MS. RINI KHANNA : Welcome to all of you. I request the representatives from the States to please come up on to the dais. The Chief Ministers and Ministers who are representing the States to please come up on to the stage. Ladies and gentlemen, those of you who are carrying mobile phones, please keep them switched off for the entire duration of this Conclave. May I request the photographers who are in front, when the session starts, if I could please request you to either move to the flings or please be seated on the floor so that the audience view our Chief Ministers? A reminder for all mobile phones to be kept switched off.

May I now invite the Editor-in-Chief, India Today Group Mr. Aroon Purie, to welcome our guests and make the opening remarks?

SHRI AROON PURIE :

Honorable Chief Ministers and distinguished guests.

Welcome to the third INDIA TODAY CONCLAVE of Chief Ministers.

I feel humble and proud. Humble because Chief Ministers from as far as the northeast and as near as Delhi have honoured us with their presence. As we all know, the destiny of India is shifting out of the hands of Delhi, and moving into the hands of state capitals-more precisely into the hands of Chief Ministers. Having the Chief Ministers here is a rare privilege for the India Today Group.

I also feel proud that the initiative of evaluating performance of Indian states has matured into an exercise of some repute. The presence of so many stake holders in India's development in this hall today is one proof of that. But even more gratifying is the flood of responses we get from chief ministers, politicians and research institutions from across the country.

The reactions have been critical as well as congratulatory--but all very constructive. This is one way to engage people in the issues of development. That's the primary responsibility of a media house and I am happy that we are able to fulfill it to some extent. I request you all to keep coming back to us with your comments and criticisms. Inspired and encouraged by the past responses we present 2005 ranking of Indian states-revised and improved.

Like last year, the 2005 state study covers every inch of India's geographical space-30 states and 5 union territories. In addition to annual ranks and scores, this year we studied a few more issues of critical, common and current interest to states.

The first of this concerns efficiency (or lack of it) in public spending. Both the Finance Minister and the Prime Minister have in the recent months talked of the need to match "outlays with outcomes". To help identify good spenders on key public services, we have built what we call "Bang for the Buck" index for states.

Our second new offering relates to the UPA government's resolve to impart a human face to reforms. As our contribution to that concern, we built an index of pro-poor growth in states. The index shows the success of each state's economic growth in reducing poverty. The economists call it the "Trickle-down index."

Thirdly, we also created, for the first time ever, an index of economic freedom of states. As we all know, India has been a country with high level of political freedom and low level of economic freedom. But human freedom is incomplete without a high degree of economic freedom. The results of this study are startling and surprising.

Finally, we also did on-the-ground assessment of progress achieved by the three newest Indian states-Uttaranchal, Jharkhand and Chhattishgarh. It's been five years since these states were created and it's time to check if people living in these states are better off than they would have been if these states weren't created. The answer would validate a hypothesis that reoccurs in our state study every year: when it comes to governance, small is beautiful. And if the main poverty of India is the poverty of governance, then big states may need to ask if being big is really a big deal any more.

The detailed findings on all these factors will be presented to you during the award ceremony and in the copies of the latest India Today issue which will be with you in a while. But let me make one important observation.

It comes out clearly from our study that many states are good at doing many things-but not all the things. There is nothing wrong with that. After all no state can be good at all the things, all the time. But what is wrong is that best practices of individual states aren't spreading to other states fast enough.

I request the Chief Ministers present here to think of creating a Common Minimum Programme for states. Just like the CMP of the central government, states can have a CMP of their own--the CMPS. The CMPS can be more productive and constructive than the CMP. The logic is simple: whatever the problem, there are usually one or two states that are doing a better job of managing it but other states do not know how they are doing it. It makes sense to have a forum where state officials can come and explain to their colleagues in other states how they fixed a problem.

For instance, the people who built computerised land records in Karnataka should explain to colleagues in other states the practical details of doing so, as well as the benefits. The state leaders in Maharashtra can understand how Tamil Nadu was able to attract the auto industry in such a large scale. The forum should allow MLAs to learn why the Urban Land Ceiling Act failed to fulfill its objective, or why liberalization in agriculture to create a single domestic market is a good idea... There are many issues where a little bit of knowledge sharing among the political class could do wonders.

The implementation of Value Added Tax (VAT) was achieved-against many odds-by such cooperation among states. Let us convert the forum created for implementation of VAT into a permanent institution of knowledge and experience sharing among states. It will be an institution 'Of the States, By the States and For the States'. It will be free from the bureaucratic trappings of institutions run by the central government for the cause of states.

Such an exercise will be fruitful to all states-irrespective of their current level of development. Because another big message from India Today's state study is that development is beginning to defy state boundaries much more than ever before. Some of the best performing states in the past have begun to lose momentum and if they are still among the top rankers, it's because of their historical advantages. I would particularly mention Punjab, Kerala and Maharashtra in this regard. These states are still leaders, but their competitive advantage is getting eroded. But the good news is that new leaders are already on the horizon. Himachal Pradesh, Rajasthan, Karnataka, Tamil Nadu are some such potential leaders. There are many more.

Let me end by reminding the gathering that a state's performance in our study isn't a reflection of its current Chief Minister's performance. A lower ranked state may well have a better administration today than a state ranked high. That doesn't make the rankings wrong. It only proves that some states are being propelled to the top by their past.

I address this observation specifically to the Chief Ministers who have initiated reforms in their state and may not find their efforts captured in the rankings. But as we all know, development is a tardy process, especially in India. And even after the development takes place, it takes time for it to reflect in the data and therefore in the rankings. The message is that performance pays, only if it is sustained. And if your efforts are sustainable, our rankings are dynamic enough to capture it sooner rather than later. On our part, we are committed to doing the rankings, every year.

I welcome you all once again and thank you for encouraging us with your presence.

I now invite India Today's old friend Jairam Ramesh and Editor of the magazine, Prabhu Chawla to start the discussion among the Chief Ministers.

SHRI JAIRAM RAMESH : Good morning ladies and gentlemen. Before Mr. Hooda arrived there were 13 on the dais. This is the 14th political leader who has joined this distinguished group. We will have 60 minutes, seven themes and 14 leaders. So, arithmetically I do not know how much time each of you will have to speak. But I know that many of you have written speeches, written presentations which, I am sure, have been circulated in the audience. May I just repeat the seven themes that have been identified for this morning's discussion?

First is Can States help match outlays with outcomes? Second is - Does India need more States - particularly Shri Mulayam Singh Yadav, I am sure you will make a comment on this. I know it. Third is - Do States support privatisation? The fourth point is - What do farmers want - free power or fair power? I am sure Capt. Amarinder Singh will have much to say on that. The fifth point is - who is responsible for bankruptcy of States - the Centre or the States. The sixth point is - Is VAT, value added tax, the most important tax reforms since Independence and the seventh point is - Can good economics be sold as good politics to people.

So, we have these seven themes. As I said, we have 14 leaders. May I request the senior-most Chief Minister who is present here, not that he belongs to the Congress but he just happens to be the most senior in terms of political experience - Shri Narain Dutt Tiwari to kick the discussion off? Perhaps, Sir, since you have been Chief Minister of a very large State, India's largest State, and now you happen to be the Chief Minister of one of India's smaller States, may be you would want to start off by reflecting on this theme - Does India need more States. I think the discussion is bilingual.

SHRI NARAIN DUTT TIWARI, CHIEF MINISTER, UTTARANCHAL : My esteemed colleagues, the Chief Ministers from different States of the country, Jairam Rameshji, who has been given the task of being the chief rapporteur or spokesman of the conference, distinguished invitees, editors, commentators, journalists and administrators,

Well, I think the question that has been imposed before us - the first question is whether India needs more States. I think there are already demands regarding the establishment of Vidarbha, Telengana and some other States in the country. I think ever since Independence we have discussed this issue at length. I remember Mr. K.M. Panicker's note of dissent to the States Reorganisation Commission. Some leading political parties, including the Congress have posed the question that - do we need to have another States Reorganisation Commission. I think that is the answer to the question put before me. I think, in the future we have to have a States Reorganisation Commission not just to create new States but also to rationalize the boundaries of different States. The configuration of our country is such that we have to see not only the linguistic composition of the States concerned but also the cultural composition, the heterogeneous character of our cultural composition. Again, the leading question in the 21st century would be - how would the economic strength of a State help India as a whole. For example, in Karnataka, Bangalore today is called the Information City or the City of Information Technology and Biotechnology. It is because not only of the salubrious climate of Bangalore but also because the number of entrepreneurs, industrialists that they have been able to attract.

I think, the answer to the question posed to me would be that let us agree to create a new States Reorganisation Commission which not only does consider the question of establishment of new States but also to reorganise and rationalize the boundaries not substantively but marginally speaking. For example, take Bundelkhand. They always wanted a greater Bundelkhand. But, because of the configuration of their land and the past history, it has not been an economic entity by itself, but only a historical entity. I would say that my answer to that question would be that let us agree to set up a new States Reorganisation Commission in the near future and not so distant future. You may consider the near future in the context of the Finance Commission reports. Our Finance Commission covers five years as a whole. I think, we have to have a criteria by which we can determine the configuration of a new States Reorganisation Commission including rationalisation of the States' boundaries.

SHRI JAIRAM RAMESH : Thank you Tiwariji. That is a very clear statement of your position. You are coming out very clearly in favour of a new States Reorganisation Commission. We have Chief Ministers from different political parties. So, let us try to see whether there is a consensus on this, at least on this issue, even if the definition of what constitutes near future has been left open by Tiwariji. Mulayam Singhji, would you support this proposal that a new Commission should be set up which will see once again the reorganization of States once again and see demands like Vidarbha or Telengana or Harit Pradesh etc. and should it be seen as a whole once again?

SHRI MULAYAM SINGH YADAV, CHIEF MINISTER, UTTAR PRADESH : [He spoke in Hindi - This is translation] Respected Chief Ministers, distinguished delegates present here and friends from the media : It is a matter of happiness to me that India Today Group has organised this Conclave by inviting many of the Chief Ministers of the country and presented these questions in the presence of all of them. As far as this States' reorganization is concerned, I and our Party are not in agreement with it. There are problems. There is the water problem. In between two regions {suba}, the Capital is there. There are other issues concerning the borders and the properties. There are so many such issues which have to be solved. I am of the opinion that to solve all these issues, let there be a Commission formed. For a national water policy, there can be a separate Commission. I am agreeable to it. For properties also there can be a Commission. But for the reorganization of the States, to have a Commission our Samajwadi Party is not in agreement. When there is a demand in the country that we should take the country forward in the international level and put India on par with the developed countries, in such a situation by raising such an unimportant issue which will lead to problems may not be right. Whatever Commissions you may set up, but still you will not find a solution to this problem. If there is a solution to this, the problem arises only among the neighbouring States. The very recent and strong and living example of this is the point that since 1966 Haryana's capital could not be built. You know how important that issue is. Some people want that it can be in Rohtak. Some others want it elsewhere else. Till now their State capital could not be built. Therefore, I am not in agreement with this.

On the other hand, I am strictly against division of the States into smaller and smaller States. The more smaller States you have, that many dangers you would have for the country to disintegrate and become weak. The power of the small States become weak and the power of the big States is very strong. If you want to give an example to this, there are dozens of them. The big States will handle issues like illiteracy or terrorism; they will be able to face these issues strongly. The smaller States cannot be able to do it so strongly. They have very limited capacity. By creating smaller States, by raising emotional feelings, you will create so much of encouragement and spirit and once the smaller States are created, their expectations are very high that let us have those facilities and amenities. And they are not able to get those amenities and this leads to more problems that arise. I will not take names. Many are here. By appealing to the emotional feelings before the people, they made so many promises to the people and they could not fulfil those promises. Today they are desperate. Therefore, my respectful submission is that this should not be considered.

Therefore, in the name of dividing the States creating a new problem in front of the country, by creating smaller States establishing the divisiveness is not correct. The distribution of properties is not being able to be done. The distribution of water is not being able to be done. Therefore, to start a new problem is not correct. All of us, the people of the entire country, should come together want to stay, by the year 2020, in that line where developed countries are there. By doing this, we will be very back in the line. Therefore, I am not in favour of this new States Reorganisation Commission. There are problems. For them some Commissions can be set up and problems solved.

SHRI PRABHU CHAWLA : [In Hindi] Shri Mulayam Singhji, you have raised an issue that when you create smaller States the biggest problem will be that of the Capital. Shri Hooda the Chief Minister of Haryana is here. Its capital is not yet built. But for the three new States which have been formed recently, Uttaranchal, Chattisgarh and Jharkhand, they have the Capitals. If the distribution is done properly, the capital is built. Capital is not a big issue.

