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State Plan

State Plans - Performance and Problems

There are wide variations in the growth performance of individual States. The range of variation between the slowest and the fastest growing States in the 1980s was from 3.6% per year in Kerala to 6.6% in Rajasthan, a factor of less than 2. The range increased very substantially in the 1990s from a low of 2.7% per year for Bihar to a high of 9.6% for Gujarat, a factor exceeding 3.5%. Comparing Bihar’s per capita growth rate with that of Gujarat in 1990s, the ratio between the lowest and the highest is as high as 1:7.

Seven States showed an acceleration in growth in the 1990s. They are fairly well distributed regionally i.e. Gujarat (9.6%), Maharashtra (8.0%), West Bengal (6.9%), Tamilnadu (6.2%), Madhya Pradesh (6.2%) and Kerala (5.8%). Bihar, UP and Orissa continue to be the poor performers in the 1990s growing much more slowly than the average. The other states, namely, Rajasthan and MP have performed reasonably well. However, the coastal State of Orissa had a poor growth performance.

The States also vary very widely in human development. The percentage of population below poverty line is the highest in Bihar (55%) followed by Orissa, MP and UP. The lowest percentage is in Punjab (11.8%) (1993-94). Regarding literacy, on one end of the spectrum is Kerala with over 90% literacy rate and the other end is Orissa with just 51% in 1997.

While most of the States have not been able to fully utilise the outlay approved in their discussions with the Planning Commission, there has been a huge gap between the approved outlay and expenditure in the case of States like U.P. and Bihar which has affected almost all the sectors and particularly the power sector in both these States.

Seven States, namely, Andhra Pradesh, Maharashtra, UP, Tamilnadu, Gujarat, West Bengal and Karnataka continue to be the preferred States for external assistance. The major considerations for assistance on the part of the donor, seem to be the capabilities of the States to pose projects, the ability to carry out dialogue with the donor, imparting impressions to the donor about being reform oriented and a reasonable assurance of project implementation through good governance.

In 1991-92, maximum external assistance has gone for energy and power sector followed by structural adjustment, industry and finance and water resources. Even in 1998-99 energy and power sector retained the top position and was followed by social sector, water resources and infrastructure. The external aid in general thus reflects the sector-wise plan priorities at any point of time.

There are significant differentials between the rural and urban areas; between communities and between the genders in most States. The disturbing factor is that many of these inequalities are widening and not narrowing. The biggest challenge in India therefore is to narrow down these disparities.

We need to have a closer look at the programmes designed for uplifting the weaker sections and restructure them to provide long term development benefits to these communities.

We also need to emphasise on providing education, rather than providing temporary assets to the poor.

The critical factor appears to be effective governance to ensure balanced growth of the different regions of India.

Design and Implementation of Programmes

The Central Ministries spend roughly Rs 35,000 crore annually on Programmes that are meant to achieve Poverty Alleviation. These funds, if directly transferred to the poor, could buy for every poor household 3 kg of foodgrain every day from the market at the rate of Rs.7.5 per kg and thus could wipe off the entire poverty from this country. If poverty still continues in the last ten years, the obvious conclusion is that availability of funds can at best be a necessary but not sufficient condition to tackle poverty and backwardness. The determining factor is the capability of the government machinery to formulate viable schemes and the delivery system to optimally utilise funds. Unfortunately the record of government is poor on both counts. The CAG has also highlighted the inability of the Union Ministries to control the execution of the schemes and the indifferent attitude of the State Governments.

Capacity for monitoring is limited, and often does not exist. Monitoring is confined to the release of funds provided in budgets without any reference to effective utilisation and the quality of output.

There are too many centrally sponsored schemes to monitor. The number needs to be curtailed. There have been a large number of plan schemes with similar objectives targeting the same population in several sectors such as agricultural and cooperation, women and child development, education, rural development and other social sectors. There is a strong need for convergence of these programmes.

Uniformity of schemes all over the country without sufficient delegation to States to change schemes to suit local conditions has made many States indifferent to their implementation.

The fiscal indiscipline in the States has also resulted in failure to release the counterpart funds in time.

The sustainability of projects on completion also poses a serious problem. In many cases the States have not been able to provide adequate funds for maintenance of assets which has resulted in their deterioration. A number of States have diverted substantial amounts of plan funds to non-plan expenditure particularly for staff salaries.

Development is an outcome of efficient institutions rather than the other way around. There is a need to focus on building institutions and improving governance from maximising the quantity of development funding to maximising of development outcomes and effectiveness and efficiency of public service delivery.

The States need to take some tough decisions such as freeze on new hiring, restructuring of the power sector, increasing user chargers at various levels, liquidation or privatisation of several public enterprises, tax reforms and above all better governance. The adjustment process would be painful but not adjusting would be more so.

People often perceive the bureaucracy as an agent of exploitation rather than a provider of service. Corruption has become a low risk and high reward activity. Operational decisions ensuring stability of tenure, transparency in performance and a comprehensive anti-corruption strategy have to be taken without further loss of time.

The average tenure of collectors, SPs, Project Officers., and other such category of officers should be at least two years. Although government would be free to transfer an officer before two years without calling for his explanation, the average must be maintained above two years. This would mean that for every short tenure some one else must have a sufficiently long tenure to maintain the average. States where this average is less than two years should be given two years of time to bring it above two years.

At least for higher ranks of the civil services e.g. Chief Secretaries, Secretaries to Government, both at Centre and at State, and DGPs, postings may be made contractual for a fixed period, and suitable systems may be evolved to ensure that they are rarely removed before the period of the contract without their consent or explanation.

The Central Government must take a lead in reducing its staff, especially in Ministries dealing with state subjects, and transfer most of the CSS to the states. In the Ministries, there should be control on initial recruitment and most vacancies caused by retirement should remain ordinarily unfilled and abolished.

Professionalising the civil service, ensuring accountability to the people through right to information, improving the quality of life through greater attention to environment and redefining the role of Government in the light of decentralisation brought in through the 73rd and 74th Constitution Amendments, can ensure good governance to a large extent.

The Expenditure Commission constituted by the Central Government should be tasked to implement the recommendation of the fifth pay commission regarding the 30% downsizing in the Central Government staff over a period of five years.