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Address by Shri Naveen Patnaik, Chief Minister, Orissa
49th N.D.C. Meeting, 1st September 2001, Vigyan Bhavan, New Delhi.


Hon'ble Prime Minister, Deputy Chairman and Members of the Planning Commission, Union Ministers, Colleague Chief Ministers and Friends.

1. At the outset, I must congratulate the Planning Commission for convening this meeting of the National Development Council on the eve of the Tenth Five Year Plan (2002-2007). I would also like to compliment the Planning Commission for their innovative approach to the Tenth Plan. The multi-dimensional strategy envisaged in the approach paper is a welcome change from the traditional mode. The Objectives outlined in the approach paper are laudable. At the same time, appropriate strategies need to be evolved and spelt out in clear terms so as to achieve these objectives.

2. We have witnessed both successes and failures in the last half-century of planning. There is no dearth of experience, expertise, skill and technology in our Country. What we need is proper implementation through good governance and earnest endeavour.


Tenth Plan Objectives :

3. The Tenth Plan aims at achieving 8% growth rate in the GDP during the period 2002-2007 which is lower than the required growth rate of 8.7% needed for doubling the per capita income over the next 10 years. Although, it is an intermediate target for the Tenth Plan, this appears ambitious on the face of 6% rate of growth obtaining at present. Some of our Asian neighbours have achieved even higher rates of growth. We should be able to register efficiency gains both in the public and the private sectors, and reduce the Incremental Capital Output ratio.

4. In case we set a target of 8% growth rate in the case of Orissa, we have to double the current growth rate. This acceleration in growth can materialise if there is massive additional investment. The requirement of additional investment in case of Orissa would be of the order of 16 % of its GSDP, which amounts to approximately Rs.7600/- crore per annum. The total additional investment requirement during the five years of the Tenth Plan would, therefore, be approximately Rs.38000/- crore. The outlay for the Ninth Plan was Rs.15000/- crore. As such, to achieve a growth rate of 8%, the Tenth Plan outlay needs to be fixed at Rs.53000/- (meaning thereby 250% increase).

5. The resources back up needed for ensuring 8% growth per annum needs to be spelt out. Setting monitorabie targets at macro levels will not be sufficient. National objectives can be fulfilled if the targets in various sectors are achieved, both at the level of the Nation and also the States. This calls for disseminating the monitorabie targets between the States, setting clear cut milestones and ensuring timely achievement.

6. In view of the above considerations, it would be my humble submission before the NDC that a Committee be constituted which will go into such details and work out the ways and means to be resorted to for ensuring efficiency improvements and arranging additional investments for the Tenth Plan, both for the Centre and the States and arrive at an acceptable memorandum of understanding (MOU) between the Centre and the States with provision of rewards for fulfilment of the MOU conditions. This exercise would have to be completed sufficiently before the formulation of the Tenth Plan.

Regional Disparity:

7. An over-view of our past performance reveals that despite our persistent and determined endeavour towards increasing production and productivity, both in the economic and social sectors, objectives like ameliorating poverty, generating employment; reducing regional imbalances have not been fully achieved. Even though there have been satisfactory performance in certain areas, the benefits have not been equitably distributed. This is particularly true of the people living in the remote and inaccessible pockets of the country. They continue to remain as backward as ever being deprived of the various development efforts in sectors like Health, Education, Industry, Communications etc. We have launched a number of Poverty Alleviation Programmes in the past. There has been considerable growth in the economy. But the over-all growth in the economy has not made the desired dent on the problem of poverty. Poverty is the result of lack of individual capacity and the disadvantaged economic and social position of the poor which does not help them to take active part in the process of development and get their due share. Over-all growth in the economy without appropriate share to the deprived regions as also to the deprived sections of the people is neither desirable nor acceptable. In view of this, the first and fore-most objective in the Tenth Plan should be to eradicate poverty and remove regional disparity within a reasonable time frame. The approach paper, I am afraid, has not done justice to this important matter. It will be highly appreciated if a fund can be created by the Central Government from which special assistance could be provided to the States for launching special programmes for the backward regions.

