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Address by Shri Rajnath Singh, Chief Minister, Uttar Pradesh
49th N.D.C. Meeting, 1st September 2001, Vigyan Bhavan, New Delhi.


Respected Prime Minister, Vice-Chairman and members of the Planning Commission, fellow Chief Ministers and other dignitaries present here.

First of all I would like to thank the Prime Minister for calling a meeting of the National Development Council to consider various important issues relating to the Tenth Five Year Plan. I am sure that the deliberations held here would pave way for the timely preparation of the Plan which has to be implemented from April 2002.

The approach paper presented before the National Development Council for its consideration sets the tone of the proposed Tenth Five Year Plan in a lucid manner. Various aspects of the proposed Plan, including the policy matters as well as the development plans have been described in it. The paper indicates the mode of monitoring the targets set for the Tenth Five Year Plan. While highlighting the effectiveness of the economic system, it also explains its shortcomings. It gives a vivid description of the various aspects where our progress has not been to the desired extent. The improvements expected during the Tenth Five Year Plan have also been indicated. Various aspects of the Plan have been analysed in the paper in a crisp and clear terms. The need of an appropriate system for the implementation of the policies during the Plan period have been underlined in this paper.

I consider it as a great achievement. I am happy to say that a novel approach has been adopted while preparing this paper. Effort has been made to do away with the practice of presenting the old wine in a new bottle. It is quite obviously the outcome of the constant efforts made by the Planning Commission, for which I would like to congratulate the Prime Minister.

I feel that the priorities which have been mentioned in the approach paper, and the strategy which is proposed to be adopted, are quite relevant and useful in the present socio-economic environment. I would like to present my views on certain important aspects which have been mentioned in the approach paper.

Sir, in this paper a target has been set to double the per capita income within ten years. A target of eight percent annual growth rate has also been fixed during the proposed Plan period. Keeping in view our past performance and achievements, the target set for the growth rate appears to be a bit ambitious, but I feel that it can be achieved through hard work and by adopting appropriate means. I am not supporting it only for this reason. In the past also it has been noticed that the growth rate in a new Five Year Plan had invariably deviated from the past trends and showed better results as compared to the preceding Five Year Plan.

I would like to draw your attention towards the hazards of the backwardness being faced by a big state like Uttar Pradesh, which has to bear the burden of one sixth of the total population of the country. The backwardness of this state does not affect only its inhabitants, but it has both direct and indirect repercussions which affects the whole country. It goes without saying that the country can not progress till this state remains backward. If a big chunk of the population remains backward, the country can not make any significant progress and the growth in the country's economy would not be possible to the desired extent.

The backwardness of the states should be seen in the national perspective. To achieve eight percent growth rate at the national level during the next five year plan, it would be absolutely necessary to ensure increase in the growth rate of the states like Uttar Pradesh. For a higher growth rate in Uttar Pradesh, sufficient capital investment would be required. With a view to achieveing this objective, the national policies should be framed in such a manner that constant improvement in the economic condition of the backward states is possible.

Concern over the increasing regional imbalance in the country has been expressed in the approach paper. To achieve the economic growth to the desired extent, reduction in the regional imbalances, narrowing of the gap in the standard of living of the people belonging to urban and rural areas, besides reduction in the disparity prevailing in the individual's income in the society is absolutely necessary. There are certain areas in the country which are quite rich and prosperous, while there are some other areas which are quite poor and backward. Only the people belonging to these poor and backward areas are not responsible for this, but there are certain other factors behind it, which are beyond their control. Under these circumstances, we will have to accept it as a national challenge and take a vow to adopt solid measures to reduce the regional imbalances.

According to the figures available for the year 1999-2000, as many as 31 percent people in Uttar Pradesh are living below the poverty line against the national average of 26.10 percent. There could be serious repercussions of the increasing dissatisfaction among a big chunk of the state's population which is quite poor. Besides this, increasing number of educated unemployed and increasing disparity among the states may lead to national disharmony. Hence its immediate solution is very necessary. To priority should be accorded to the economic and financial measures to overcome these problems. These problems can not be overcome only through the developmental activities. It is necessary to chalk out a clear strategy and prepare a wide ranging solid programme in this regard.

In the approach paper, the problems of the deprived class has been projected in a very systematic and effective manner. Scheduled Castes, Scheduled Tribes, Backward Class and women folk are very much socially and economically backward and are not able to get the benefits of the opportunities available for development. Special efforts should be made in the Tenth Five Year Plan to enable them to derive the benefits of various development schemes.

