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Time to make things happen

IN A DELAYED exercise, the Planning Commission has finalised Tamil Nadu's annual plan outlay of Rs. 7,000 crores for 2003-04, almost three months after the State budget was presented in the Assembly. Though the Planning Commission has now undertaken a year-round review and monitoring of the State plans it makes sense to restore the timing for these annual meetings with the States to finalise their plan outlays well ahead of the budgets. For Tamil Nadu, this year's plan marks a 21.7 per cent increase over last year, but then 2002-03 was an unusual fiscal when the State voluntarily slashed its annual plan to just Rs. 5,750 crores and an even more anaemic Rs. 5,200 crores in the previous year (when the actual outlay was supposed to be Rs. 6,040 crores) due to the severe financial crisis that had built up over the past five years. Viewed in that context, the return to the growth path and an outlay of Rs. 7,000 crores is welcome, though the Finance Minister, C. Ponnaiyan, had indicated in the budget that this figure included a possible Rs. 1,000 crores that the Government was expecting from the World Bank. When compared to Karnataka and Andhra Pradesh, which face an even more serious financial crisis, Tamil Nadu's plan outlay is lower, but the thinking in the Government seems to be that this is `realistic' and can be built on during the remaining years of the Tenth Plan, for which Rs. 40,000 crores has been fixed as the outlay.

The State Government has chosen the tough path of reforms but wants the Centre to step up its special assistance to implement the package of fiscal reforms. The Chief Minister, Jayalalithaa, used the discussions to seek Central assistance for a variety of programmes that her Government will be launching — the Chennai metropolitan development project, drought relief, wasteland development and for the desalination plants — besides a widening of the tax base in the services sector for the States to raise additional revenue. It appears doubtful if enhanced Central assistance is at all possible, given the Centre's own fiscal problems. But the growing demand from the States for an increased share in the Central revenue and the expansion of the list of `services' that can be taxed by them has to be taken serious note of. Unless the `inelastic' revenue base of the States can be made somewhat flexible and the devolution of funds from the Centre goes up annually, more States will get into serious fiscal crises. The Union Finance Minister must act on the requests and suggestions from the States for a viable debt-swap and other mechanisms to reduce the debt and interest burdens of these Governments. The 12th Finance Commission should also come up with innovative solutions to this ticklish issue.

Based on the data furnished by the Centre for Monitoring the Indian Economy, the Chief Minister has claimed that Tamil Nadu has shown the highest growth in terms of total investment committed to the manufacturing sector in the period 2001-03 and the State ranks first in `absolute terms'. Very often, the projects cleared for investments do not materialise and it is important for the State Government to follow up on the promises or commitments to ensure that proposals are translated into projects so that additional employment is generated and the State GDP returns to a higher trajectory of growth. It is as important for the State to focus on IT, biotechnology and food processing, as to resuscitate the traditional industries such as textiles, plantations and leather. A closer dialogue needs to be initiated with industry and investors on a regular and continuing basis to make the State more investor-friendly. Marketing the State's strengths and areas of core competence is another aspect that needs serious attention.

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