Special Area Programme :

8. Inter-regional imbalance and inequity breed serious socio-economic problems. People in socio-economically depressed regions often carry a deep sense of frustration and discrimination against their better off neighbours. The problems of terrorism, naxalism, increased incidence of crime, deterioration of the law and order situation, and social strife in many pockets can be attributed to social and economic deprivations of the neglected regions.

9. I would like to mention that Government of Orissa are deeply committed to removing regional imbalances and inequities in keeping with the emphasis laid by Government of India for doing away with regional disparities. In order to achieve these objectives, we have established the Western Orissa Development Council (WODC) to speed up the development of the districts in the western parts of Orissa. We have also formulated, in consultation with Government of India, a Revised Long Term Action Plan (RLTAP) for speedy development of three undivided districts of Koraput, Botangir and Kalahandi, popularly called as the KBK districts. Southern Orissa in which these districts are located is one of the most backward regions of the country. The KBK region with about 68.8% persons living below poverty line is perhaps the poorest in India. This region has a pre-ponderance of tribal population. Rural tribal communities suffer from physical isolation and a sense of deprivation on account of woefully inadequate infrastructure facilities. Malkangiri, Rayagada, Koraput and Gajapati districts of Southern Orissa are also a hub of naxalite activities. It is, therefore, essential that the pace of socio-economic development of these areas gets accelerated so that reasonable aspirations of people of these regions are fulfilled. While on this point, I would reiterate my request to include the undivided Phulbani district, the Gajapati district and the Padampur subdivision of the Bargarh district which are contiguous to the KBK-region, in KBK.

10. I would like to take this opportunity to express some concerns of Government of Orissa in connection with this area development project. First, the RLTAP that was submitted to Government of India in 1998 has not yet been formally approved by them. It needs to be approved expeditiously. Second, the State Government have been receiving only a meagre additional central assistance (ACA) to fund the RLTAP. The State Government have requested that at least Rs.200.00 crore per annum be provided as Central Assistance in shape of 100% grant, in addition to loan assistance of Rs.125.00 crore under the AlBP with relaxed norms. Third, the RLTAP for the KBK districts should be included as a specific component of the Tenth Plan.

State's Economy:

11. The problem of economic backwardness of the State has assumed serious proportion. The long-term growth rate of the States economy during the period from 1951 to 1995 has been around 2.7%  which is substantially lower than the growth rate of the National economy. That the planning process has not helped to remove the backwardness of the State is amply clear from some of the socio-economic development indicators of the State like per-capita Income, infant mortality rate. percentage of population below poverty line and per-capita plan investment. While the per-capita income of Rs.200/- of the State during the year 1951-52 at current price, has gone up to Rs.9162/- during 1999-2000, showing an increase of 46 times, the national per-capita income shows an increase of 65 times from Rs.248/- to Rs.16,047/- during the corresponding period. The infant mortality rate of the State per thousand births was 135 during 1951-52, which has come down to 98 during 1998 showing a reduction of 27.4%, whereas at the national level the same has come down by 44.4%. The percentage of people below poverty line has decreased from 68.6% during 1972-73 to 47.15% during 1999-2000 in case of Orissa, whereas at the national level, the same has declined from 48.3% to 26.10% during the same period. More so, the percentage of people below poverty line for Orissa is the highest (1999-2000) among all other States. This conveys a clear picture that poverty continues to be an intractable problem for the State of Orissa and this has been conclusively corroborated by the estimate formulated by the Planning Commission based on the field survey conducted by the National Sample Survey Organisation.

State Finance:

12. The State's Revenue account was more or less balanced till 1980-81. During 1980-81, the total Revenue receipt was Rs.621.65 cr. and Revenue expenditure was Rs.546.85 cr. resulting in a revenue surplus of Rs. 74.50 cr. which was 2.01 % of the GSDP. With the implementation of the Fifth Pay Commission recommendations w.e.f. 01.01.96. the revenue deficit reached a staggering figure of Rs.2262.50 cr. in 1998-99 which has further increased to Rs.2573.87 cr. in 1999-2000. As a percentage of GSDP, the Revenue deficit rose in a single year from the level of 2.76% in 1997-98 to the level of 6.32% during 1998-99 and to 6.53% during 1999-2000.