The second point you said is that the smaller States have less power and big States have much power. There are many people here of smaller States. I do not know whether they will be in agreement with you or not. Shri Narain Duttji, he says that the power has become less after your going there. You have earlier been the Finance Minister of the country. After having gone to Uttaranchal, has your political power been reduced because it is a smaller State?

SHRI NARAIN DUTT TIWARI : The political power of either a smaller State or a bigger State is controlled as per the Constitution. By being a big State, the powers are within the political and geographical borders. Only the population is less. As far as administration is concerned, the rules are one as per the Constitution. Regarding the viewpoint of the Finance Commission or the Planning Commission, it is the same in this regard.

SHRI JAIRAM RAMESH : [In Hindi] We will take this argument away from Uttar Pradesh.

SHRI PRABHU CHAWLA : Take it towards Chattisgarh.

SHRI JAIRAM RAMESH : [In Hindi] Let us ask Shri Narendra Modi - of course, you are not here as a representative of the BJP but as a Chief Minister - but still, will the Bharatiya Janata Party support this proposal of having a new State Reorganisation Commission?

SHRI NARENDRA MODI, CHIEF MINISTER, GUJARAT : [In Hindi] In principle, Bharatiya Janata Party has been in favour of smaller States. The ultimate goal of the smaller States is to reach the maximum development opportunities to the last person in the State at the earliest possible time. Therefore, administratively everybody will agree that small unit will be more powerful. But, what will be its decision-making process? We have to understand the ground reality. This country has lost the power to resolve the dispute of water between two States. This country has also lost the power of delimitation of Parliament's seats. It is not able to do it. In the matter of giving reservation to the women, taking it out from the existing ones, even this, the country is not able to do. In such a situation, as Shri Mulayam Singh has said, if we open this Pandora's Box, where will the country go and stand - we have to think this aspect also. The smaller States, in principle, are good for development. The experience also says the same. A State like Gujarat is not too small or not too big and we can understand that we have the capability to run it. Therefore, if there should be a Commission or not, this is an issue of big dispute.

SHRI JAIRAM RAMESH : Capt. Amarinder Singh, I think Mr. Narendra Modi has raised a big issue on which I would like you to comment. He says that why think of reorganization of States when the Centre, certainly seems to have, lost the ability to solve inter-State water disputes for example which is so very central to the economic future of States and people. Would you agree with this that somewhere along the line, as a nation, the Central capacity to deal with State-level problems as the spill-over between States, whether it relates to water, whether it relates to the sharing of natural resources, has been lost?

CAPT. AMARINDER SINGH, CHIEF MINISTER, PUNJAB : I do not agree with that statement. At any time, on any issue, the Centre has the powers to interact with the States and try and resolve the problem. Yes, we have our own problem which lingers. But the Centre has that power. But, I agree with Mr. Modi on this score definitely that the management is much better and implementation of programmes and all is much better in small States. For any State to really take off, you have to run it in a very tight-ship. You have to run it as a family. Whatever decision I take, I take it at the Secretariat level, eventually it is the Deputy Commissioner or the SSP and all at the districts who have to implement those things. Here, you must know who your Deputy Commissioners are. You must understand their capabilities. We should be able to interact with them and know them - their plus points and negative points.

I think, we in Punjab at least, have that atmosphere in which we work together in a very tight-ship. I think in large States it is impossible to deal with. Shri Mulayam Singhji's State has 84 districts. I do not know if he even knows the names of every District Magistrate. Now, these are the problems that come. So, certainly small States will certainly make it easier for those States to run and for implementations of programmes.

SHRI PRABHU CHAWLA : [In Hindi] I think we need to ask Babulalji. If that happens to your State, the position of Chattisgarh is different, does it appear to you that you have the possibility to have more division of your State?

SHRI BABULAL GAUR, CHIEF MINISTER, MADHYA PRADESH : By making more smaller States, the establishment expenditure increases much. The big States have a different benefit. From our State, Chattisgarh has been made a State. But there are problems. Because of it being a small State, the naxalites have increased. To control them, a separate power is needed. In our Madhya Pradesh also, we believe that it is there in Mahakaushal area. There is no benefit to anybody. There should be only good governance. This is what I have to say.

As Shri Mulayam Singh has said, the benefit of a big State is that the political establishment is very strong. You see what is happening in Goa. If one or two members change loyalty from this side to that, the Government itself changes. Therefore, the big State has the benefit. But the other problem to that is one cannot reach all the places in the State.

SHRI PRABHU CHAWLA : Is there a necessity to make another State?

SHRI BABULAL GAUR : According to me, there is no necessity.

SHRI PRABHU CHAWLA : Let us ask Vasundharaji. Theirs is a very big State even in terms of area also.

SHRIMATI VASUNDHARA RAJE, CHIEF MINISTER, RAJASTHAN : I am going to look at it slightly differently. If you look at our history, we merged all the small States to make a strong Union of India. I do not say that the small States do not have their advantages. But, as you listened to both the Chief Ministers, the large States do have a lot of advantages also because the economies of scales spread out far and wide. But there are difficulties which we cannot run away from. I would like to say at the end of the day that running a State as large as, say, Rajasthan would certainly take more effort in running a State like, may be, Chattisgarh.

SHRI PRABHU CHAWLA : Do you agree with your colleague Shri Narendra Modi that there is a need for reorganization of States? Smaller States are much more ….

SHRIMATI VASUNDHARA RAJE : As for governance to come to the smaller areas, the benefits to reach quickly, yes, a smaller State is required. But I do believe that in the sense of a large State the economies of scale, the establishment factor that he has spoken about, that also count. I really do not think that we should meddle too much in all these things because they would create more problems than they would ease things.

SHRI PRABHU CHAWLA : [In Hindi] I think we ask Shri Hooda. Your State was formed out of Punjab. What is your experience? Do you support small State? You can see the entire Haryana.

SHRI BHUPINDER SINGH BOODA, CHIEF MINISTER, HARYANA : The small States enable the Government to pay more attention to the Government work and the Government can go to the remotest villages and they can reach in time there. Our experience is, when we were one State with Punjab, Haryana was much backward. Now we have developed because of being a small State. But to create very small States would be really counterproductive.

As far as what Tiwariji has said is concerned, about reorganizing the States….

SHRI NARAIN DUTT TIWARI : No; on States Reorgnisation Commission, I mentioned that we could have a second States Reorgnisation Commission not for smaller States or bigger States but for consideration of the demands.

SHRI BHUPINDER SINGH HOODA : Yes. I would like to correct what Shri Mulayam Singh has said and other said. They said Haryana has no capital. Even Punjab does not have its own capital. Both share the Union Territory of Chandigarh. How can you say it?

SHRI JAIRAM RAMESH : [In Hindi] Hooda sahib has said rightly that this argument of size will go on. We will not have any consensus on this because as you saw on the dais itself people from the same political Party have different views. Let us move on. Let us agree to disagree. If there was a way of setting up a States Reorgnisation Commission and not including U.P. in that, perhaps, Mulayam Singhji also would agree.

SHRI NARAIN DUTT TIWARI : The States Reorgnisation Commission is to be for the consideration of the demands.

SHRI JAIRAM RAMESH : Sir, your approach is quite right and clear.

SHRI NARAIN DUTT TIWARI : This also is there.

SHRI JAIRAM RAMESH : His procedure is 50:50. Anyway, Shri Gaur has said that forget size and concentrate on good governance. He said that good governance alone will have its importance at the end. I would like to ask Shri Gaur himself. Taking the example of Madhya Pradesh itself, when we talk of good governance, whatever statistics you see of U.P., Bihar, Rajasthan, Madhya Pradesh - even today it clearly shows the backwardness. Why is it so? Is it that you are unable to get interim relief from the Government of India? Is it that your own problems give so much of challenge to you that you are not able to go forward? Why are you not able to give good governance in these States, particularly in northern India States?

SHRI BABULAL GAUR : [In Hindi] I would like to submit that the meaning of good governance is that there should be good plans, good economic system. Our State is part of the 'BIMARU' region and it is third from the bottom. In our State, we have large reserves of coal, we have large areas of forests. Nearly 42% of forest covered area is in Madhya Pradesh. We have very good coal mines - Chindwara, Parasia etc. But at this time, because of the policies of the Government of India, some problems do arise. We have some 32 or 33 per cent of our forests. To maintain it, to protect it, to organise it the Government of India is helping on the basis of what it does for, say, Nagaland or Punjab where there is very less area of forests. It gives funds to us on that basis. Coal comes from out of our State; but we do not get the royalty on the basis of the market but on some other basis.

The Government should make a national policy. After good governance, the economic administration should also be correct. In Madhya Pradesh the economic administration is very good. Therefore, the Government of India has given an additional bonus of Rs. 262 crore. Therefore, my submission is that within the economic policies they should work. Every time they say that they will pay for coal based on the weight. We say - why do you not give based on the market price. If we get that, then in one year we can get an additional financial benefit of Rs. 1,000 crore. Therefore, my submission is that financial policies are very much essential. The meaning of good governance is that within the administration two things are essential. One is what type of control we have on the Government servants and the machinery. The second is, the Government of India has its Pay Commission and they increase their own employees' salaries because they have the printing machine to print notes. When you increase their salaries, our employees do hartal that 'you give us on Delhi basis and merge 50% of our Dearness Allowance in the pay'. My point is one national wage policy should be prepared.

SHRI JAIRAM RAMESH : Gaur sahib, are you against the Sixth Pay Commission?

SHRI BABULAL GAUR : My saying is that a national wage policy should be prepared. If the Government of India increases the salaries in Delhi, then they should give subsidies to us as we have less funds.

SHRI JAIRAM RAMESH : Can I bring Mr. Singh Deo here? Orissa is one of the richest States of India in terms of natural resources. It has all the natural resources that you can think of, very well endowed; yet continues to languish at the bottom. On any social indicator it really is at the bottom and it is not BIMARU, it should be a BIMARU. Why is Orissa State so poor and backward in spite of having all the resources?

SHRI SINGH DEO, MINISTER OF ORISSA : I will try to answer the question. Sir, Orissa is a rich State where poor people live. This idiom is fast changing. It is, in a way, changed as we sit. As you know, we have signed MoUs of Rs. 1,18,000 crore worth of industries coming in; 37 MoUs have been signed. The biggest FDI investment in the world has come to Orissa - that is POSCO today. As you hear, it is coming. Besides that, we have on the ground industries - aluminium industry in Lanjigarh; we have it coming in Kollapat; we have it coming in various other places.

So, the idiom as I mentioned, is a thing of the past. We are fast changing. We are also reducing the fiscal deficit and revenue deficit. Our fiscal management is extremely good. We have taken measures to look after the floods, cyclone and other disasters that we have been having in the past. So, we are really on the threshold of a major, major development. What you have mentioned is really a thing of the past, as you will see. We have also the Paradip Refinery project coming in.

SHRI JAIRAM RAMESH : Would you say that in the next five years, with all these steel plants, aluminium plants, refineries, health indicators and education indicators and poverty indicators of Orissa will actually improve?

SHRI SINGH DEO : I am absolutely sure of it, Sir, because we have managed to put our iron ore and alumina and other industries on line saying that for the minerals in our State, we would prefer that the investments are done in the State. What has been happening in the past was that all our iron ore and alumina have been exported to other States and exported abroad. We have put a blanket stop to it in the sense that we are prepared to give our best, premium iron ore or alumina or whatever else, as long as you put the industry in the State. Not only that, we also have now diamond and other industries. Orissa is a gem country as you know. We have alumina, we have gems coming out, and every other gem coming in the State. This is another big industry that is picking up.

As we have mentioned, we are at the threshold of change. In the next five years you will see a major change in the State.

SHRI JAIRAM RAMESH : We will bring in Mr. Muzaffar Beg here, the Finance Minister of Jammu and Kashmir. Mr. Muzaffar, one of the arguments that is often given is that if you had good governance in Kashmir, they would not have had the serious problem that we have in J&K. Do you subscribe to this view that good governance is being one of the main problems that you face?

SHRI MUZAFFAR BEG, FINANCE MINISTER, JAMMU AND KASHMIR : The bad economics and bad governance have contributed substantially to the recurring crisis that we are confronting with in the State. Unfortunately, the State of Jammu and Kashmir has some unique political features. One of the features it has is that by and large democracy was only a ritual and I can say it with confidence that this is a fact which should be self-evident to most observers that during the last elections the Government of India and the Election Commission have fairly assured that the democracy reaches at the grassroot level in the State of Jammu and Kashmir. We had a divided and a fractured mandate. But, it did make people accountable. While the Governments were picked up and removed at the behest of someone at the Centre, there was no accountability. Today we are accountable and we are happy to say that with the help of the Central Government, whether it was the NDA Government or the present Government, they have been very generous in extending not only moral but material support to the State of Jammu and Kashmir. We have noticed that this good governance and good development will limit the space in which violence and militants can operate. We have found that despite the problems that we face day to day, people's sympathy for the mischief-mongers, the terrorists has considerably decreased because of accountability, good governance and development.