The per capita income in the state in 1950-51 was only three percent lower than the national average, while in the year 1999-2000, it is lower by 38 percent of the national average. This increasing gap between the national and the stated average is quite alarming. The impact of diversification in the state's economic system is not yet visible. Out of total workers in the state, 73 percent are still dependent on agriculture for their livelihood, while the total share of the state's revenue from agriculture sector is only 36 percent. In this way, 64 percent of the stated revenue is going to the 27 percent non- agricultural workers. Out of the total land holdings in the state, 74 percent are in the marginal category, against 59.4 percent of the national average. Due to this reason, agricultural production is quite low in the state.

The growth rate of the total revenue of this state depends mainly on the increase in the income through agriculture. During last 20 years, the annual growth rate of income through agriculture had been stagnating around 2.5 percent. Till the employment opportunities do not rise in other sectors of the economy, which may enable the workers engaged in the agricultural sector to shift to the more economically viable sectors, it would be difficult to control the incidence of unemployment, semi-employment and poverty.

Uttar Pradesh is a state where there is a tremendous scope for development in the agricultural sector. Sufficient land is available in the state which could be brought under cultivation and by increasing irrigation facilities, gross crop area can be increased considerably.

I am confident that till productive sources of earning are not generated in rural areas, dependence on agriculture can not be reduced. This objective can be achieved by developing commercial crops, new agricultural technology and agriculture based industry, besides development of agriculture allied and non-agricultural professions. Sufficient investment from public sector would be required for this purpose. In the approach paper, determination for improvement in agricultural sector has been indicated. For real improvement in the agricultural sector, it is necessary to clarify the measures which are proposed to be adotpted for giving a practical shape to the agricultural development in the agriculture dominated big states. It is also necessary to specify how the investment required for this purpose would be arranged. In the context of improvement in the agricultural sector, precaution would have to be taken to ensure that the interests of the small and marginal farmers are not sacrificed.

While development of agricultural sector, which is the biggest sector of the economic system, is very necessary, it is also necessary to chalk out a strategy for increasing the growth rate of manufacturing sector. In the approach paper, an annual growth of 10 percent in this sector has been visualised. This target may appear to be realistic in the present circumstances, yet I do not foresee the solution of the problems like unemployment and poverty by it.

We should realise the fact that with the growth of the manufacturing sector, the contribution of the capital intensive industries will go on increasing, while the share of the labour intensive industries would continue to go down. In my view, it would be wrong to think that by achieving the 10 percent annual growth rate, it would be possible to provide employment to a big chunk of the surplus man power presently engaged in the agricultural sector.

The situation in states like Uttar Pradesh is still worse. While on one hand the surplus work force in agricultural sector is facing gigantic problems, on the other hand, the infrastructure facilities like power, communication, transport, and roads etc., required for the expansion of the manufacturing sector, are quite insufficient. There can be scope for the expansion of the manufacturing sector only in the states where better infrastructural facilities are available. This tendency can not be checked in the modem age of economic reforms. The tendency of diminishing role of public sector and increasing role of private secotr can not be checked. I would like to draw your attention Mr. Prime Minister, especially towards this fact, and request you to make provision for some concrete measures in the Tenth Five Year Plan in this regard. Increase in the allocation of funds under schemes like RIDF, AIBP, and APDP is necessary.

Infrastructural facilities play an important role in the development of any state. The role of irrigation and power is especially important in this regard. The shortage of power is proving a great hurdle in the developmental work in the state. Development of both agricultural and the industrial sectors are being badly affected due to shortage of power. Power is an area where it is necessary to attract maximum possible investment from private sector, which is not coming forward according to our expectations. It is, therefore, suggested that till necessary investment is available from the private sector, efforts should be made to tap resources from the public sector for this purpose. At present the situation in our state is not congenial for mopping up resources from the public sector. The state is facing a serious resource crunch at present. Reforms in the power sector is in vogue in the state. With the formation of Uttaranchal state, most of the hydro-electric projects have gone to that state, and to make up this loss in Uttar Pradesh is quite a difficult problem. The centre will have to come forward to help in this regard.

Some useful suggestions have been given in the approach paper on the complicated issue of mobilisation of resources. I welcome these suggestions. While we are trying to mobilise additonal resources, we have also decided to make optimum use of available resources by reducing goverment expenditure and ending projects which are not useful. Several steps have been taken in the direction of economic and administrative reforms. Massive fiscal reform programmes have been initiated for economic stability and accelerating the pace of development. The user charges have been reframed to provide better services to the people. The number of the government employees is being reduced by two percent per annum.

A scheme regarding reorganisation of irrigation sector has been started and to ensure the participation of the farmers, water consumer management system has been introduced. Special efforts are being made to make loss incurring public sector units financially viable through rehabilitation packages, to save the employees from the curse of unemployment. The Voluntary Retirement Scheme is also being expanded.