13. The ever increasing gap in the Revenue account is being met from borrowings. Higher doses of borrowing lead to consequent higher revenue expenditure. The debt stock as on 31.03.2000 was around Rs.18, 100 cr. and as on 31.03.2001 it is Rs.21, 072 cr. which amounts to 46% and 51% of the GSDP respectively. The debt servicing liability is 73% of Orissa's own revenues.

14. The Capital expenditure and net lending has come down from 5.80 % of the GSDP in 1980-81 to 2.75% in 1999-2000. Similarly the capital expenditure as a percentage of the total State Plan expenditure has declined from 68% in 1980-81 to nearly 36% in 1999-2000 and to 45% in 2000-01.

15. The State Govt. do not have funds to meet the salary, pension and interest payment and repayment liabilities fully. These liabilities exceed the revenue receipts of the State Government. The liabilities on these accounts were Rs.6119 crore, Rs.7534 crore and Rs.7733 crore during 1999-2000, 2000-01, and 2001-02 respectively whereas the total revenue receipts during the aforesaid years were estimated at Rs.5885 crore, Rs.7390 crore and Rs.7511 crore respectively.

16. The indebtedness of the State Government to the Central Government is continually rising. It is therefore imperative to revise the transfer formula hither-to followed. In order to ease the pressure on the States the present element of loan and grant should be reversed.

Fiscal Reforms :

17. It may be recalled that the National Development Council in its meeting held on 20.2.1999 recognised that the ways and means difficulties faced by most States were the result of continued neglect of fiscal prudence and decided that a medium Term Fiscal Strategy would be drawn up by each State to deal with its recurrent financial difficulties. The Council recommended that the Government of India would provide immediate assistance to the needy States, but will link the same to specific fiscal reform measures aimed at strengthening the State Finances. Accordingly we signed an MoU with the Ministry of Finance, GOI in April, 1999, committing ourselves to implementing specific fiscal reform measures aimed at reducing non-plan revenue expenditure and enhancing revenue receipts.

18. In pursuance of the provisions contained in the said MoU the State Government have in the meantime, taken a number of measures to contain non-plan revenue expenditure and to enhance revenue receipts. To contain non-plan revenue expenditure the measures taken include: abolition of 50% of the base level vacancies as on 1.7.99 progressive reduction of manpower by 10% within 3 years w.e.f. 1.7.99; restriction in filling up of base level vacancies without specific clearance of Finance Department; implementation of VRS in the State PSUs. To enhance the State's revenues, the measures taken include: withdrawal of Sales Tax incentives to Industries: introduction of uniform floor rates of Sales Tax on all the agreed goods; rationalization of Sales Tax rates with a four rate structure w.e.f. 1.4.2001; introduction of a broad based Entry Tax in lieu of Octroi, w.e.f. 1.12.99; imposition of Profession Tax w.e.f. 1.11.2000 and taking over of the wholesale trade in liquor by the State Government. Other measures in the pipeline are; rationalisation of Registration fees and Stamp duty; revision of irrigation water rates; revision of cess on land revenue and revision of levy of tax and registration fees etc. under the Motor Vehicles Act and Rules. In the matter of fiscal reforms we are on target.

Unfavourable EFC Award:

19. The expenditure on pension and interest payment have been grossly under-assessed by the Eleventh Finance Commission and non-plan miscellaneous grants have been unduly over-pitched. For example, during 2000-01, the EFC has assessed payment of pension at Rs.485.00 cr. whereas the State has incurred expenditure of Rs.832,07 cr. (pre-actuals) towards pension. Thus, on account of the under assessment of pension and interest liabilities and over-assessment' of non-plan miscellaneous grant, the State has lost nearly Rs.7500.00 cr. towards Non-Plan Revenue Deficit grant for the five year period 2000-05.

