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G. Srinivasan

NEW DELHI, Dec. 8

THE Assam Development Report of the Planning Commission has unequivocally urged the State Government to initiate fiscal governance and public enterprise reforms to restore fiscal sustainability, improve governance and get over the low growth groove to which the State had sunk over the years.

The report of the Plan panel, first of its kind for Assam, specifically notes that the State must perforce reorient spending priorities towards capital expenditure, in particular, rural infrastructure namely irrigation, roads and electricity.

Official sources told Business Line here that the Plan panel has initiated, in coordination with the States, concerned preparation of State Development Reports (SDR) for 13 States including Assam, Rajasthan, Bihar, Jharkand, Uttar Pradesh, Madhya Pradesh, Tamil Nadu, West Bengal, Jammu and Kashmir, Himachal Pradesh, Maharastra and Punjab.

The sources said the SDR for Andhra Pradesh, Goa, Kerala, Karnataka and Tripura would be ready in six months, while the SDR of Gujarat, Haryana, Delhi, Andaman and Nicobar Islands, Manipur, Sikkim, Meghalaya, Nagaland and Pondichery would be complete by next year.

The Governments of Assam in the past had followed the "easy way out to increase Government and public sector employment" which led to rapid growth in labour-employing activities under public sectors such as electricity and water supply in the 1980s.

"The situation today is such that 90 per cent of Assam's tax and non-revenue inclusive of its share in Central taxes and non-plan grants in 1997-98 went for maintaining the government servant, past and present, that is, for wages, salaries and pension", it said.

The report said the poor growth performance in Assam encompassed all sectors with agriculture having grown only at 2.1 per cent per year over the 1980s and 1990s and slowing down in the 1990s to 1.6 per cent. Manufacturing growth rate in the 1990s was higher at 3.4 per cent compared to 2.4 per cent in the 1980s, while services growth has decreased marginally from 4.9 per cent to 4.5 per cent.

It highlighted the fact that transport disadvantage discourages industry from locating in Assam. Only those industries, which are based on special raw materials available in the North-East are likely to locate here.

To move a nine-tonne truck from Guwahati to Kolkatta a distance of 1,100 km today costs around Rs 20,000. A truck going from Chennai to Kolkatta, a distance of 1,600 km, costs only Rs 16,000. This also reflects on the quality of road connecting the North-East with the rest of the country.

The report said that if Assam's development is to be based on its natural resources and on a participatory basis, agriculture, horticulture, agro-processing, handicrafts, fishery, forestry and related industries, tourism, petrochemicals and related industries and IT-based services should play "important roles".

The action plan to pep up the State economy outlined in the report cover reorientation of spending priorities, improvement in tax revenue and non-tax revenue generation and establishment of well-functioning local governments in urban and rural areas, besides imposing limit on total borrowings/debt accumulation.

On its part, the Central Government should provide initial counterpart funds for reform, with monitoring and evaluation, special phased grant to repay part of State liabilities and transfer of funds linked to fiscal performance. Alongside, it stated that development in Assam and North-Eastern States could get a "big boost" if trade with neighbouring countries — Bangladesh, Myanmar and China — could be made freer.

"The Ministry of External Affairs can do more for the North-East than perhaps what Planning Commission can do", it said point-blank.

For inland water transport, the report calls for setting up a Brahmaputra Development Authority with appropriate local ownership, encouraging modernisation and acquisition of vessels and crafts and providing fiscal fillips for private developers, besides beefing up the dredging capacity.

Pointing out that development of Assam is intricately linked with the development of the entire North-East, the report concedes "with sound policies and good governance, Assam should and can develop much faster than it has been doing. Until security milieu becomes conducive to private investment, the Government needs to take the lead.

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