I think that without good governance and good economics, I hope you do not have similar problems, but you will have law and order problems and problems of militancy in the other parts of India.

SHRI JAIRAM RAMESH : I want to ask the Chief Minister of Chattisgarh that when this talk of good governance comes up, many people believe that panchayat raj has a very important role in this. Are you in agreement with this? If we take panchayat raj more seriously, now the panchayat raj institutions have come up constitutionally, I am particularly talking of North India where is backwardness, poverty indicators are there. Can we bring good governance with the help of panchayat raj?

SHRI RAMAN SINGH, CHIEF MINISTER, CHATTISGARH : Through the panchayat raj, Chattisgarh has done this experiment. After doing all the elections, we have given powers to the panchayats. I feel happy to say that even in the recruitment of teachers, some 28,000 teachers have been recruited directly through the panchayats. They have been given power to do works up to Rs. five lakh. The panchayats are standing on their legs. I want to say still further. In connection with Chattisgarh, giving powers to panchayats and the royalty power to the panchayats, strengthening them in financial terms - these are essential things to us.

I will give the example of our small State. Today, in the line of new States, Chattisgarh has proved that within four years our GDP has grown from Rs. 24,000 crore to Rs. 42,000 crore. The per capita income has gone up from Rs. 9,900 to Rs. 15,000. In four years, we have increased our Budget plan from Rs. 6,000 crore to Rs. 12,000 crore. This tells that in small States, we have just doubled the figures which was not possible in four years. We have increased the PWD budget for irrigation ten times. The meaning of this is that in the revenue that is collected, we have increased it by 18%. Now our Budget has grown today. This means that by adopting good measures along with good governance, we have brought the administration nearer to the people. Today Chattisgarh is emerging as a model State in the society. We have closed down all the PSUs which were running in losses. Out of 28, now we have only nine PSUs in Chattisgarh which are going to run in profits. We have closed the rest of them, we have privatised them. Today Chattisgarh is in a position of standing on its own legs.

There are some shortcomings. As Shri Gaur has said, we should get the royalty. Today, the royalty that we get on iron ore is three times less than that we get on earth, two times less than that of sand. We are getting 18 rupees royalty per tonne. How long will this discrimination go on? All our coal and iron ore will go away and we get a royalty of 18 or 20 rupees. The chance of development will only be then when we make it ad valorem, value-based. Otherwise, the position of States like Chattisgarh, Bihar and Orissa etc. will worsen day by day. If we apply VAT on this, we will be losing still further. If we lose even the Rs. 400 crore that we get, then what is left with us? We have to think in these lines. The small States have their own problems. They can be on the basis of language. But in the administrative point of view, the view emerges that the work should be done in a better way. In this, not only Chattisgarh and Jharkhand but other States have also proved that small States can work well and the chance of development increases and we will be successful in fulfilling the expectations of the people.

SHRI PRABHU CHAWLA : Jairam, I think we are shifting one question. As has been pointed out, small is beautiful and good governance. I think smaller States are there - like Sikkim. It is big in terms of presence but it is small in terms of everything. Is it the consensus of that, that for good governance geographically or otherwise you need a smaller State?

SHRI JAIRAM RAMESH : Mr. Chamling to answer.

SHRI PAWAN CHAMLING, CHIEF MINISTER, SIKKIM : [In Hindi] At the very outset, I extend my support for building up smaller States. I myself am administering one small State for the past twelve years. If it is good for the country, good for the region, then what is the objection in making small States? We have to always keep in mind the national security and integrity of the nation and work in that way. We have to see how the country will be stronger and how the country will develop.
[Change of tape side]
..We have to see how we can take the country forward and in which direction and in that direction the small States have to think of. This is what I feel. Whatever issue we raise, it should be in the interest of the country but not for the interest of any individual or any State. We have to think for the country.

When we build smaller States and reorganize them, we have to see whether the country will be benefited, whether the country will be stronger, whether the people will be happy, whether there will be equality among the people etc. So, we have to take it in a positive way. I myself run a small State. I have seen that in running a small State, meeting the people and interacting with them and spreading the economic development is easier. Two-three issues have been raised here today that by having a small State there will not be political stability, there will not be peace etc. You can take Sikkim as an example. I am running the State Government for the past 12 years. Sikkim is the most peaceful State of the country. It is the most peaceful and secure State. There is a stable Government there. There are 32 MLAs. Out of the 32 MLAs, 31 MLAs are from my Party. We have a stable Government there and much development and progress is taking place there. If we see it from the international border point of view, it is one of the critical States. On one side we have China, on the other side Bhutan and Nepal on the third side. But still, peace is established there. Nowadays there is an impression in our country that just hearing the word border State, people will start thinking that there will not be peace, there will be disturbances, there will not be national integration there, emotional integration will not be there, that the people there will be anti-national etc. Such sort of a thinking is there in our country. But, we have proved it completely wrong in Sikkim. The people there are balanced, there is an emotional integration with the basic national thinking of the country. The people of Sikkim feel proud of being citizens of India. That is the reason why Sikkim has achieved the development that it has achieved.

Some examples have been taken here. Goa example was taken. It is said that, it being a small State, the Governments change there very frequently, once in six months etc. It is not correct. The Governments change or the Governments become weak only because it depends on the mental thinking of the politicians. It depends on their morality, history, their political thinking and moral principles of them as to whether the Government should be strong or weak. It is an issue of principle. Politics is the prime and best principle. But why do we see those who do politics in such a negative way? For this we the politicians ourselves are responsible and not only that but the people are answerable and guilty for this.

Today we have to think as to how we can give a good leadership to this country. Those of us who are in the corridors of power, first of all we ourselves should change. This is what I feel. I am from a regional party in Sikkim. But every time I think and work of national good and national benefit only. Therefore, whatever Government comes into power at the Centre, we work along with them. People ask why do you do like this. I say that we work in the national interest. The country's interest and the development and prosperity of Sikkim State - this is my only motto and my only agenda. Therefore, we have a balance and work in that way. We work as a regional party in Sikkim. There are geographical problems, the life there is very difficult. We live on the hills. Therefore, from the Central Government whatever plans are prepared for development and progress, and how they are implemented may not be acceptable to many States. Let us take the road policy.

SHRI PRABHU CHAWLA : Just a minute Mr. Chamling. We will talk to you about development. I think you are in favour of small States, the more small States are there, that much more development will be there, that much more political power will be in your hands. Is this what you want to say?

SHRI PAWAN CHAMLING : Yes.

SHRI PRABHU CHAWLA : We have a small State, Delhi. Shrimati Sheila Dikshit is here. Madam, he said about political powers etc. Please tell what are your experiences? In two hours you can travel the entire city of Delhi.

SHRIMATI SHEILA DIKSHIT, CHIEF MINISTER, DELHI : We have a very peculiar situation which, I do not think, any other State has. We really are a city-State. I would like to add that everybody has spoken about good governance. But I would like to say that good governance emanates from a responsive Government. So, the Government has not only to have good governance, it has to have a responsive governance and that responsive governance can come about when you have as much interaction and as much participation of the people of that State in the governance, in taking decisions, in seeing their aspirations and all. For that, I do believe that smaller States are better equipped for a more responsive and better governance.

However, for Delhi I would like to say that Delhi is, as I said, a city-State, perhaps the only city-State in the country. We get hampered because we are a State and yet we are not a State. Many things which are integral part of good governance or where speedy decisions can be taken, are not available to a city-State like Delhi because land is not with the city-State of Delhi; law and order is not with the city-State of Delhi. There is enormous cross-crossing of institutions which are governed directly either by the Centre or the Centre has a half-say in them. We have a half-say. So, that, I think, needs to be looked into. But, I do believe that small States can be better governed because they can be much more responsive.

SHRI PRABHU CHAWLA : You are in favour of a full-fledged State.

SHRIMATI SHEILA DIKSHIT : Yes, I am.

SHRI PRABHU CHAWLA : You can request your own Government to give you a full-fledged State.

SHRIMATI SHEILA DIKSHIT : Yes. We have requested.

SHRI PRABHU CHAWLA : To that extent smaller State lacks political power.

SHRIMATI SHEILA DIKSHIT : No, I am not saying it. I said Delhi is a peculiar State. Not all the smaller States lack political power. They have the political power under the Constitution. Also, Delhi, under the Constitution, has very limited powers; yet, it is called a State.

SHRI PRABHU CHAWLA : On this issue, I would like to again speak to Shri Mulayam Singhji to close the issue. Mulayam Singhji, the consensus that is emerging here is that both Shri Babulal Gaur and Shri Mulayam Singh have fallen into minority. Does it appear to you that you will revise your opinion that the smaller State is in the interest of the country, in the interest of the State. I will ask both of you to speak in one minute each. After hearing this, does it not appear that it is good for the country to have smaller States?

SHRI MULAYAM SINGH YADAV : You are saying that we are in minority. Take the people. Uttar Pradesh's population is 17.5 crore. Nobody can say that we are in a minority. Nobody can ignore its important background in the national interest. So, Mr. Gaur and Mulayam Singh are not in minority.

SHRI PRABHU CHAWLA : You are in minority here; not there.

SHRI MULAYAM SINGH YADAV : I am the Chief Minister of a big State, Uttar Pradesh. The second important point is …..

SHRI BABULAL GAUR : My point is that more than the small States that have already been formed, no other small State can be built. The reason is what will be the political necessity for this and the entire country will be involved in a political turbulence.

SHRI PRABHU CHAWLA : So, you are also not in agreement to have small State. Shri Virbhadra Singhji, please tell what do you feel. After Narain Duttji, you are seniormost. You are a senior Chief Minister.

SHRI VIRBHADRA SINGH, CHIEF MINISTER, HIMACHAL PRADESH : [ In Hindi] At the outset I want to say that the States that were formed after Independence, they were formed because of the developmental aspirations and political aspirations of the people there. They wanted to have a desire to be together and work for the social development. Because of this these new States have been formed. They were created to fulfil the political, executive and developmental aspirations of the people of those States. Every State that has been formed, it has a history, it has its background. It was not created just out of thin air. Many smaller States have been formed, there are demands for many others. You have mentioned about them like Harit Pradesh, Telengana or Vidarbha. The wind is blowing in that direction. In this regard, it is the responsibility of the Central Government to look into the aspect. They have to decide whether small States are to be created or not. They have to take a decision on that.

I want to tell you one thing. There is no issue of small or big State. Be it small State or a big State, all of them are equal under the Constitution. All the Stats have got the same rights and powers - be it executive powers or financial powers or other powers. Therefore, all the States should get the equal appreciation. It gives me great happiness when I read the American Constitution. There, the Congress is there, which is elected by the people. But the Senate there - whether it is small State or big State, all have equal representatives in the Senate. In the American Senate, two members represent each State.

But in India, we do it on the basis of population. The States' representation in the Rajya Sabha is on the basis of population. It is called the Council of States. I think, there should be equal representation to all the States there to enforce the equality in decision-making and also to give equal status to all the States of the country. This is a goal towards which we should go. This is my sincere suggestion.

SHRI JAIRAM RAMESH : I think we have started off with - does India need more States. I think the general view is that while there could very well a case be made for smaller States, but right now this is not the overriding priority as far as the national agenda is concerned. There are other important issues like water, management of natural resources etc.

The second issue, of course, that has been raised by the Chief Minister of Madhya Pradesh in response to the theme on who is responsible for bankruptcy of the States, the Centre or the States - quite clearly the consensus seems to be that the Centre must have a relook at its policy of royalties and sharing of resources etc. You yourself have been talking of water etc.

I think, also the point that has been made is that there has to be a national policy on wages and emoluments and allowances for Government employees, that the Central Government cannot unilaterally decide something for itself. This is bound to have a ripple effect on the States. We are just coming out of the impact of the Fifth Pay Commission. Modiji, would you like to say on this?

SHRI NARENDRA MODI : [In Hindi] Are there problems because of the Central Government; or are there problems because of the State Government - it is a very good point that you have touched. For the Central Government, be it political reason or the necessity of that time, they start the planning. They start with a big pomp and show and the States also do it. In three or four years, the Centre withdraws that scheme. But the States have to run those schemes as they are planned. First, they talk of giving finance; but they stop it later. Like this, you will find hundreds of such schemes which would have been envisaged by the Central Government and later the Government of India has withdrawn from it and the problem would have fallen on the States.