Regarding the question of centre's aid to the states, which has been mentioned in the approach paper, I would like to submit that about 20 to 25 years back, the total funds which are provided to the states for the developmental works under the Plan, the major portion used to be under the head of "central aid", as per prescribed formulae. The amount thus given to a particular state was added with the state's own resources, which became its total resource. The total resources of the Plan were utilised by the states according to their own discretion as per the guide lines provided by the Planning Commission. There were neither any restrictions on the utilisation of the aid provided by the centre nor separate instructions were issued regarding their use.

This system was working effectively, but later changes were introduced in it. As against the aid given to the states as per prescribed formulae, the number of centrally sponsored schemes went on increasing and the amount of their share also went on increasing. Not only this, the centre started creating separate funds for new schemes and the states started getting money from these funds for specific programmes. Due to this fact, the amount given to the states, which could be used by them according to their own priorities as per the formuale approved by the National Development Council, went on decreasing. On the other hand, the centre's share for specific schemes went on increasing. There are separate standards prescribed for the funds made available from these sources. Due to this reason, it is not necessary that the funds made available to the states from these sources and the central aid released to the states as per prescribed formulae, may have proper coordination. Thus the state's discretion in the implementation of the Plans went on decreasing.

The backward states would not be able to utilise the funds, released to them as project linked aid, to the extent to which the developed states would be able to utilise. The result would be that the backward states would become more backward. Hence it is necessary to reconsider the whole issue of central aid being given to the states from different sources under different heads. A well thought of system should be found out which may be in the interest of the states and be helpful in their development.

Sir, the Planning Commmission has proposed setting up of an incentive fund to encourage the states in introducing fiscal reforms. We are strong supporters of the move that the states introducing fiscal reforms be given sufficient aid but the concept of ending revenue deficit within five years is very difficult. Under the present circumstances only a few states would be able to take proper advantage of the fund created at the Planning Commission level. Similar fund had already been set up by the Finance Ministry. Such funds should not be established by sacrificing the funds made available to the states as the central aid.

The subsidy provided under the job oriented / poverty eradication schemes sponsored by the Government of India for the upliftment of the people living below poverty line is still important. State Government is of the view that it should not be ended.

Besides the above mentioned points, I would like to submit some other important points also regarding the approach paper on the Tenth Five Year Plan, for your consideration. In the present circumstances, these points are important in respect of Uttar Pradesh as well as for other states.

  1. Due to the discontinuation of special facilities granted to backward states under the new industrial and liberalisation policies, these areas are becoming more backward. Hence for balanced regional development, Backward Area Development Programme need be run like BADP, in which the centre and state should have equal contribution. 
  2. The state has accepted power reforms programme as a challenge. After the dissolution of the State Electricity Board, a feeling has to be infused among the employees that reforms programme is in their interest. Hence the central government should play an active role in the power reforms programmes. In this direction, in the initial years, aid should be provided to compensate the losses incurred by the Power Corporation. The central establishments should also help by rescheduling their loans.
  3. The investment by the scheduled banks in Uttar Pradesh is not sufficient and the credit deposit ratio is going down. In September 2000, against the average national credit deposit ratio of 57.1 percent, in Uttar Pradesh it was only 27.1 percent. Similarly, the loans/advances given by the all India financial institutions like IDBI, and ICICI etc. were not satisfactory. In 1998-99, the Uttar Pradesh's share of the loans disbursed by these institutions was only six percent which was too meagre keeping in view the fact that this state has 16 percent of the total population of the country. In this context there is a need of increasing the investment through the institutional finance companies in the state. The centre should take necessary steps in this regard.
  4. In the schemes relating to social sector and certain other schemes, capital investment is either very low or is non-existent. The financial viability of such projects is not such that the state may be able to repay the loans within a specified period. Hence in today's meeting we should take a decision that 50 percent of centre's aid should be made available in the form of grants.
  5. The centre is making loans available to the states for irrigation purposes under AIBP. Considering the critical financial situation of the states, and the problems faced by them in the repayment of loans, it is necesssary that the normal central assistace should be provided in the form of 70 percent as loan and 30 percent as grant.
  6. The period of repayment of loans in respect of the backward states, whose financial position is weak, should be longer and the rate of interest should be lower, to reduce the economic burden on them. It is more important in respect of the loans received from financial institution like RIDF and NABARD, which are used for rural development.
  7. Under the Pradhan Mantri Gramodaya Sadak Yojana, the Government of India has fixed the target of linking the villages having a population of over 1000 by the year 2003, and the villages having population between 500 to 1000, by the year 2007. At present 10382 villages having a population of over 1000 are yet to be provided with the link roads for which Rs. 4375 is required. Besides this, villages having population between 500 and 1000 are also to be provided with the link roads though the state is being given only Rs. 315 crore for this purpose. It would be possible only if necessary funds are provided by the Government of India, keeping in view the number of villages where this work is to be done.
  8. Electrification is an important aspect for the all round development of any village. Though the rural electrification work has been included in the Pradhan Mantri Gramodaya Yojana, and the Government of India has fixed year 2007 for the electrification of all villages, yet with the funds being made available at present under the Pradhan Mantri Gramodaya Yojana, it would not be possible to complete this work even in the next 20 years. Keeping it in view, sufficient funds should be made available under this scheme.
  9. The origin of almost all the rivers responsible for causing flood havoc in the east Uttar Pradesh and Bihar is in Nepal. Besides the loss of lives and property suffered due to these floods, the pace of development works is also adversely affected by it. Hence it is necessary that for a permanent solution of the flood menace, initiative should be taken by the Government of India regarding a time bound flood protection work and water storage schemes, in collaboration with Nepal.
  10. After the formation of Uttaranchal state, the forest area in the state has been reduced from 17 percent to 7 percent. It is necessary to have forest cover to the required extent from environmental point of view. The state should be given special central aid for this national programme.
  11. For the centrally sponsered rural development schemes being run by the central government, the centre's share is released direct to the operating institutions at the district level. It is not in accordance with the federal economic system. It is not only causing administrative, financial and disciplinary problems but the implementation of various schemes is also being delayed. Keeping in view the adverse impact of this system, it is requested that the funds relating to these schemes should also be released through the state Government.

