The Hindu : Centre will help improve finances of States: Jaswant

Online edition of India's National Newspaper
Friday, Nov 15, 2002

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Centre will help improve finances of States: Jaswant

By Our Special Correspondent

NEW DELHI NOV. 14. The Union Finance Minister, Jaswant Singh, today reiterated the Central Government's commitment to improve the fiscal situation of the States and said that in the first instance, a debt swap scheme had been proposed envisaging the retirement of Rs. 25,000 crores of high cost debt of the States.

Addressing members of the consultative committee of Parliament attached to his Ministry, Mr. Singh said a high-level committee of select State Finance Ministers had been constituted to work out ways of improving the fiscal situation of the States. The committee is headed by Mr. Singh.

There was a broad consensus on the introduction of value added tax (VAT) all over the country by April next year and a number of State Governments had already enacted legislation to facilitate this.

The Centre would introduce a Bill in the coming session of Parliament to amend Article 269 of the Constitution to enable implementation of VAT from April 1, 2003 in the entire country, the Minister said and solicited the support of the Members of Parliament for the passage of the Bill.

The members were informed that State Governments had also held meetings with the Reserve Bank Governor, Bimal Jalan, regarding State finances. Some of the Centrally-sponsored schemes were being transferred to the States, he added.

Mr. Singh, however, cautioned that since 80 per cent of the Plan expenditure was based on borrowed funds, there was need to ensure that it remained within reasonable limits. Responding to the concern expressed by some members regarding reports of starvation deaths in the country, he said these were serious issues and would be addressed.

During the discussions, members referred to steps to improve the fiscal situation of the States and it was suggested that wasteful expenditure could be reduced by downsizing Government staff, closing down or privatising uneconomic enterprises and undertaking administrative reforms to streamline some of the multiple and overlapping schemes that were being implemented.

Some members suggested that the State Governments need to take responsibility and ensure fiscal discipline while some others pointed out that States which had a low revenue base should continue to get assistance from the Centre. Some others said there was need to carry out reforms in the power sector.

Some members underlined the need to develop agro and village-based industries, encourage self-help groups and strengthen the Panchayati Raj institutions to bring about greater economic growth in the rural areas.

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