Take the case of small savings. Gujarat is the State doing the largest quantity of small saving. But, it is given to us as loan. Even the interest on that loan is so high that for many States they have to pass through very many difficulties. Take the case of natural resources and see the surprises there. Gas is available from Gujarat. But the gas that is available in Gujarat when it reaches Delhi, it is not costly. It is available at the same price to the person at Delhi at the price at which it is available to the person in Gujarat. But, take the case of coal. If it comes out in Jharkhand or Bihar, by the time it reaches Gujarat it becomes costly. This is absolutely one way of situation of injustice.

SHRI JAIRAM RAMESH : Now, in addition to Gujarat, gas is found in Andhra Pradesh also.

SHRI NARENDRA MODI : [In Hindi] Gas is found. But the half-baked principles from the Government of India do increase the problems. Secondly, as far as the loans of the States are concerned, I have appealed to the Government of India many times that in our country, the loan should be divided in three parts. One is the loan that is taken for development and it should be in one category. The second category is the loans that are taken to meet the natural calamities. They should be in a separate category. The third is those loans to the States which are not able to run the State, pay the salaries, take loans for livelihood - that should be in third category. The interest rate should be separate for each category. The payback system should be separate. All the three things should be presented before the country. Then only, we can streamline it and that we can go ahead and strengthen our economic system. Instead of finding out who is the culprit, you should think what are the things to be done for doing good things and by consensus we can find these out and then only the country will prosper. It appears to me that the need of the hour is that those States who are proactive in the background of performing and taking initiatives, they should be encouraged. The Government of India should remain like a regulatory authority, become a catalytic agent and then, perhaps, the pace of development can be faster.

SHRI JAIRAM RAMESH : Who will bring this consensus? Whose responsibility is it? Is it of the State Governments or the Central Government? Yes, there is National Development Council.

SHRI NARENDRA MODI : The States and the Centre should do together.

SHRI JAIRAM RAMESH : Where do they meet? This argument is going on for ten years. There should be a Common Minimum Programme between the States, there should be an agreed national agenda deciding these are the responsibilities of the Central Government and these are the responsibilities of the States and these are the responsibilities of the panchayats. Who will finalise this common programme?

SHRI NARENDRA MODI : Ultimately it is for the Government of India to do it.

SHRI JAIRAM RAMESH : Through which agency?

SHRI NARENDRA MODI : The State Government will implement it. It has to be done by Central Government. It is the responsibility of the Government of India. Its leadership quality should also contain this aspect. Its bureaucratic set up should have the guts that the States should be taken towards national good, through discussions. Then only we can bring good to the country. Just by taking suggestions, by proceeding from problems up to discussion, then nothing will happen.

SHRI JAIRAM RAMESH : There is one issue on which consensus was arrived at.

SHRI PRABHU CHAWLA : Gujarat is reacting to it. I think both Vasundharaji and Sheilaji are wanting to say something.

SHRI JAIRAM RAMESH : I am going to raise something with Vasundharaji right now actually.

There is one issue on which consensus was arrived at. That is VAT, value added tax. It is the belief of many people that in the last 30-40 years this is a very important step that was taken. I want to ask Vasundharaji one thing. Although it is only two or three months that it is implemented, can you tell on it, based on this experience? Are you in agreement with this viewpoint that in the last 20-25 years this is a very important step and through VAT there has been a lot of improvement in the economic position of the State Governments?

SHRIMATI VASUNDHARA RAJE : [In Hindi] Jairamji, firstly I want to come to the question that you were asking Shri Narendra Modi. I want to come to that.

It is absolutely important that the Centre now sits down to talk to us. The Sarkaria Commission has gone a long, long time ago and gave its recommendations then. I do not think any of us have got down to revising or revisiting this issue. It is absolutely important. It is not a question of a small State or a large State. The good governance can only come about if there is fairness with the States. I think, I am just bringing to your mind, Narendra bhai has brought some of the issues to your mind; but I am just bringing to your mind that there is something lately which has been imposed on almost all of us - something called Banking Cash Transaction Tax. Basically, every time you withdraw something you will be taxed on this. If you are going to actually tax the withdrawal, I am actually going to be in a position where for relief work, for wages, for daily labour, for casual labour, for the poorest of the poor when I am paying up their salary you are going to really be charging me for this. Should we not be talking about it? Should this not be some kind of a discussion between the States and the Centre?

Similarly, you talked about the small savings. We are compulsorily to take from the small savings at 9%. Why can I not go to the market and borrow at 7%? Why should you put me into that kind of a tailspin? These are issues that we should be able to discuss. I am not going to be talking against the Centre or State versus each other. It is a time for everybody to get down to working together. The Fifth Pay Commission business has already been spoken about. You take that decision; we have to bear the brunt of it. Not that, we will not do it. But the fact is, why can we not sit down and take this decision together? It should not be a political discussion.

SHRI JAIRAM RAMESH : Don't you agree that this is the time for a new Sarkaria Commission?

SHRIMATI VASUNDHARA RAJE : It is absolutely the time for us to sit down and revisiting the Sarkaria Commission would be an important feature of this.

SHRI JAIRAM RAMESH : Okay. I want you to respond to the VAT thing.

SHRIMATI VASUNDHARA RAJE : As far as VAT is concerned, I believe that it is really one of the most important tax reforms if it went hand in hand with removal of the CST. I am told that it is a tax which is supposed to be a unifying tax. But, conceptually I believe, it cannot really co-exist with the CST. For States like us which are importing States, we get put up with a disadvantage. My manufacturer is put at a disadvantage. If he is importing from, let us say, Gujarat or Karnataka or Maharashtra or anywhere else, he has to part with 4% on the CST which becomes a major problem for him because he cannot compete with his counterpart in the producing State.

I really believe that it is very very important that we get this removed. There are only States like Maharashtra or let us say West Bengal where CST is a very major source of earning for them. But for us, it becomes a problem if you are going to make them work together. Therefore, some kind of unification, some kind of discussion is needed. There are loopholes, there are problems which need to be sorted out between the two before a regime of VAT can actually come into place.

I would also like to say one more thing over here that it would take away, I believe, from the autonomy of the State, to some extent - the autonomy of the State in the sense that because then it becomes a Central subject. The taxation levied comes down to the Central area. You are giving exemption on, may be, ten goods. But in my State, for example, today I have an exemption on 60 goods. Take things like Mehendi for example. It is a local thing and I would like to exempt it; may be something like lac, that is made by my local people over there. I would like to exempt it. Those kind of things would run into problems. I think that some kind of autonomy needs to be left with the State.

SHRI JAIRAM RAMESH : I think, one of the key problems on VAT was the position of Delhi. Maybe, the Chief Minister of Delhi can enlighten us on what is their position.

SHRIMATI SHEILA DIKSHIT : I know what her problem that you are going to say. Vasundharaji, I have that problem too. May I say one thing that VAT has been spoken about for several years. There is an Empowered Committee on which, I think, Rajasthan is a member or not - I do not know. But, I can tell you one thing that there was a time when several States said that VAT should be taken on. There was skepticism because whether the country was prepared for it or not, the bureaucracy is prepared for it or not - that is one issue.

But, to a very large extent, those States which have stepped into VAT have seen a great buoyancy in their taxation. For instance, I can say that Delhi, in the present quarter, if you compare it to last year's similar quarter, we have had a jump of nearly 30% collection in taxation. It is 30%. Now, when you talk of goods like lac or mehendi which are specific to your State, others may be specific to other States - there is flexibility we got out of that. There is a lot of flexibility that has been available. I do believe that VAT has gone into a political spin. I wish it could be taken out of that and if you all but pick it up, I think it would do good not only for the States individually but for the whole nation. In CST we are all facing that problem. But since the tax buoyancy becomes much more, as I have said, I can say 30%, 29.6% to be exact. It is nearly a 30% buoyancy. I think it is worthwhile to bring about uniformity and less corruption, more openness.

I think these are two aspects which we think we need to look at instead of just small or minor things that you are talking of. They can be resolved and, I think, the Government of India is willing. Shri Asim Dasgupta, Finance Minister of West Bengal and Chairman of the Empowered Committee is really very understanding and has looked at the specific problems that States have faced.

SHRIMATI VASUNDHARA RAJE : I would like to disagree with that. We are a member of the Empowered Committee. I do not believe that our problems of Rajasthan have been addressed. I believe that there are issues and I would not call them small issues because those issues are important for the State. It would be very very important for us. Therefore, I think that, when West Bengal makes much money on CST, Rajasthan has a disadvantage. I am afraid that I cannot go into a regime where the CST loss for three years which is going to put us in a disadvantage, if you can balance it out and bring it to a situation where Rajasthan can work along as everybody else, we would have no problem. But I think that it is important for Mr. Asim Dasgupta to spend some time with Rajasthan to find out what these problems are. Really, I think that you could divide the States between the producing and the consuming States. The consumer States would have that kind of problem.

SHRI JAIRAM RAMESH : Mr. Modi, is it your point also that tax buoyancy has come, revenue buoyancy has come in Gujarat?

SHRI NARENDRA MODI : As far as we discuss on VAT, I want to draw your attention to another point. On 1st January, 2000 all the States in the country have together taken a decision. A very healthy impact of it has been there on the development of the country, even today. That decision was that we, in the competition for investment will not give concessions and will not do that type of competition and will come out of the tax exemptions and other things. A healthy impact of that is now connected with the development of the States of the country. This is just one example how one decision impacts all the States.

As far as VAT is concerned, in principle, VAT was discussed in one forum for quite long. An opinion was also there. But one thing was said it in earlier also that as long as it is connected to all the States and by solving their problems, till that time we cannot produce its correct impact. My appeal to you is that now that it has been three months since we implemented VAT, some States have done it - the Government of India should come out with a White Paper giving details of the impact of VAT in the past three months, what happened to the States comparatively and give an assurance to the country.

SHRIMATI VASUNDHARA RAJE : Absolutely.

SHRI NARENDRA MODI : Then only, it will be convenient to the other States. Tax collection is not the only point. But, what is the position of the common man, especially the consumer? We have to address all these things and bring out a White Paper. We have to tell the country how much advantageous this new arrangement is. Some States may be left out because they have to find out whether they can solve their problems or not. Till such time this is done, I do not think that we can bring any good result of any good thing.

SHRI JAIRAM RAMESH : It is a good suggestion. You may remember that a White Paper was issued earlier. But now you are saying that it should be after three months' experience what is the position with VAT. Shri Mulayam Singhji, on this issue every Chief Minister wants to discuss. First, I will ask you, Shri Mulayam Singhji, that you are only one State, leaving Tamil Nadu, which has opposed VAT. Even now you feel that you will not implement VAT in Uttar Pradesh. After seeing this, has your mind changed?

SHRI MULAYAM SINGH YADAV : I am happy that VAT is being discussed here. Tamil Nadu came later. It was Uttar Pradesh which alone stood against VAT. Even now we are against VAT. Our position is the same as earlier. There are reasons for this. What was the intention of VAT? The intention of VAT was that in all the places there will be one uniform tax system. The second thing is that the tax system is not uniform. I am giving you one example of beer[?]. ….one line not clear

Like this there are many items. In Punjab you have made it 5% or 5.5% on some items. The basic purpose of VAT that was there, is not there now. On the other hand, you can see the difficulties that the businessmen will face. There will be criminal cases. We have to respect their sentiments. On the other hand, the CST is there. You will collect Central sales tax and the State tax also, whereas this was not the intention of VAT. You will not cancel the central sales tax; and you will impose VAT. Slowly, what is happening is that many States are now not implementing VAT.

SHRI JAIRAM RAMESH : Mulayam Singhji, many States are implementing VAT. In 22 States VAT is effective. Out of 29, it is there in 22.

SHRI MULAYAM SINGH YADAV : VAT may be there. But in our Uttar Pradesh, by not implementing VAT, there has been no effect on our economic situation. On the other hand, it has the effect in other States, the prices have risen there as compared to Uttar Pradesh. The result of this is that while we were alone, now Shri Narendra Modi has come with us, Bharatiya Janata Party also came with us whose Government at the Centre has implemented the VAT legislation. This is what I want to say.

SHRI JAIRAM RAMESH : Capt. Amarinder Singh,

CAPT. AMARINDER SINGH, CHIEF MINISTER, PUNJAB : The States that were doing tax-sharing, there has been a big effect on them.

SHRIMATI SHEILA DIKSHIT : It is correct. Mulayam Singhji, I want to tell one thing to you and Vasundharaji. From the date when VAT was implemented, I was talking about the responsive governance, we have talked with all the associations and the businessmen and convinced them. Now, when they have come in the tax net, it is not that the problem is completely solved, but they are there; but their solutions are being found. If there is a problem, then solution also comes out. In a State like Delhi which depends mainly on trade, we have only trading and nothing else, if there is loss more than any others, it is on us. We were almost cutting down our economic basis. But I want to tell you that we have got 30% benefit in this. Therefore, we need to reconsider this.

