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Missing The Point On State Specific Grants

AN interesting feature of the largesse doled out by the 11th, 12th and the ongoing 13th Finance Commission is the provision of state-specific grants amounting to a whopping Rs 27,945 crores which will be transferred during 2010-2015 in addition to their share of Central taxes and 14 other transfers for activities ranging from improvement in delivery of justice to disaster relief. These grants are to enable the states to deal with what the 13th Finance Commission defined as “local problems and needs”. It is up to the states to assess these special development needs which could vary widely from bridging the social and physical infrastructural gaps in health, education or roads and bridges in the hill areas to improving physical facilities for regulatory administration and preserving historical sites, buildings and promoting adventure or eco-tourism. The idea is to give an “extra push” to trigger development in areas which might not have received required funding under the Five-year Plan and thereby emphasizes their importance and growth potential. Implicit in these grants is the hope that the funds would be properly utilized and activities would revive due focus and appropriate support in future plans on a regular basis.

In this background, it is fascinating to see the differing perceptions of states of their special development needs projected under this scheme. Given the constraints of space, a brief comparative assessment of what the North-east states and some of the advancing and aspiring ones have demanded and grants received under this scheme would be useful to understand the dynamics of growth. Andhra Pradesh, Gujarat and Karnataka have been on a high growth path for over a decade now. The first has been granted Rs 20 crores to establish a centre “to create a climate for accelerating and diffusing innovations in the public system through experience and knowledge-sharing across the country and to raise, thereby, human capabilities”. A knowledge network to improve local capacities is crucial for a decentralized polity to deal with local problems of a wide-ranging nature. Karnataka’s major challenge is improving the urban infrastructure of Bangalore – its growth engine — and thus received Rs 200 crores for solid waste management and Rs 200 crores for traffic management.

Gujarat submitted that rapid ingress of salinity and erosion affecting coastal villages demanded special efforts and was thus granted Rs 150 crores to protect 450 fishing villages. Haryana got Rs 300 crores to develop its extremely backward Mewat region to correct this imbalance. Bihar, which has shaken off its tag of being a “stagnant” economy in the 10th Plan, received Rs. 100 crores to establish 105 new industrial training centers. This is significant as Madhya Pradesh is the only state in the eastern and central regions that projected this demand, which indicates Bihar’s effort to raise the skill level and employability of its youth.

Bihar also got a whopping Rs 1,000 crores to set up of panchayat sarkar bhavans to strengthen local governance and public service delivery. Though the states mentioned received grants for other activities too, these “thrust areas” reflect a welcome shift to long-term capacity building worthy of emulation by other states.

When one looks at the grants received by North-east states, one is struck by the fact that the matter has been somewhat routinized in that what was demanded and awarded by the 11th Financial Commission became the norm and no fresh thought has apparently been given to refix priorities on an assessment of present and future needs. Thus, most states in the region got grants for police training and housing, new police stations and construction of administrative and prison buildings in new districts. As for development of border areas, Assam, Arunachal Pradesh and Mizoram received grants that will be used mainly for construction-related projects. Preservation of heritage sites and buildings was, of course, a major item and Assam got Rs 50 crores to improve the historic Cotton College, Guwahati, and Mizoram’s bid to set up a Sainik School received Rs 50 crores, a welcome measure in keeping with the long tradition of Mizo military service. The only notable feature of what Tripura received was a large provision of Rs 200 crores to improve drainage in Agartala. Meghalaya and Nagaland were given grants to build storage facilities for horticultural produce.

Though the total North-east share is a hefty Rs 2,851 crores – more than 10 per cent of the total state specific grants — the likely result may not be significant because there is nothing to show that grants during the previous dispensations made any difference in growth performance. Since much of these relate to construction, escalating costs, poor quality of construction and leakage, especially in disturbed areas might have reduced the “infrastructure value” of these works. If, on the other hand, the North-east states had sought, like Bihar, to set up new ITIs, nursing, para-medical or food processing training facilities or anything that goes to upgrade the skill level of the youth, the region could have moved faster towards a modern economy from a surplus unskilled labor producing region it is today.

State specific grants provide the scope to expand human capabilities by institution building to impart skills and their use for infructuous construction mainly amounts to missing the point of providing these in the first place by the Finance Commission.

*The article is written by Rangan Dutta

*The writer, a retired Assam-Meghalaya cadre IAS officer, is presently scientific consultant in the office of the Principal Scientific Adviser to the government of India

(Courtesy: The Statesman, India)

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