20. Mining Royalty is a major source of non-tax revenue. It contributes nearly 60% of State's non- tax revenue taken together. Revision of royalty on coal was due in October,1997 and the next revision in October,2000. Since revision of royalty has not yet been effected, the annual loss of revenue is of the order of Rs.150.00 cr. This has prevented the State Govt. from showing improvement in the ratio of revenue receipt to revenue expenditures for being entitled to general debt relief linked to fiscal performance.

21. The EFC endorsed the views of the State Govt. and vide para 3.53 of its Report have recommended that royalty rates on minerals be revised regularly and the decision about the revision of the rates of royalty be taken well before the date on which the revision falls due, so that it can be notified immediately after the completion of every three-year period as provided under the law. !n case the process of revision is not completed by the date the revision is due, the States should be entitled to compensation. The Sarkaria Commission has recommended revision of royalty every two years. It is unfortunate that these suggestions have not been acted upon.

22. All sincere efforts of the State Govt. to generate additional revenues and contain the revenue expenditure by a fiscal readjustment programme can not succeed unless the Govt. of India supplement the efforts of the State Govt. by restructuring the debt stock of the State Government, providing compensatory grant-in-aid for non revision of royalty on coal.

Privatisation :

23. The approach to the Tenth Plan envisages redefining the role of Government in carrying out its business- Its future role shall be mostly of regulating, facilitating and monitoring nature and the private sector should come in a big way to take part in implementation of development programmes with a view to creating infrastructure and service facilities for public use. There has already been a shift in the economy from the public sector to the private sector. The public sector has become much less dominant in many critical sectors whereas the private sector capabilities have been developed significantly in areas like telecommunication, power, ports, industries, rural infrastructure, roads etc. Private sector can play a much larger role provided they are encouraged. In order to introduce proper accountability, a regulatory mechanism has to be in place, when services get privatised.

24. Privatisation of public enterprises will have to resorted to, so that Government responsibility remains confined only to certain core areas. Closing down unviable units may have to be resorted to in certain cases. Retraining of retrenched workers, both in Government Departments and in PSUs needs to be planned systematically. A National fund should be created to take care of this activity and to administer VSS / VRS. The National Renewal Fund set up earlier did not cover the States. The proposed fund should cover the States.

Tribal Development:

25. It has been argued that the forced integration of tribals into the main stream of development process has not benefited them. The Tenth Plan envisages formulation of a comprehensive national policy for empowering tribals which will lay down the responsibility of different wings of Government with appropriate accountability. The centre should finalise the proposed national policy early after due consultation with the States.

Power Sector Reforms:

26- Orissa has the unique distinction of being the first State in India for ushering in sweeping reforms in Power Sector. The paramount objective of reforms in the Power Sector is to provide customers with reliable and adequate quantity of power. To achieve this end, the Orissa Electricity Reforms Act, 1995 was enacted on 10th January, 1996 and it came into force from 1.4.96. As a part of the reform and restructuring programme, generation, transmission and distribution activities have been corporatised into separate functional units. A transparent and independent regulatory body, the Orissa Electricity Regulatory Commission (OERC) has been established for promoting efficiency and accountability in the Power Sector. In addition, four distribution Companies have also been set up during 1999 to take up transmission and distribution of power independently.

27. It is expected that the T and D loss in Orissa would come down to about 20% by the end of 2002 progressively against the present T and D loss of about 45% at the all India level. Thereafter the tariff could be lowered thereby benefiting all categories of consumers.

28. We are happy to note that the Rural Electrification Programme has been Included as a component under the PMGY. This activity needs to be subsidised at the initial stage. Hence it should be funded cent percent by the Central Government.

29. The Power Sector Reform and Re-structuring Project is under implementation with external assistance. It is therefore suggested that Government of India may not charge further interest on the loan extended to the State in the form of Additional Central Assistance (ACA) over and above that charged by the Doner Agency, with a view to encouraging the process of reforms in the State.