SHRI MULAYAM SINGH YADAV : Comparing Delhi to Uttar Pradesh is not correct. All the big industrialists who are all big, are there. They are not here. They stay in Delhi. They are all in its favour. But, does anybody know the position of Bundelkhand, Purvanchal or Madhya Pradesh? Is there a single sugar mill in this area? Shri Narain Dutt Tiwari was the Chief Minister four times. What is the position of Kanpur today?

All of them will be settling in NOIDA or in Greater NOIDA or in Delhi.

SHRI JAIRAM RAMESH : Greater Kailash.

SHRI MULAYAM SINGH YADAV : Or they will settle in Greater Kailash. Dear sister, Sheilaji, kindly do not compare Delhi with other States. Just by sitting here, these people will give such information.

SHRI JAIRAM RAMESH : Capt. Amarinder Singh wants to say something. This is leading to controversy.

CAPT. AMARINDER SINGH : You asked a question about the last three months.

SHRI MULAYAM SINGH YADAV : Therefore, I am saying. I was alone; now there are so many with me. VAT will not be implemented. If you are saying it is okay, you implement it.

SHRI JAIRAM RAMESH : Modiji has said that VAT will be implemented but bring a White Paper. He is not saying that it should be reconsidered.

SHRI NARENDRA MODI : I would like to repeat it. Jairamji is revolved around his own questions. I said clearly that the first condition of VAT is that there should be consensus in the entire country where the Central Government failed and because of it, it could not take along the States. Secondly, now that you have said it, in three months whatever has happened, the full details of it together with facts and figures should be brought before the country so that a new vista can be opened for thinking.

CAPT. AMARINDER SINGH : I would like to seriously say. Shri Modiji has said just now that you bring out three months' experience before us. We have been in it. Sheilaji has already mentioned it. I agree with her completely. Our experience of the past three months is - VAT has initially teething troubles.

SHRI NARENDRA MODI : Just a minute, Amarinderji. What is the improvement that has been done in revenue collection - that alone is not the criteria. What is the benefit to common man and consumer - that is the point.

CAPT. AMARINDER SINGH : Modiji, I am coming to that point. Initially, there were teething troubles, there was the fear of the unknown. People have instigated people, and there were groups of people. We sent our Finance Minister who met all the groups. Eventually, when it was implemented, today the entire Punjab is happy on this. That is one. Secondly, what you were asking as to what was the reaction in the three months. Our sales tax which used to be about Rs. 3,800 crore a year, we expect it to go to about Rs. 5,000 crore this year plus or minus Rs. 1,000 crore. It should be like this. In the first month it was about 42% increase and this month, I think, it is going about 28%. But it is going in a good fashion up.

This is the experience of those States which has done it; 22 States have done it. I am sure, other States feel the same way. But this is a positive step and definitely it will increase revenue. I think the initial fear that was there in the minds of the people, the traders - that has been removed now in our Punjab.

SHRI JAIRAM RAMESH : The CM of Chattisgarh wants to say on it.

SHRI RAMAN SINGH : For a State like Chattisgarh, which is a producing State, we produce coal, iron ore, bauxite, the problem before us is that the loss that we will have of Rs. 450 crore, who will compensate us on it? Will you exempt coal from VAT? All the States have exempted petroleum from VAT. But coal is in that category. We will have a loss of Rs. 450 crore. There is no mention in this that for a State like Chattisgarh, which is a producing State, what will happen in the coming three years? Now it is 100% compensation, then it will be 75% and then 50%. What will happen after that? We will be incurring a loss of Rs. 450 crore or Rs. 500 crore. There is no answer to this anywhere. We have raised this point. We said that you exempt the coal belt from this. Coal is produced in Chattisgarh. Chattisgarh does not do value addition to it. No alternative to this has been mentioned here. Along with petroleum, you drop coal also. With this, the loss of Chattisgarh will be reduced and our situation will improve after three years. We have placed this argument earlier also. But till now no answer has come to it.

SHRI JAIRAM RAMESH : Tiwariji, what is your experience of VAT in Uttaranchal? Is it positive or negative?

SHRI NARAIN DUTT TIWARI : On this question, I am waiting for the White Paper or the message - which was mentioned by Hon'ble Chief Minister of Gujarat just now - I am waiting for it.

I do not want to get involved. Second thing is - if you tell as an example, even after Britain joining the European Economic Community, did not accept Euro. They made pound as their thing. So, it is not that 100% one thing will be done. Some time will lapse in this. Shri Asim Dasgupta has personally gone to Lucknow to meet respected Shri Mulayam Singh Yadav. He will also see it. If he see it, then we will be compelled to see it.

SHRI JAIRAM RAMESH : Tiwariji, there is no comparison to your diplomatic skills. I want to ask Hoodaji. Haryana is the first State where VAT was involved. You have brought out an agitation that you will remove VAT. Now you are in power.

SHRI BHUPINDER SINGH HOODA : The point is I have never brought out an agitation. When VAT was implemented in Haryana, it was the first State. I said that in isolation by implementing it, the paddy growers there and those connected with it, they have to face a great loss. The paddy growers lost more than Rs. 2,000. But now it is implemented in other States. No one can deny it. It is one of the major milestones for economic integration of the country. There is something that we said in the Empower Committee. Our commitment is that along with the needs of the State, we should discuss about any variations of specific agents.

Lastly, on the CST issue, before implementing it there should be a national consensus. This is an important thing. The total income from VAT as on date is, the cumulative growth that we achieved was 44% as compared to the figure in 2003-2004. By VAT, the tax compliance is very good. There is no doubt in it.

SHRI JAIRAM RAMESH : On this issue of VAT, there is general consensus on two things. One is that it should not be seen simply from the viewpoint of revenue collection but what will be the burden on the ultimate consumer, it should be viewed from this point of view. Secondly, whatever experience has been there in the States, either positive or negative, on it one White Paper should be issued. Modiji, is it okay?

This was the discussion on VAT. So, out of seven issues, we have discussed on three issues. At this time, I think we have just 20 minutes. We want to give a chance to the audience to ask questions to the Chief Ministers and other Ministers. Should we open it up to the audience now?

SHRI PRABHU CHAWLA : The Chief Ministers will excuse me. I am a journalist so I am going to take some liberty. I am going to ask a question.

A DELEGATE : We have no option.

SHRI JAIRAM RAMESH : And you have to talk directly - Seedhi Baat.

SHRI PRABHU CHAWLA : It should be Seedhi Baat in which there should be no issue of Kintu Parantu. There are some questions in the minds of all about what is happening that a national consensus should be there. I will ask one question. I seek your pardon, you may have to give answer to it in yes or no form.

There is a tendency that before elections, all say that free power should be given to all. They start distributing. Amarinder Singhji has done something earlier, he has done something else later. My first question is this. I will start with Orissa. There also such a thing is starting. This is a habit to give free power to the farmers because they constitute a very major, important vote bank. Is it desirable or not? Yes or no.

SHRI SINGH DEO, MINISTER, ORISSA : You cannot answer yes or no because you have to get the reasons.

SHRI PRABHU CHAWLA : The question is - you can have half-a-minute of reasoning; but I want yes or no first then you explain.

SHRI JAIRAM RAMESH : I think on this, you should excuse Punjab and Haryana.

SHRI PRABHU CHAWLA : I cannot give concession to my rules. Mr. Singh Deo, please say yes or no.

SHRI SINGH DEO : Of course not. It should not be free power. In fact, Orissa is the first State which privatised power and the concept of free power went.

SHRI PRABHU CHAWLA : Okay, you are against giving free power.

Mr. _____ You give everything free. Tell me what about it here?

A DELEGATE : We are against it as we have long been, by imposing a strict regime, we have been able to provide fair policy to distribute.

SHRI PRABHU CHAWLA : Okay, you do not want to give free power.

A DELEGATE : No.

SHRI PRABHU CHAWLA : Hooda sahib -

SHRI BHUPINDER SINGH HOODA : The farmers do not want free power. They want quality power.

SHRI PRABHU CHAWLA : No, whether you want to give them free power or not.

SHRI BHUPINDER SINGH HOODA : No.

SHRI PRABHU CHAWLA : You have not given them free power.

SHRI BHUPINDER SINGH HOODA : I have not given, I will not give.

SHRI PRABHU CHAWLA : Mr. _____ will you give?

A DELEGATE : I am completely against it. Free does not have any respect.

SHRIMATI VASUNDHARA RAJE : You have asked this question earlier also. I have told you last time also that there is no meaning of free power. It should be quality power.

SHRI PRABHU CHAWLA : You have done a big favour by giving small answer. Capt. Amarinder Singh will take some time. You are one State who said it.

CAPT. AMARINDER SINGH : I would like to take some time. All the States that are talking like this, other than Bhoopi are -

SHRI PRABHU CHAWLA : First say yes or no.

CAPT. AMARINDER SINGH : No, I am going to give free power. That is what I am trying to justify.

SHRI PRABHU CHAWLA : Like a big maharaja, he wants to give something.

CAPT. AMARINDER SINGH : No, there is a reason for it. The reason which they are saying is, these are the States which are not agriculture-producing. I produce and contribute to the national food pool, nearly 50% of the produce. You expect my farmer to produce rice and you expect him to produce wheat and you are not giving him a commensurate MSP. If you do not give him an MSP, how long your MSP lasts, I do not know. But if MSP goes and your cost of all inputs are on the rise and you have given MSP, in any case what you are giving today is 1% or 2%, whereas diesel price has risen 10 rupees in the last four years. Your tractor costs are going up. The prices of everything are going up. Everything is going up.

SHRI PRABHU CHAWLA : I want to stop you here.

CAPT. AMARINDER SINGH : Please do not stop me.

SHRI PRABHU CHAWLA : I understood your point. You are saying that the raw material and input costs are going up, and, therefore, you want to give the farmer free power.

CAPT. AMARINDER SINGH : No, I am on a different issue. The small farmers have to be helped. They have to be given the MSP because the cost of production is going up.

SHRIMATI SHEILA DIKSHIT : I am not for free power at all.

SHRI PRABHU CHAWLA : Punjab has got the highest per capita income. Still he wants to give free power.

CAPT. AMARINDER SINGH : No, I do not have them. Do you know - I would like to mention this to you, Prabhuji. When I took over the State, the growth of the State was 1.81%, the lowest in the whole country. You are talking about this agriculture sector. My primary sector was stagnant. Today if the State is moving, it is because of the secondary and the service sector. But my agriculture is where it is. I have to give something to those little farmers to exist. How do they exist otherwise?

SHRI PRABHU CHAWLA : They are poor farmers. They should be given free power.

CAPT. AMARINDER SINGH : I have to do whatever I can.

SHRI PRABHU CHAWLA : The Punjab farmers are poor farmers, and, therefore, they need free power. That is the consensus you are saying. Modiji, please tell your position.

SHRI NARENDRA MODI : The focus in the country should be changed.

SHRI PRABHU CHAWLA : Please say yes or no first.

SHRI NARENDRA MODI : Instead of free power or fair power, the farmer now wants water.

SHRI PRABHU CHAWLA : We are talking about power.

SHRI NARENDRA MODI : The farmer wants water.

SHRI PRABHU CHAWLA : Please excuse me. Please talk on power.

SHRI NARENDRA MODI : The farmer wants water. There should be arrangement for giving water. The need of the farmer for electricity is for water. Therefore, he wants water. Take our riverbed projects, our check dam projects or our dam projects, we should give all these facilities. If we want to help our farmers, if we give sufficient water then the farmer will not suffer for electricity. We have done a mistake that we have handed him over the electricity wire and we are killing the farmers. The need of the farmer is water. Our effort should be on water.

SHRI PRABHU CHAWLA : Will you give free power or not?

SHRI NARENDRA MODI : Give water to the farmer. We have done the experiment in Gujarat and showed it. Gujarat did the experiment. The need of the farmer is water.

SHRI PRABHU CHAWLA : I accept your point.

SHRI NARENDRA MODI : If he gets water, there is no fight of electricity to him.

SHRI PRABHU CHAWLA : Your point has been understood.

SHRI JAIRAM RAMESH : On this, there is agreement between Narendra Modiji and Amarinder Singhji.

SHRI PRABHU CHAWLA : He is not saying it. He wants water. I understand. There are some problems of Sangh Parivar. Mulayam Singhji, please tell. Will you give free power or not?

SHRI MULAYAM SINGH YADAV : If you want to know my opinion, my party's opinion,

SHRI PRABHU CHAWLA : Please tell yes or no.

SHRI MULAYAM SINGH YADAV : I want that when the position of the farmer is not adjustable, then somewhere the farmer has to be given some concession.

SHRI PRABHU CHAWLA : It has to be given free.