Respected Prime Minister, I would like to present my views regarding another important point mentioned in the agenda relating to the distribution of resource for the "Grameen Gareebee Unmoolan Karyakram". Poverty is a complicated problem not only in case of Uttar Pradesh but also in case of various other states. Poverty-eradication and qualitative improvement in the people's standard of living are important ingredients of various schemes. According to the Planning Commission's estimate, 31 percent people in Uttar Pradesh are living below poverty line. Besides introducing uniformity in the economic system and accelerating the developmental activities, we should try to create a feeling of participation among those belonging to the poor class. For permanent solution of the poverty, it is necessary to create profitable and self supporting employment opportunities. Several programmes are being run to achieve this objective. I suggest that till a decision is taken on the recommendations of the working group set up for the Tenth Five Year Plan, distribution of funds may be started, for the time being, on the basis of the recommendations of the commitee set up by the National Development Council. Besides this, to achieve the desired target of poverty eradication programme, a seperate sub plan for people living below the poverty line may be prepared on the lines of the Special Component Plan. Under the poverty eradication programmes, community's contribution of 10 percent in the areas with general population and five percent in Scheduled Caste/ Scheduled Tribe areas may be fixed so that these programmes may be acceptable to the people.

I would also like to express my views on the transfer of the centrally sponsored schemes. In my opinion, the concept of the centrally sponsored schemes in the present form does not have any relevance in the present situation. We have got the experience of several five year plans in the fields of planning and development. High expertise regarding development is available in various states. The states themselves can decide in a better and more appropriate manner about the competitive claims regarding fixing up of the priorities about the developmental works in their states. In this regard I would like to make the following suggestions:

  • In the centrally sponsored schemes, there should be more flexibility and greater participation of the states. The number of centrally sponsored schemes, should be kept at bare minimum. For the remaining schemes, the funds to be distributed among the states may be centralised at one place and be distributed to various states according to formula approved for the normal central aid with the amendment that it should be given as hundred percent aid and the transferred schemes should be left completely at the discretion of the states.
  • The hill area of Uttar Pradesh has been formed into Uttaranchal state. We welcome the inclusion of this state in the special category list. We especially express our gratitude to the Prime Minister for this move as it indicates the centred determination to help in the development of the backward states under his stewardship. I am confident that this state, which is full of natural resources, would be developed into an ideal state with commitment and proper imagination. Our good wishes are with them.

I have tried to present my views in brief only on a few issues included in the appoarch paper. The Tenth Five Year Plan has great significance for us. We have been left far behind in the race for development. We are trying our best to get our state included among the developed states. We are commited to lead our state towards prosperity by following the principles of transparency, sensitive administration, competence and effectiveness, on which the democratic system is based. But more than this, we need your guidance and support. I have full confidence that we will always be benefited with your kind blessings. On my part, I would like to assure that by the end of the Plan period we will be able to present a completely changed picture of our state before you.

With these words I extend my full support to the approach paper regarding the Tenth Five Year Plan. I am grateful to the Prime Minister and the dignitaries present here who have heard me with full attention and patience. On behalf of the people of Uttar Pradesh, I wish to assure the Prime Minister that we will achieve with full determination and commitment whatever development targets are fixed by you, through this meeting of the National Development Council.