30. Our Government fully endorses the approach for expanding the Accelerated Power Development Programme (APDP) during the Tenth Plan, which will encourage all other States to undertake power sector reforms. But limiting the Central Assistance, to improving only power generation leaving aside transmission and distribution may not help in achieving the objectives.1 It is therefore suggested that this scheme be extended to renovation and maintenance of Grid Sub-stations and EHT lines for organisations like GRIDCO in the State of Orissa.

Industrial Policy Issues:

31. With a view to achieving an overall growth of 8% in GDP during the Tenth Plan, 10% growth will be necessary in the Industrial Sector at the National level. A major acceleration from the past performance is necessary not only at the National level but also at the State level. During the Tenth Plan, much emphasis has been laid on private sector participation. Industry is one of the sectors in which private sector participation will be predominant. The Tenth Plan approach suggests that there must be a focus on creating a conducive policy environment for private companies so that they can become efficient and competitive. Orissa is in the process of finalising a new Industrial Policy. The proposed IPR 2001 envisages simplification of rules and procedures, rationalisation of labour laws, facilitation of industrial restructuring and accelerated development of physical and social infrastructure through public and private partnership, which will generate a conducive business climate for attracting investment and establishing new industries. The strategy adopted in the proposed IPR is to ensure (i) single window clearances, (ii) single window information system, (iii) speedy clearance for fast track projects, (iv) provision of concessions to attract investors and to - make them sustainable ,in the initial period. However, the Government of India does not appear to be having schemes in the industries sector for correcting regional imbalances. With increased competition from imports, this problem will get accentuated. Hence for the backward States, excise duty concessions should be announced for five years as given to the north-eastern region.

Labour and Employment:

32. Since the bulk of the labour force in the unorganised sector consists of agricultural labourers, forest product gatherers, rural artisans, unskilled workers etc.creation of adequate wage earning opportunities is essentially required to be given due priority in the Tenth Plan. These activities are being carried out mostly in the rural areas, where the wage earners are very often exploited by the contractors. Adequate social security measures like Group Insurance, sickness benefits and pensions will need to be thought of.

33. In the approach paper (para 3.22) it has been rightly pointed out that rigidity in the present labour laws poses a great burden to the labour intensive industries as the provisions in the laws do not allow the firms adequate flexibility in the matter of engagement of labour. A suitable exit policy for the sick industries needs to be thought of. A pragmatic policy needs to be developed which would harmonise productivity and welfare considerations.


34. Our State Government agrees with the policy approach outlined under the head Agriculture, Food Security and land Management. The subsidies have grown' in size and are now financially unsustainable, States like Orissa which are prone to frequent-natural calamities, may have to subsidise input costs after floods,, droughts and cyclones. Capital cost on small irrigation projects also needs to be subsidised during the coming plan period.

35. Water shed development programmes, are being implemented by several departments of Government of India, often with conflicting guidelines. This practice should be done away with during the Tenth Plan and one single National Initiative as mentioned in the approach paper should be adopted in order to prevent confusion amongst the field functionaries and to ensure effective and better monitoring of projects and funds.

36. The credit flow in the agriculture sector needs improvement. Therefore, revamping of Cooperative Banks is needed during the Tenth Plan. Introduction of work plan on Macro Management Mode for the States is a welcome step and it should continue during the Tenth Plan. Adequate flexibility should be introduced in the Centrally Sponsored schemes like OPP, ICDP, NPDP on the same lines as the Macro Management Mode of work plan. Quantum of funds under Crop insurance should be enhanced. The share of the states should be reduced to 25% as against 50% now.

37. For the eastern States like Orissa mechanisation of agriculture needs encouragement by way of promoting agro service centres. Storage facilities need be enhanced for storage of agricultural produce. This apart use of certified seeds should be encouraged. Infrastructure for post harvest technology needs to be developed for processing of agricultural produce for export. In all these matters the Union Government could act as the catalyst.