SHRI MULAYAM SINGH YADAV : When this plant will be set up in Ghaziabad, and it becomes capable of 24 hours power, then we will be giving free power to the Uttar Pradesh farmers. Secondly, Shri Narendra Modi has said the important thing.

SHRI PRABHU CHAWLA : Give water.

SHRI MULAYAM SINGH YADAV : Do not take water lightly. Water is required for Sheilaji. You ask her from where she gets water. You ask her what is the solution for water.

It is because of that today in India there is no national water policy. It is a serious issue. It has been said that all the rivers of India will be combined. For 100 years it has not been done. If it is not done, the country will be lost. It is a serious issue. Now we have water in Ganga. The whole Banda area is getting damaged.

SHRI PRABHU CHAWLA : Please excuse me. Please speak on electricity.

SHRI MULAYAM SINGH YADAV : Water is the main issue of electricity. There are ponds and small rivulets. Those ponds and rivulets should be filled once again. For this, the Central Government's help is needed.

SHRI PRABHU CHAWLA : They said that they have kept lot of money for this work of ponds and rivulets. It has come in the budget.

Raja Sahib, you tell me - do you want to give free power or not.

SHRI VIRBHADRA SINGH : In Himachal Pradesh, ..

SHRI PRABHU CHAWLA : Please say yes or no.

SHRI VIRBHADRA SINGH : In the matter of electricity, Himachal Pradesh is surplus. But still, we are against giving free power to the farmers.

SHRI PRABHU CHAWLA : Shri Narain Dutt Tiwariji, kindly do not give a diplomatic answer.

SHRI NARAIN DUTT TIWARI : Giving power free or not, this question is before the entire nation. The Electricity Regulation Act is there. There is Power Grid Corporation of India. We have to give power from the Power Grid. We also have to take power from Balihal which is a power producer. We too have to take electricity sometimes because of floods or cross-springs etc. The subject of power is not of one State. It is of the entire country.

SHRI JAIRAM RAMESH : There should be a White Paper on it.

SHRI NARAIN DUTT TIWARI : White Paper or not, it is separate. This is the fact that I am saying.

SHRI PRABHU CHAWLA : What do you want to say - yes or no. Are you in favour of free power or not?

SHRI NARAIN DUTT TIWARI : Free power cannot be given in correct manner. We can say that power rates will not be reduced. The power rates should be reduced.
[Change of tape side]

SHRI PRABHU CHAWLA : You want water.

SHRI MULAYAM SINGH YADAV : The entire economy is dependent on the farmer and if the back of the farmer is broken then India's back will be broken. Therefore, it is necessary to give facility to the farmer to the extent possible. I am happy that the point which was made by the Chief Minister of Chattisgarh is right.

SHRI PRABHU CHAWLA : Yes. We heard your point. Mr. _____ please tell.

A DELEGATE : In America, the cotton growers get a subsidy of millions and billions of rupees. In Europe, for the mills millions are given to keep the farmer alive. So, to keep the poor farmers alive something has to be done.

SHRI PRABHU CHAWLA : Let Shri Chamling speak.

SHRI MULAYAM SINGH YADAV : The farmers are given more in America and Europe as compared to the Indian farmers.

SHRI PAWAN CHAMLING : I am not in agreement of giving free power. I want to produce power and sell it in the country.

SHRI PRABHU CHAWLA : Very good.

A DELEGATE [Maharashtra] : In Maharashtra we have done this experiment. We have waived off six months' bill. We gave zero bill to the farmers. But the demand from the farmers is they want quality power and a reasonable bill. We are taking efforts to give them reasonable bill and quality power.

A DELEGATE : Mr. Prabhu, I want one information. Gujarat is a State of water scarcity. We have to draw water from 800 to 900 feet down under. To solve all the problems, for water we have prepared many schemes. It is a successful story. But, along with it, Gujarat gives Rs. 1,600 crore subsidy, which is the largest in the country, to the farmers in the matter of electricity. Our appeal is how to get quality power. In that, we have succeeded to a large extent.

SHRI PRABHU CHAWLA : I will start the second question from there. Anybody who comes from doing investment from outside or from here, his saying is that India's bureaucracy is the biggest enemy of development. The size of bureaucracy should be reduced as its size is big and there is lot of expenditure. There are Pay Commissions etc. Please tell yes or no, whether to reduce the bureaucracy or not.

A DELEGATE : We have to do it in such a way that the corruption etc. is there ….

SHRI PRABHU CHAWLA : Is it to be reduced or not - yes or no?

SHRI PRABHU CHAWLA : Chamlingji,

SHRI PAWAN CHAMLING : The bureaucracy has to change. The size of bureaucracy has to be reduced and their thinking some be changed.

SHRI PRABHU CHAWLA : Shri _____, yes or no; the size should be reduced. There are many IAS, IPS officers etc.

A DELEGATE : Against 140, 85 posts are there. In Chattisgarh 42 people are doing this work.

SHRI PRABHU CHAWLA : Therefore, I am talking on the principle, not on numbers.

A DELEGATE : A very big necessity is there.

SHRI PRABHU CHAWLA : What about for the entire country? Is it to be reduced or not? In the entire country should the size of bureaucracy be reduced or not?

SHRI PRABHU CHAWLA : Tiwariji, you are a very senior Minister. In our country should the democracy size be reduced or not?

SHRI NARAIN DUTT TIWARI : In our country the habit is for the rider to ride on the horse. If he tightens the leash and keeps the bureaucracy under control, then the bureaucracy remains under control. If you are a little relaxed, then anybody in the bureaucracy or even the horse becomes uncontrollable.

SHRI PRABHU CHAWLA : I think you will have a control on all the horses. The more horses are there, the more difficult it will be.

SHRI NARAIN DUTT TIWARI : No. What I mean to say is - where is this not there, in which country it is not there. You say to run without bureaucracy or Government servants, you can call that system as service oriented people.

SHRI PRABHU CHAWLA : Do you feel that the size should be reduced or not?

SHRI NARAIN DUTT TIWARI : The size should be reasonable.

SHRI PRABHU CHAWLA : Okay. Raja sahib you say.

SHRI VIRBHADRA SINGH : The bureaucracy is very essential for running any administration. But its size should also be according to the needs there. There should be full control over the bureaucracy. Unleashed bureaucracy is difficult for development and democracy.

SHRI PRABHU CHAWLA : As on today, the bureaucracy in your State - is it okay or not, does its size need to be reduced or not?

SHRI VIRBHADRA SINGH : I have no complaint against my bureaucracy.

SHRI PRABHU CHAWLA : The size is okay for you. Mulayam Singhji, please tell about bureaucracy.

SHRI MULAYAM SINGH YADAV : You must have read from the newspapers ….

SHRI PRABHU CHAWLA : Should it be reduced or not?

SHRI MULAYAM SINGH YADAV : It should be under control. Control will be there. If the bureaucracy is not controlled and becomes uncontrollable, then it becomes very dangerous. They may not have belief in the democracy. This has been my experience now. I have belief in democracy. Whatever they want, it will happen.

SHRI PRABHU CHAWLA : Therefore, the size should be reduced.

SHRI MULAYAM SINGH YADAV : For this, we are making efforts. We caught hold of some. We caught some forest people, some ACB people.

SHRI PRABHU CHAWLA : Does the bureaucracy size should be reduced or not?

SHRI MULAYAM SINGH YADAV : The bureaucracy's importance increases depend on the need.

SHRI PRABHU CHAWLA : Please give the position of your State.

SHRI MULAYAM SINGH YADAV : As long as there is need, the bureaucracy should be there. As of today, in Uttar Pradesh the number of employee is less. It is the position in the entire country. Therefore, as per the understood method whenever there is a need he should be attended to. As on today the number of employees in Uttar Pradesh is much less. We are not able to decide as to whom we make as ASP or whom to make DM etc.

SHRI PRABHU CHAWLA : Narendra bhai, I want to put the question again. Is the size of bureaucracy in your problem a problem for you or it is an asset for you or it should be reduced, condensed etc.?

SHRI NARENDRA MODI : In the entire country, there is appreciation about the size of Government in Gujarat. Our size is quite reasonable. We have done 20% downsizing. We are implementing it. Now, in Nagar Panchayats etc. we have fixed the norms and are seeing that they should not exceed. Secondly, we have started outsourcing. Because of that also, our efficiency level has increased. Thirdly, technology is answer to this question. Instead of merely by reducing the number, the effort is on change of manner in which the people do serve. Therefore, if the technology input increases, it will help. Then the bureaucracy plus technology will give good result and in that direction Gujarat has made a good effort in the direction of good governance. Recently we have got an award from Commonwealth on good governance.

SHRI PRABHU CHAWLA : You have reduced 20%.

SHRI JAIRAM RAMESH : We have seen many advertisements of yours.

SHRI PRABHU CHAWLA : Sheilaji, please tell about the current size of the bureaucracy in Delhi.

SHRIMATI SHEILA DIKSHIT : Size is not the relevant issue. I think the relevant issue is administrative reforms, more open governance which comes through technology and also accountability and responsiveness of this bureaucracy. That, I think, is more important.

SHRI PRABHU CHAWLA : What do you say about reducing the size of the bureaucracy?

SHRIMATI SHEILA DIKSHIT : You can reduce it, you can increase it. But unless you have these parameters of accountability, responsiveness and use of modern technology, it will not lead you anywhere, whether you reduce the bureaucracy or whether you increase it.

SHRI PRABHU CHAWLA : So, I will put it like this. Amarinderji, do you think the size of the bureaucracy is a problem or the bureaucracy itself is a problem for you to do it?

CAPT. AMARINDER SINGH : I think if there is a system and that system has so many Secretaries, so many Financial Commissioners, so many Directors, so much something, that is what has to be maintained. Unless there are administrative reforms as Sheilaji says and something changes in the future, at the moment we in Punjab have no problem.

SHRI PRABHU CHAWLA : You believe in status quo as far as bureaucracy is concerned.

CAPT. AMARINDER SINGH : No, it is not status quo anyway. The fact is I do not have surplus Secretaries, I do not have surplus Financial Commissioners. If they were surplus, I would say downsize, but there is not.

SHRI PRABHU CHAWLA : Everybody seems to be happy with the bureaucracy. They are doing good work. Vasundharaji, the size of the bureaucracy - whether it is appropriate or not.

SHRIMATI VASUNDHARA RAJE : No, I agree with it. I believe that it should be a reasonable amount. As far as Rajasthan State is concerned, I do not have this problem because I do not have that many people. At the moment, as they are, they are just fitting in the slots. I do not think that we have a problem. But the problem can be taken care of if that ever arose.

SHRI PRABHU CHAWLA : You do not need to cut the size of the bureaucracy.

SHRIMATI VASUNDHARA RAJE : I do not need to because I do not have enough people.

SHRI PRABHU CHAWLA : Okay. Shri Babulalji,

SHRI BABULAL GAUR : According to my thinking, for reasonable reforms the powers of the bureaucracy should be reduced.

SHRI BHUPINDER SINGH HOODA : Ours is a small State. But reasonably, the size should be correct. It is not a question of numbers. It is a question of system. There should be transparency in the system and reward and punishment policy should be followed by the State Governments. I have not seen any bureaucrat being punished for his misdeeds. That is the position. The size of the bureaucracy should be under control. Now it has grown because of the time-scale promotion and all that. It is going up.

SHRI PRABHU CHAWLA : It should be reduced. Is it not?

SHRI BHUPINDER SINGH HOODA : For lower people there should be a limit of those who have to do the work and those who have to implement the policies. But at the decision-taking level, the size of the bureaucracy should be reduced.

SHRI PRABHU CHAWLA : Okay. Shri _____

A DELEGATE : The size has to be reduced. However, reduction of size will itself not lead to efficiency. The procedure and inspiration are to be there. There must be procedure in the form and there must be inspiration which comes really from political leadership. If I am a bad minister I can never have good bureaucracy. So, there must be political leadership.

SHRI PRABHU CHAWLA : Last word -

A DELEGATE : Bureaucratic set up is taken from U.K. As there has been technology advancement there ….

SHRI PRABHU CHAWLA : Yes or no -

A DELEGATE : As the advancement takes place, the bureaucracy will become more accountable and performing and they will need to be reduced.

SHRI PRABHU CHAWLA : They should be made more accountable and reduce the size. Jairam, would you like to conduct because we have very limited time left now?

SHRI JAIRAM RAMESH : Thank you for giving me a chance, Prabhu.

SHRI PRABHU CHAWLA : You are very lucky because I thought you got a chance.

