sadak Yojana (PMGSY) launched to connect all habitations having more than 1000 population. But in Arunachal even if we take the criteria of connecting all villages with population of 500 and above, 92% of our villages will be automatically deprived of me benefits of the scheme. Ironically, our small population size is proving a big constraint in availing of the facilities under various schemes. Unless these rigidities are imaginatively addressed the full benefit of central initiatives will not flow to us. I would request for a special time bound support to this State for construction of all weather roads to all the air-fed stations so that we can gradually eliminate the costly but presently indispensable air dropping operations. Tills will not only reduce our air dropping liability but will also open up remote border areas to the process of economic development.

Agenda Item No. 2: Report of the NDC Sub-Committee on the criterion for allocation of funds under Major Rural Poverty Alleviation Programme.

2.1 We have examined the report of the NDC Sub-Committee on the criterion of fund allocations under major Rural Poverty Alleviation Programmes. It seems die Planning Commission has set up an expert group to workout the formula for 10th Plan. I am sure before finalizing the criteria the social needs having regard to the existing ground situation prevailing in Arunachal Pradesh and other hilly states of North East will be taken into account to compensate the disadvantages arising out of the low level of infrastructure, high over-head expenditure required to be made in the hill areas, absence of adequate marketing facility etc. The lack of investments and allocations made in the previous plans should also be taken into consideration. The criteria for allocation of funds as suggested by Rural Development Ministers of North Eastern States their meeting held at Kohima in November' 2000 is that 50% funds on the basis of population and 50% in inverse proportional to the density of population be allocated. This proposal needs serious consideration.

Agenda Item No. 3: NDC - Sub-Committee on Transfer of Centrally Sponsored Schemes (CSS): Status Report

3.1 We have examined me Status report in respect of NDC Sub-Committee on transfer of Centrally Sponsored Schemes. We shall wait for the review of the schemes presently being undertaken by the Central Ministries and departments. While deciding the fate of centrally sponsored schemes it would not be inappropriate to consult the states also on me modalities if any of these schemes are to be transferred to the states. However, as an initial reaction I would suggest that the number of Centrally Sponsored Scheme should be brought down to about 25 from the present level of more than 200. The nodal Ministries may only indicate the broad parameters and then can monitor the schemes. There should be adequate flexibility in the schemes to take care of the local conditions. In this context I may mention that Arunachal Pradesh and perhaps other special category states are finding it difficult, in some cases impossible, to provide state share for the Centrally Sponsored Schemes resulting in non-implementation or deferred implementation. I would, therefore, request for 100% Central funding for all the CSS in respect of Special Category States.

Agenda Stem No. 4: Placing Uttaranchal on the list of Special Category States

4.1 We welcome the extension of the Special Category State to Uttaranchal with a commensurate increase in resources for such states, and hope it will pave the way for its rapid development.

Agenda Item No. 5: Placing Mid Term Appraisal of The Ninth Five Year Plan before the NDC

5.1 I would like to commend the Planning Commission for bringing out a mid-term appraisal of the Ninth Five Year Plan (1997-2002), which gives us an insight into the planning process and an opportunity to review our performance in areas in which we could not achieve the envisaged target.

With these comments I endorse the approach to the Tenth Plan.