Irrigation :

38. The percentage of area under irrigation in Orissa is well below the All India average, in spite of the potential that exists. We have been borrowing funds from NABARD. RIDF, the World Bank. AIBP and the bilateral doner agencies for creating additional irrigation potential. The loan burden of the State is already reaching unsustainable limits. Hence I would request that funds under AIBP may be given to Orissa as a grant as a special case. Similarly for the Externally Aided Projects, 70% of the loan amount comes as additional central assistance. I would request that ACA for funding irrigation projects should bear a nominal rate of interest against the normal interest of more than 12%.

39. While enhancement of water rate is one way of easing the pressure on the State Exchequer, the other alternative is to entrust the repair and maintenance of irrigation channels to the end users. Keeping this in view the State of Orissa has introduced a new scheme under the caption " Pani Panchayat" during 2001. Under this scheme. Water User Associations called Pani Panchayats are being formed and they would be handed over the responsibility of operation and maintenance of the canal system- A large percentage of this water rate collected will be passed on to them,

Public Distribution System :

40. The public distribution system is not flexible enough to cater to the requirement of the BPL families, majority of whom are wage earners on daily or weekly basis.It is felt that majority of them can not afford to purchase the increased quota of BPL rice in one instalment. in view of this. our State Government have issued necessary instructions to issue the BPL rice to the BPL card holders at least in 2 instalments in a month. State Government is further subsidising BPL rice by Rs.1.50 per Kg. in the ITDP / DPAP blocks. This may have to continue.

41. The Essential commodities Act was enacted in, 1955. It is high time that the relevance of this Act in the present context should be reviewed and necessary amendments made. It is suggested that the amendment to the Act should include only essential items like food grains for mass consumption, petroleum products etc. and control orders should be invoked only in the periods of acute scarcity. The Act was conceived of when the country was grappling with food shortages. Now we are required to manage surpluses.

42. The Food Corporation of India is procuring rice from the millers. It does not procure paddy from the farmers. We have been requesting that the FCI should buy paddy from the farmers and convert the same into rice But they have not agreed. Even in the years of distress, pockets of surplus are emerging, where the farmers are not able to get the minimum support price. The FCI should create additional storage facility in the State of Orissa and should not transfer stocks from other States.


43. Consolidation of forests i.e. reservation of demarcated forest blocks, record updating (reserve forest notification and maps), controlling smuggling, checking shifting cultivation by Joint Forest Management (J F M) methodology and application of information technology may be given due importance in the Tenth Plan. The approach paper is silent about the need for conservation of wild life.

44. As regards tendu leaf collection, we have a separate tendu leaf organisation in our State, the staff of which are engaged in supervising tendu leaf collection, processing, binding etc. The staff of the other wing are engaged in JFM and other developmental activities and as such the forest related work does not suffer in the season when tendu leaves are collected. This system is working properly. We are able to assure fair wages to the tendu Leaf pluckers. Hence this strategy should continue.

45. It is high time that the Forest Conservation Act gets amended. Plantation crops which provide permanent forest cover and prevent soil erosion should be treated as afforestation activities in respect of the denuded forest lands where nothing grows at present. Tea, Coffee, Rubber etc. provide permanent forest cover. A time has come to take a pragmatic view in the matter.

46- Many forests were created on the basis of notifications arbitrarily issued ignoring the fact that tribal communities have been living in those areas for generations. The tribals depend on the forests for their livelihood. They can also able to play a vital role in protecting the forests and also in taking up afforestation. They provide labour for the forestry developmental works. Here also a pragmatic view needs to be taken. There has to be a synergetic relationship between the forest on the one hand and the needs of the tribal population on the other.


47. Under environment sector, management of waste and more specifically Hazardous wastes and bio-medical wastes need to be handled and disposed of with utmost care. Identification of common disposal sites away from human habitats and from agricultural fields should be given priority, especially for major towns and cities.

48. People's participation should be encouraged in maintaining pollution free environment. The suggestion given in the Approach Paper for improving environmental education and creation of public awareness is a welcome step.


