The Hindu Business Line : Plan panel made no suggestion on States' debt: Montek

THE Planning Commission has not made any recommendations to the Twelfth Finance Commission (FC) on debt restructuring or write-off of State governments debt, contrary to the view doing the rounds, the Planning Commission Deputy Chairman, Dr Montek Singh Ahluwalia, said today.

Talking to Business Line in Yojana Bhawan, Dr Ahluwalia said that a few days ago "we had a meeting with the Twelfth Finance Commission here. For the Planning Commission as a whole, I made it plain that it is impossible for us to make any recommendations on debt restructuring, unless we know what the FC is going to do on revenue devolution. Because if the FC increases the share of revenue going to the State to that extent the debt problem will be taken care. Since we do not know what they are going to recommend, we really can't make any recommendation on the debt issue."

Dr Ahluwalia, however, hastened to add, "it is my personal view that some of the interest rates that have been charged to the State Governments are too high. There may be a scope for moderating the interest rate on debt. There is also a scope for some consolidation of the debt and we left it at that."

Stating that "anything you do for the State will have some impact on the Centre", Dr Ahluwalia said "we don't regard ourselves as only representing the Centre.

"So from our point of view, a balanced view has to be taken of the problem of the Centre and the problems of the State and we are looking at both."

To a specific query about the start of annual plan discussions with the State governments for the next fiscal, he said "when the new Government came in place well after the financial year began and the budgets had to be passed, we decided that there was not much point in having annual plan discussion for the current fiscal. Because most of the States had already passed the Budget and plan outlays, we decided to finalise discussion by correspondence. Already I met with a number of Chief Ministers and they conveyed some of their concerns."

Dr Ahluwalia said that he told the State Chief Ministers that for the future (2005-06 fiscal) "we should try to complete the annual plan discussions in advance of their submission of the Budget" to be completed between November this year and early 2005."

When asked about retaining the core plan concept introduced by his predecessor Mr K.C. Pant, the Plan panel deputy chief said that the concept was consistent with realistic assessment of resources. "If the Planning Commission feels that the likely resource availability is much less than what the State wants to put up, there is merit in continuing with the core plan concept," he added.

On the question of linking Plan assistance to reforms by States, he remarked that "some of the Central Plan assistance go in bloc devolution and so it is not actually linked to reforms. There are other elements of plan assistance like accelerated power development programme or accelerated irrigation benefit programmes which are linked to certain specific projects or sometimes certain activities which you can call part of the reform."

Referring to the headway on mid-term appraisal (MTA) work, he said that "members are dealing the issue with advisors and we are meeting a larger number of individual consultations.

"We have arranged a series of regional consultations because we want to hear the views of the States. In the next two or three weeks, we will be going to Guwahati to talk to North-East States, Kolkata to talk to eastern States, Bangalore to southern States, Rajasthan (Jaipur) for the western States and to Lucknow for central and northern States."

Dr Ahluwalia said that compared to the projection of 6 to 6.5 per cent GDP growth set out in the approach to MTA paper, "we are sure of the upper-end because we are a little more optimistic on agriculture and more optimistic on the industrial front because of some evidence of investment revival and we do hope that the economy will do well this fiscal."