Sunday, May 21, 2000,
Chandigarh, India


M A I N   N E W S

Cut subsidies, PM tells states
Power sector reforms ‘crucial’

Tribune News Service & agencies

NEW DELHI, May 20 (UNI) —Ignoring opposition to cut in subsidies, Prime Minister Atal Behari Vajpayee today went a step further by asking the state governments to reduce the growing subsidy burden in power, transport and other service sectors to set their finances in order and help the country overcome the burgeoning deficit.

Addressing the sixth meeting of the Inter-State Council (ISC) here, Mr Vajpayee urged the states to bring reform in the power sector, rationalise user charges on utilities and services and evolve a consensus on rightsizing of government.

‘‘The Centre has made a beginning. We hope the states will adopt a realistic approach. The response will be very positive after some time’’, the Prime Minister told newspersons after his address.

He said the Centre and the states were going through a period of severe financial stress. The resources were increasingly proving to be inadequate to meet essential development needs. Both the Centre and the states were therefore resorting to excessive borrowings.

‘‘A more rational policy needs to be evolved in respect of state PSUs. While viable undertakings need to be strengthened, those that are loss-making and cannot be rehabilitated need a realistic approach’’, Mr Vajpayee said.

He said many states felt that a solution lay in greater provision of funds by the Centre. ‘‘However, I would urge you to realise that providing additional central funds cannot solve the problem. The financial position of the Centre is itself strained’’, he stressed.

The council agreed for a constitutional amendment for time-bound decision on the Bills cleared by the state legislatures while the contentious issue of Article 356 was referred to a sub-committee already deliberating on it.

The sixth meeting of the full council, the first after the NDA government assumed power at the Centre last October, devoted time discussing the administrative and financial relations with the latter subject evoking mixed views.

Under the Constitution, the Bills passed by the state legislatures are referred to the Governor for the assent who can also refer them for the President’s consideration. In view of inordinate delays in some cases, many Chief Ministers including that of Punjab expressed their concern in this regard.

Strong views were expressed on Article 356, which empowers the Centre to dismiss a state government, with some stating the provision as wholesome and others describing it as repugnant to the principle of federalism.

The council decided to refer the matter to the the sub-committee headed by the Defence Minister which includes the Chief Ministers of Punjab, Andhra Pradesh, Madhya Pradesh, Tamil Nadu and the Finance Minister of West Bengal which is already deliberating on the issue of amendments to Article 356 and related Articles 256 and 257. The sub-committee is expected to give its report within three months.

He said there was no agreement on the suggestion that the Governors should get pensionary benefits with some stating that such a benefit should be given only to elected offices.

On the fiscal front, a majority of 21 Chief Ministers and six ministers who deputised for them underscored the effect of liberalisation and its effect on the state economies with the Prime Minister stating that there was a need for common approach to cope with economic reforms and growth.

Finance Minister Yashwant Sinha, who briefed correspondents on the economic agenda discussed today, said the Centre has decided to give Rs 2,000 crore to make up the difference between sharing of central revenue which has gone up to 29 per cent on ‘net’ base instead of earlier ‘gross’ base.

Punjab emphasised the need for an immediate and drastic restructuring of the Constitution in order to bring it in tune with federal goals while Haryana suggested that Centre-state and Inter-State issues be resolved in a time-bound manner.

On the other hand, Himachal suggested that the Centre should hold prior consultations with the states before deciding on issues like central issue price and other areas effecting food security.

Much of what Punjab Chief Minister Parkash Singh Badal said was reiteration of the state’s stand on issues like financial autonomy to states and greater political, legislative and administrative autonomy, scrapping of Articles 256, 257 and 356. He suggested that the minimum support price be linked to the general price index and that views of the states which lead in farm produce be the main basis for decisions on prices.

Himachal Chief Minister Prem Kumar Dhumal said the Centre should hold prior consultations with states in regard to central issue price, relaxation of specifications for procurement of foodgrain and any ad hoc increase over and above the recommendations of the Commission for Agricultural Costs and Prices to create food security, especially in states which are facing deficiency on this score.

Haryana’s viewpoint was articulated by Finance Minister Sampat Singh, who read out the speech of Chief Minister Om Prakash Chautala, who was recovering from a minor toe surgery. 

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