49. The Government of Orissa fully endorses the approach on universalisation of elementary education and the scheme " Sarba Sikhya Abhijan" recently launched should be given the highest priority. As per the funding pattern of the scheme, the State's share will be 25% during the Tenth Plan. For the states having acute fiscal problems this should be reduced to 10%.

50. During the Ninth Plan period there was provision for a third teacher in the U.P. Schools under the Extended Operation of Black Board scheme. But after the Ninth Plan period the entire liability would have to be borne by the State Government- Hence it was not possible for our State to take a decision regarding engagement of about 10,000 regular teachers in U.P. Schools. However, after a lot of correspondence, GO! have allowed us to fill up these posts through para teachers with a remuneration of Rs.1500/- per month per teacher and we have taken steps for recruitment of para teachers. Thus the State Government will get a reimbursement of about Rs.18 Cr. towards the salary of para teachers for a period of one year only against an entitlement of about Rs.300 Cr. during the Ninth Plan period. It is therefore suggested that a resource poor State like Orissa should not be penalized because of engagement of para teachers and the entire benefit of the scheme should be extended to the State. This scheme may be continued during the Tenth Plan period.

51. The scheme "Vocatlonalisation of Secondary Education at +2 stage was continuing as a Centrally Sponsored Scheme. But no Central assistance under the scheme is being provided for the last few years. It may be appreciated that vocational education has high unit cost and has to compete and justify for resources against general education. In order to revive and reactivate the scheme, we have recommended 100% Central assistance.

52. The income ceiling of parents for awarding National Scholarships to the meritorious students was fixed at Rs.25,000/- per annum long ago. This ceiling needs to be revised to Rs.50,000/- per annum as recommended by the TATA Institute of Social Sciences.

Rural Development:

53. While the erstwhile scheme of IRDP had a lot of bottlenecks, SGSY incorporates significant improvements which can really reduce poverty in a big way, if implemented properly. Unlike SGSY, micro-finance programme of Rastriya Manila Kosh has no subsidy component. Considering the poverty in rural areas and lack of sufficient entrepreneurial skill, complete withdrawal of subsidy may not be desirable. However, SGSY may give more focus on social mobilisation and group formation with back-ended subsidy. The indifferent attitude in credit delivery by the banks has to be changed so that credit is given to swarojgaries/ groups in multiple doses for successful implementation of the programme,

54. It has been proposed that funds under the Jawahar Gram Swarojgar Yojana (JGSY) flowing to the villages directly may be linked to peoples' contribution of 10 to 50 percent. The Villages who are willing to give contribution may be allocated funds on priority basis. Employment programmes should be focussed on undertaking productive works and their maintenance such as rural roads, renovation of tanks, afforestation etc. The food for work programme may also be dovetailed. Besides, specific funds should be earmarked for provision of other basic infra structural facilities in rural areas such as development of Educational and Health Institutions, Anganwadi Centres, Animal Health Centres. Rural Markets which will ultimately help in changing the quality of life of the rural poor. Infrastructural facilities such as communication and market access for Small and Marginal Farmers, Artisans, Skilled Workers, and Forest Produce Gatherers should be provided separately and assistance for value addition in agricultural and non-timber forest produce sector would help tribals, forest dwellers and poor artisans in augmenting their incomes.

55. In Orissa Panchayati Raj Institutions (PRIs) have emerged as important agencies for socio-economic development of the rural people. Government of India desires that Finance Commission Grant and other developmental funds of the Local Bodies should not be given to the States unless effective power is transferred to them. In this context, it may be mentioned that twenty-five subjects out of twenty-nine subjects enlisted in the 11t11 Schedule have been transferred to the PRIs in Orissa. Election to PRIs was held in the year 1997 and the next election in consonance with the 73rd amendment and the provisions of Panchayat (Extension to Scheduled Areas) Act will be held in early 2002. In Orissa 118 Blocks out of 314 are situated in the Scheduled Area.