SHRI JAIRAM RAMESH : I think, just to summarise what happened this morning, first of all, I think the Chief Ministers have spent a long time here and they have seen governance being reduced to sound bytes which is, unfortunately, a fact of life today. But, I think, that there are two big ideas that emerged from today's discussions which I just want to highlight. I think, on the issue of VAT the experience that the States have had, the problems that certain States are facing vis-à-vis other States, I think Mr. Narendra Modi's suggestion that the Central Government should come out with a White Paper on VAT implementation, not on VAT in theory but VAT as it actually happened in practice. It is something that is a very worthwhile suggestion that should get picked up.

The second suggestion that has come from the Chief Minister of Rajasthan which has been echoed in the comments of all the Chief Ministers is that the last time the relationship between the Centre and the States was looked at in a structural manner was in mid-1980s when the Justice Sarkaria Commission was set up. It submitted its recommendations in 1987. But since 1987 Indian politics and Indian economics has undergone a remarkable change. We have had economic liberalisation. Then we have had the 73rd and 74th amendments to the Constitution which were introduced and given constitutional sanction to the decentralized governance both in rural and urban India. Therefore, you need a Sarkaria Commissoin-2 to look at the whole relationship, financial relationship particularly between the Centre and the States at the one level and between the States and local Governments on the other.

Let me also say this that while the States demand decentralization from the Central Government, the States are not willing to give that decentralization to panchayats and nagarpalikas. This has to be looked at in a structural seamless way. I think the suggestion the Chief Minister of Rajasthan has given is a very good suggestion. It needs to be followed up so that many of the fiscal problems particularly that the States are facing are addressed in a systematic manner.

I think the third issue or the third idea for which I really do not have any solution but which has come again in the intervention of all the Chief Ministers is that there is need for an institutional forum where many of these issues, whether it relates to water, whether it relates to royalty on minerals, whether it relates to the problems that are being faced by, like Mr. Modi mentioned, natural calamities - I think these are issues that have to be addressed in a framework of cooperative federalism. Now, we have 29 States. We have different political parties ruling the different States. Therefore, you need a framework for cooperative federalism where the States are able to bring forward their suggestions and discuss this with the Centre.

Now, there is a National Development Council which exists, which has met. The National Development Council has met 47 times in the last 55 years - not a very good record. We all know what happens in the National Development Council. Every Chief Minister reads out a prepared text of his speech that has been prepared for him or her and there is very little discussion, very little business-like deliberations in the National Development Council. We have an Inter-State Council which is a smaller body in a way; we have Zonal Councils where some of these issues are discussed. But I entirely agree with the suggestion that Mr. Modi and others have given that many of these issues are not Centre versus State but these are issues of governance as a whole and they need to be addressed in a much more systematic and structural manner. Whether it is done through the National Development Council or whether it is done through Inter-State Council or whether it is done by a Council of Chief Ministers it is okay. I do not see why India cannot have a Council of Chief Ministers. Then, of course, you have political problems - who will take the lead etc. But the fact that all the States have people belonging to different political parties will ensure that this move is not seen as a confrontationist move of the States vis-à-vis the Centre. But, I do believe the time has come for us to think of a Council of Chief Ministers as distinct from our National Development Council. It can be a Council of Chief Ministers which meets regularly, which discusses problems of inter-State commerce, inter-State trade and so on and so forth.

So, we have got three big ideas that, at least, I have gathered from the discussion. I want to thank all the leading political personalities who have been present here for spending almost two hours. I know they are very busy people. I thank you for patiently listening to the deliberations.

SHRI PRABHU CHAWLA : I think we have very little time for questions. We have taken more time than that was required. We will take only two questions and not more than that. Shri N.K. Singh, you are the most aggressive in any way. Mr. N.K. Singh does not need any introduction.

SHRI N.K. SINGH : [In Hindi] My question is particularly to Shrimati Vasundhara Raje. At the end, while summing up the discussion that had taken place today, Jairam said -

I think Jairam, you have suggested a Council of Chief Ministers. To some extent, Vasundhara, does it really imply that the original purpose for which the NDC was created mainly to have a meaningful dialogue between the States and the Centre has over time become mechanized and meaningless and that the mechanism of the Centre-State Council which the Sarkaria Commission had suggested exactly for the purpose which has been discussed, mainly a resolution of issues which are contentious, has not been able to serve the desired objective? Therefore, I think, the first effort must be to rejuvenate the v National Development Council, make it more meaningful. Prabhu, you have not dealt with one of the issues which was raised in the seven questions - mainly the discrepancy between outlays and outcomes. Who is to do this? Perhaps, one way is that this responsibility of monitoring in a non-contentious way can be given to a rejuvenated National Development Council. The other way is to give some thought to how to really rejuvenate the National Development Council even while the next Commission, mainly the Commission holistically on Centre-State relations comes up?

Incidentally, Jairam, you should have pointed out that one of the unfulfilled promises of the Common Minimum Programme is a promise to create a Commission for Centre-State relations.

SHRI JAIRAM RAMESH : We may announce it next week.

SHRI N.K. SINGH : Vasundhara, would you like to comment on how we can rejuvenate the National Development Council and the Council on Centre-State relations? Since that Commission will take some time and I do not think we need to waste time, how to really address the issue of outcomes and outlays?

SHRIMATI VASUNDHARA RAJE : One of the reasons, I think, for your, what they call the anti-incumbency factor, is probably the difference between your outlays and your outcomes. So, we need to close that gap in any case. That, I think, is very important. In Rajasthan we have actually put together a body that is going to be looking at general budgeting and also the outcomes and also performance auditing. We are going to be looking at that because we think this is very important.

But to your main question of this National Development Council which we have all attended very recently, I just think that it is so over-sized and that there are so many formalities that the people who attend it basically make their presentations and leave. That is why, perhaps, a smaller body would be probably convened that could actually interact with each other, talk to each other, discuss it because the discussion at that kind of level probably is very very difficult. You need to be able to bring a body that will actually be able to concentrate on the issues at hand and not just make presentations and go away.

As far as the Sarkaria Commission is concerned, we were just talking about it. So many interesting things that have been actually recommended in that Sarkaria Commission are there and if you look at it, none of it actually happened. If you want to make the country healthy, because if it is a healthy State then it is going to be a very healthy country. If the States believe that they are unhealthy, there is no way that you can make a strong State. It is absolutely vital that that issue is revisited, revisited fast. But the NDC itself becomes a lean, mean machine that actually looks at this in a very cut and right fashion and that we are able to quickly put something in place because the States are growing. They want to grow. There are aspirations of the people. The difficulties that are arising is because we are unable to meet those aspirations, because some of these issues are not taken care of.

SHRI PRABHU CHAWLA : I have got a slip from Mr. Anand Jha. He is former Lt. Governor of Pondicherry. This will be the last question. Then Mr. Modi wants to make some comments. I hope they will be brief.

SHRI ANAND JHA : Mr. Chairman, Hon'ble Chief Ministers, in view of the paucity of time I will just confine myself to one remark. During the discussion on fair power versus free power, I think one of the points which could have been, because this touches upon the basic question of subsidies at the fringes, there is a Sharad Pawar Committee appointed some time in the early 1990s by the NDC which produced its report in 1994 and recommended a levy of 50 paise per unit on agriculture power supplied. This was implemented for a while in certain areas and then with the advent of the elections it was abandoned. Most of the Chief Ministers here have stated that they are against the concept of free power. But, how does one get over this temptation at the time of elections, to go in for populist measures like free power and make sure that everyone who is against free power stick to it at the time of election? I can find myself doing. Thank you Mr. Chairman.

SHRI PRABHU CHAWLA : Modi sahib, you were talking of water. Now it is on electricity.

SHRI NARENDRA MODI : [In Hindi] Shri N.K. Singh has raised the issue of NDC. I also feel that there is a necessity to reframe the NDC in a still better way. We have to reframe its working. It has become a ritual. Sometimes holding a regional meeting in it would be beneficial. Once there should be such NDC meeting where there is an occasion for discussion; then probably some outcome will come. As far as the talk of Chief Ministers' Council is concerned, it appears to me that in the federal structure of India, this type of unionism will not be beneficial. If a union of Chief Ministers is formed, then the national Government will not run. Nobody will be able to run it. Therefore, we should not promote this type of unionism. Even though I am a Chief Minister, my opinion is that seeing the federal structure of the country, that path is not correct.

The third issue that was taken up by Shri N.K. Singh is on outlay and outcome. Sometimes I feel that most of the times it appears that outlays are without layouts. That is one problem. If the outlays are without layouts you cannot produce the outcome. But we have tried in Gujarat in the reference of outlay; along with the budgetary provision with every department we have a round-table meeting. In that budget what they would exactly do and what would be its social impact - this is discussed. It should be in quantum and its accountability should be there and it should be in such a format that we are able to maintain it. We have got much benefit out of it. The second benefit that we got was of social audit. We have heavily activated the gram sabhas and strengthened them. Because of that, the level of social audit has gone very high. Because of that, the outlay has more power than the outcome in the social audit. One has to directly go amongst the people and give accounts for it - it is becoming beneficial.

The next thing that we attempted was through the help of technology, to bring transparency and because of this we are able to monitor the things in a better way. Therefore, we can reduce the distance between outlay and outcome and at some level we can increase the percentage of outcome than the outlay. Take the point of people's participation. After the earthquake, the work that we have done was we have improved the number of gram samithis. If school rooms were to be constructed, we gave money to the gram samithis. You will be surprised to know that the earthquake-affected people have saved three to four crores of rupees and returned that money. More than the outlay that was decided, the outcome has come still better and even then money was saved and it was returned. Therefore, people's participation helps us. Therefore, accountability, transparency and quantum plan projection are things which definitely give benefit.

SHRI JAIRAM RAMESH : One of the reasons why the new Sarkaria Commission was delayed, NK, is because of the fact that there was no consensus on the terms of reference and they had to get feedback from all the different States for the terms of reference which, I believe, now has come and there is going to be an announcement sooner rather than later. But I do agree with Shri Narendra Modi and the sentiment that you had expressed that the NDC should be reactivated and rejuvenated. In fact, if you read the National Common Minimum Programme, there is one innocuous statement there which appears innocuous; but in my view, it would send a very powerful signal for federalism which says that the NDC should meet at least twice a year, preferably outside Delhi. It has not met outside Delhi in 55 years.

A DELEGATE : Once it met in Srinagar.

SHRI JAIRAM RAMESH : It was not NDC. It was a meeting of Chief Ministers in Srinagar. There was no meeting of NDC in Srinagar. The problem is of security and so on and so forth. The whole set of issues is there. I think the entire issue of institutional reform, creating a forum by the States and the Centre can sit and discuss some of these issues not in a speech format but in a discussion format which leads to some conclusions which are then implemented by the respective sides - it is something that is awaiting attention both from the point of view of the States as well as the Centre. I entirely agree with you.

I have been asked just to wind up. I have actually already wound up. I was giving some of the ideas that have come. Unless you want to fill the time before Shri Bhairon Singh Shekhawat comes, is that the purpose of my winding up? I do not have much more to wind up except to thank all the Chief Ministers for their valuable time. I thank the audience for listening to the Chief Ministers, to me and most importantly to Mr. Prabhu Chawla very very patiently. I wish we had had this session a little more interactive. But for the paucity of time we were not able to do so.

I think we are now going to have a presentation by Ravi Parthasarathy on a comparative performance of States. Some Chief Ministers, of course, will then go out and have full page advertisements claiming credit for them. But, as Mr. Aroon Purie announced, this performance does not necessarily reflect on the incumbent Chief Minister. It reflects on the general administrative and development culture in that particular State. After the presentation, I think we will have the Vice-President of India giving away the awards to the best performing States.

Thank you.

MS. RINI KHANNA : Thank you Mr. Jairam Ramesh, Mr. Purie and Mr. Chawla and all the Chief Ministers, thank you very much for that spirited discussion. May I request you all to please take your seats in the front row. We have a presentation by Mr. Ravi Parthasarathy, the Chairman and Managing Director of IL&FS on the States' performance versus the potential. We will quickly change the seating arrangement on the stage as we have the Vice-President to join us in just a few moments. I request the Hon'ble Chief Ministers to please take their seats in the front row.

SHRI RAVI PARTHASARATHY, CHAIRMAN AND MANAGING DIRECTOR OF IL&FS : Good afternoon. Respected Chief Ministers, distinguished guests, Mr. Aroon Purie, friends, I think we have had a very active discussion on a very wide range of subjects. India Today requested our participation and suggested that we talk about performance and potential. I am really going to talk about performance and potential in the context of global events that are taking place. The rankings that have been done by India Today will be dealt with subsequently. But, while the rankings keep getting improved in terms of the methodology and the sophistication that was adopted, we do recognise that there are several constraints that States face. It is not always easy to do comparable ranking. Obviously the constraints are different. If your State has a very large desert area, comparing it with a State with a very large arable area will be difficult. Similarly maritime States have advantages that land-locked States do not. So, the task is only to exploit the demographic and geographic potential that you have at each State. Then we can have a discussion on comparative performance.