56. Grama Sabhas have been given statutory powers to certify utilisation of funds by Gram Panchayats. Details of receipt and utilisation of funds are displayed in the Gram Panchayat and Panchayat Samiti offices for information of genera! public. Documents regarding utilisation of funds can also be supplied to the public on demand by the Gram Panchayat and the Panchayat Samiti.

57. The three tier system of PRIs functioning at present should continue. These institutions will be strengthened along with the Gram Sabha by providing adequate financial resources by letting them raise their own revenues and by augmenting the Grant-in-Aid released to these Institutions.

58. While releasing grants to the urban and rural local bodies under the Finance Commission award, matching contribution from the States / local bodies should not be made a pre-condition.


59. On earlier occasion, the share of the States in allocation of funds under Major Poverty Alleviation Programmes was decided as per the Task Force Methodology (1983-84) which was adopted till 1997-98, After acceptance of the methodology evolved by the Expert Group constituted in 1989, a revised allocation formula was worked out. When the poorer States were adversely affected by their revised share of allocation based on expert group estimate, an adjusted formula for allocation of funds was worked out which was adopted for allocating funds under Major Poverty Alleviation Programmes to the States for the remaining period of Ninth Five Year Plan. While the entitlement of Orissa is 7.590% (1993-94) as per the Task Force Methodology, the share of Orissa has gone down to 5.774% (1993-94) according to the expert group methodology which is around 24% less than its entitlement. Even though the adjusted share works out to 6.451%, this is still 15% less than its earlier entitlement of 7.540%. Thus the principal objective of working out an adjusted share aiming that a State should not lose more than 15% of its earlier entitlement has not been fulfilled in case of Orissa and many other states.

60. The agenda item indicates that another Working Group has been set up to suggest an appropriate criteria for Tenth Plan since poverty estimate for 1999-2000 is already available. It is therefore suggested that the Expert Group should have consultation with the States in working out appropriate shares for States under Major Poverty Alleviation Programmes. and more specifically with the States who were worst suffers in the adjusted formula adopted during the last 3 years of Ninth Plan. In my opinion, not only the population below poverty line but also the intensity of poverty-4fre should also be taken into account with a view to calculating the needs of .a State for eradication of poverty. A part of the allocation should also be kept apart which could be awarded to the States depending on their performances so that it will work as an incentive for implementing poverty alleviation programmes in the State in an efficient manner during Tenth Plan. This exercise should be completed and the final decision should be communicated to the States sufficiently before the Tenth Plan.


61. We welcome the idea of a zero-based budgeting approach in respect of the Centrally Sponsored Schemes. The difficulties faced by States like Orissa is that because of the severe ways and means problem, we more often than not, are in a position to find our matching share in time. As a result of this most of the Centrally Sponsored Schemes are languishing. I would therefore suggest that if any CSS are to continue in the Tenth Plan period, it should be 100% funded by the Central Government.

62. It would be often seen that when a Centrally Sponsored Scheme is transferred to a State, it amounts to a one-time budgetary transfer only for that year. The States remain saddled with the staff which were created under that scheme. Therefore, no scheme should be transferred in the middle of a plan period without transferring adequate funds for staff salaries.


63. 47.2% of Orissa's population live below the poverty line. 38.5% of the population comprise the Scheduled Castes and Scheduled Tribes. The per capita landholding in the State is one of the lowest. Besides, the State is prone to natural calamities. During the last two years, we had the super cyclone, followed by a year of drought and followed recently by unprecedented floods. The debt overhang of the State is nearly half of the Gross State Domestic Product (GSDP) as against the all India average of 23%.

64. The Orissa Legislative Assembly has adopted unanimous resolutions urging the Central Government to declare Orissa as a Special Category State, Orissa fulfils all the criteria necessary to be declared as a Special Category State except that it has no international borders. On this ground alone it is rather unfair to deprive Orissa of this benefit. While we heartily welcome the inclusion of Uttaranchal as a Special Category State, we would reiterate our justified demand for declaring Orissa as such.

65. Good governance, which includes minimizing corruption at various levels and maintenance of peace and tranquillity, are essentially needed to make our plan efforts a success. We are doing our humble bit in those directions.