Today I am going to cover three issues in the context of performance and potential which has to be put in the context of globalisation. I really want to focus on three sub-sectors - employment generation, development at the level of the district and there is some reference to devolution of authority to local bodies and governance issues. If you look at globalisation, we have today indisputably an almost complete integration of the Indian economy with the global economy. We had the phased abolition of quantitative restrictions, controls on imports, tariffs coming down drastically and when I look at CNBC or Aajtak or any of the TV channels, the analysts seem to focus more on NADAQ futures and what Allen Greenspan talks about rather than any other event.

What are the implications for States? We earlier had the licensing regime where the industrial development corporations of each State took a licence and then requested industry to partner them. With the licensing regime going away, we have had a certain amount of rivalry between States which has been very healthy and as was remarked in the morning's discussions, there has been lots of populism among States and a fairy healthy level of rivalry. But today, it is no longer just a question of States competing with each other. We are looking at manufacturing competitiveness with industry moving to China versus a particular State in India, industry moving to the CIS instead of coming to a particular State in India. Now, that is the level of integration that we have already had.

The competition is not between States but also between States and other countries where Indian industry is today, as we talk, setting up ventures, setting up manufacturing facilities, even buying out companies. This is one aspect of globalisation. The second, which I feel has not been explained to the extent it should, is what are the benefits of globalisation as far as the consumer is concerned, as far as the lay person is concerned. It is not too long ago, barely 25 years ago or 20 years ago that we had one maker of watches in this country, one maker of television sets, one-and-a-half types of cars being sold, long queues for milk, long queues for almost any product. When we went abroad, our wives gave a shopping list covering everything from scissors to knives to all kinds of stuff. Today that is not there. But, I think, one of the things which we need to do at all levels and in all States is communicate that this is also the result of globalisation, this has not happened on its own accord.

Finally, it will come to what is the comparative advantage of States. We have had Porter write a thesis more than a decade ago about the comparative advantage of nations. We have to go back to the comparative advantage of States at some point in time and look at what each State has in terms of its own development strategy. Now, you can make a broad statement that Jharkhand has iron ore and Orissa has steel and so on. I think the fundamental issue is, every State has small and medium scale enterprises. We have been such an entrepreneurial nation despite colonialism and despite our decades of socialism that we still had a huge entrepreneurial spirit which is really the backbone of the economy. Now, the distribution of SMEs goes across all States. If you look globally also, whether it is Japan or whether it is Germany or France or any other country, the big companies will occupy the stock market index; but it is the smaller companies which create clusters of employment which all States require.

One of the things they are doing and this is where I feel the States can do more to attain their potential is, what do we do about the SME sector as a whole and what do we do to generate employment. This is an area which, I think, is right for discussion today. We have, in India, about 388 clusters and these clusters of industries have grown, kind of, on their own, with little or no Government support and with little or no facilities. They have been able to survive. They have been able to thrive. But then you have textile clusters, let us say in Tirupur; you have leather clusters in Andhra Pradesh; you have all kinds of clusters making every conceivable household good and these are household goods which are the result of globalisation sought in every country. The problem which arises is that when Wal-Mart comes here or any other large purchaser comes here, he wants a million units, he is not interested in buying 10,000 pieces. He wants a million units. So, we need to do something to increase the competitive advantage of clusters both in terms of scale and quality.

Here I would like to mention that we started our first experiment in Andhra Pradesh where we are trying to put in common infrastructure for 125 medium scale textile weavers with common weaving facilities. We are trying to put in common financing from our banking consortium to look after their individual loom requirements and a common security structure in order to help them also to do branding together and do marketing together. We are repeating this in Pallodam in Tamil Nadu and hopefully in Ludhiana in Punjab for garments and textiles.

The reason I am mentioning this is that there is a huge employment upside and very very numerical report - one unit of investment in I.T. which everyone talks about will generate ten jobs; but the same unit of investment in SMEs and the clusters I am talking about is generating almost 100 jobs, whether it is leather or whether it is textiles or whatever be it. The direct employment and the indirect employment is huge. It is something which is worth pursuing and if we do not do it, unfortunately, these industries will not be able to survive the scale that is required by globalisation. It is not their output. But no one is going to going to come here and buy 10,000 units and 15,000 units when they want to buy one million pieces at a time. So, this is one area which I would urge States to look at in terms of what work can be done for the SME sector.

Second is, economic development at the level of the district. We have been following a very egalitarian process of trying to encourage development across the country at the same time. We have also been reasonably envious of the products made by China. But China has not tried to develop the whole country at the same time. They have been development nodes; they have been developing the coastal regions, they have been developing areas which have become the regional engines of growth rather than looking at the country as a whole.

This is one part of the problem which is insoluble and obviously it is unpalatable for any Chief Minister to take the view that I will only develop this part of the State and not any other. But there is a second issue here. We have a very large number of Central Government sponsored schemes and there was a reference made to that in the morning's discussions. But these schemes work in silos and if you put in a rural road in one district and you put water supply in another district and electrification in the third district, they feel that they are not really getting economic progress made in any of the districts. We have been trying to look at slightly different models. Today integrated development of a singular district, which could be a kind of a model for regional engine of growth, is to be done. We are hoping to make this experiment with the encouragement of the Rajasthan Chief Minister in one of the districts of Rajasthan. I think it should work because we are trying to do it around water supply as a resource. We are trying to build in every other capability required in that district to exploit water, to take the produce to market and, perhaps, look after the other social requirements also.

So, the second issue in terms of performance versus potential is where I really believe that a focused approach on districts that have meaningful wealth or meaningful demographic potential will probably enable the State as a whole to be more prosperous than looking at the entire State especially where the larger States are concerned.

Last of all, here again there were lot of references to this in the morning's discussion. I want to focus on attitudes and processes. Let us take it at three levels - let us take it at the political level, the bureaucratic level and also the level of Government staff. Mr. Digvijay Singh is not here this time, he was here last year. But I remember quite some time back going to him and saying - 'sir, we have done this willingness to pay survey in order to impose user charges on the facility'. He looked at me and said - 'I know you have done your willingness to pay. I am sure your survey file is arrived; but formation of the issue of whether consumers have a willingness to pay is an issue where we the politicians have the willingness to charge'.

So, that was one sub-set of issues which was there because we have talked about subsidies. While it is true that every European farmer is getting 14,000 dollars per year in subsidy, I am not so sure that is the role model we need to follow. The second is at the level of the Government and the bureaucracy, these private-public partnerships. It took us almost three years to negotiate the first so-called concession agreement. Now it is being done in two months - State after State and it is not only our experience, it is the experience of all entrepreneurs. The problem is no longer signing of the agreement, the problem is adherence to the obligations under that agreement by the respective Government. This is not being done with as much alacrity as is done in the case of signing and something needs to be done on this issue also.

There was some discussion on bureaucrats. I have a lot of sympathy for the bureaucrats also. There are no incentives for good performance and there are fairly largely downsides for imaginative decision-making especially if things go wrong. So, when you talk about administrative reform I think the issue is to move from administration to management, rather than just tweak at the same processes. But shortly stated, our entire administrative structure, when we really go about things, is based on processes put in place, more than a century ago. I do not think you can govern 21st century India with East India Company processes in much less same way as Jairam commented that it is time to relook at the Sarkaria Commission and Centre-State relationships.

Last of all, change in the attitudes of Government at the level of the staff is the point. Here I want to make special mention of a very imaginative programme we are doing in Gujarat with Mr. Narendra Modi where five lakh Government personnel are being trained on attitudes. Like everything else, this programme is also being monitored very closely, independent audits are being done. I want to go back to a comment which Mr. Modi made when he inaugurated that programme. He spoke in Gujarati which I understood only partly. But if I remember right, what he addressed was that he was telling his staff that 'you five lakh people are not working for me; you all are working for five crore Gujaratis and unless you realise that you will never be able to function and never be able to deliver'. He also told the story of a policeman who was sitting at home. When his wife woke him and said - robber has come, [daku aa gaya ghar mein] he said - I am not on duty now, why should I get up. So, this is the question of attitudes at the level of working staff. Lot of programmes can be done, technology can be used and if we focus on this, I think these are the three areas where there is lot of possibility of translating the potential of each of the States into actual performance. Thank you very much.

MS. RINI KHANNA : Thank you very much Mr. Ravi Parthasarathy. Ladies and gentlemen, we are joined this morning by the Vice-President of India. Please join me in inviting me - the Hon'ble Vice-President of India, Mr. Bhairon Singh Shekhawat. May I request Mr. Aroon Purie, Mr. Prabhu Chawla and the Hon'ble Vice-President to please come up on to the stage? May I request Mr. Aroon Purie to please welcome our esteemed guest?

SHRI AROON PURIE : Distinguished guests, it is my honour and privilege to welcome the Vice-President of India Mr. Bhairon Singh Shekhawat. Mr. Shekhawat's political life covers almost the entire history of independent India. He began as a Member of the Rajasthan Assembly in 1952. In his political career spanning over 50 years,
[Change of tape side]
… this Conclave of Chief Ministers. As a pioneer of many social welfare schemes including Antyodaya which is a precursor to the Integrated Rural Development Programme, IRDP, Mr. Shekhawat knows very well what good governance is all about. I request you, Sir, to share with us what you think are the three or four most important ways of improving the current State of the States. Ladies and gentlemen, the Vice-President of India Mr. Shekhawat. Thank you.

SHRI BHAIRON SINGH SHEKHAWAT, HON'BLE VICE-PRESIDENT OF INDIA: My good friends Shri Aroon Purie and Shri Prabhu Chawla, Hon'ble Chief Ministers, Hon'ble Ministers, distinguished guests, ladies and gentlemen : Namaskar. I am very happy to be here amidst you this afternoon especially when nowadays it is rather rare to get an opportunity in the company of the Chief Ministers. I sadly miss the good old times. When I was the Chief Minister of Rajasthan I used to participate in the meetings and conferences of Chief Ministers. I, therefore, express my gratitude to Shri Prabhu Chawla for giving me the opportunity to be here in this Conclave of Chief Ministers. The Conclave is now a prominent annual event where in the open house and under full media glare, the issues of development in the States are discussed freely and frankly with the objective of giving thrust to the pace of development and achieve full potential of growth. I congratulate India today for this very laudable initiative. I was told that India Today not only believes in the age-old magazine act, yet in the living present but is also engaged in efforts for building a better tomorrow.

Friends, we are indeed very fortunate that our today is certainly much better than what our yesterday was. The significant progress since attaining Independence is a triumph of our democracy. We are today the world's fourth largest economy with the second highest rate of GDP growth. Now we are also being recognised as a responsible nuclear power in the world. These achievements naturally make us so very proud. However, when we introspect and look the other side, we find that we have miles and miles yet to go. Our biggest challenge is alleviation of poverty of 26 crore people living below the poverty line, suffering from the curse of illiteracy, disease and hunger. Equally important is the challenge of the speeding up of our growth and achieve the vision of being a fully developed nation before 2020.

Friends, the success of democracy lies in promoting people's welfare. That alone merits trust and faith of the people in this system. I, therefore, regard people's welfare as the fifth pillar of democracy. It is this pillar which is central to the stability and the strength of the edifice of democracy. All the four states of democracy are to nurture and strengthen the central pillar that will sustain people's faith in democracy as an effective system to promote their welfare. That alone lays the foundation of a better tomorrow for our people.

Friends, in the task of building the India of tomorrow, the most important role is to be played by the Chief Ministers. India is a Union of States. It is the States where the action for development lies. In fact, the real engines of the country's growth are the States. The Chief Ministers of the States know what needs to be done to overcome under-development and promote growth. A Chief Minister knows best how to promote agriculture and rural development, ensure economic empowerment of the farmers to rescue them from the tyranny of indebtedness which sometimes is the cause of unfortunate cases of farmers' suicide. The Chief Minister knows how to take care our key national concerns such as population stabilization, awareness to control HIV AIDS, protection of the environment and ecology.

They also very well know the importance to be attached to the infrastructure development without which investments for growth do not take place. The need of today is to have a holistic approach for development. What we made is planning and action for integrated development. Even more important is to determine the content of development. We need development that promotes growth with equity. To me, growth does not mean just some percentage increase in GDP. We do not need jobless growth. We need growth that creates employment opportunities, growth that alleviates poverty and bridges the gap between the rich and the poor. We need development that eradicates illiteracy, development that provides to a common man this access to basic education, healthcare and shelter. We need development which begins with welfare of the poorest among the poor. It was the conviction with which I launched the Antyodaya scheme in Rajasthan in the year 1977. Indeed the goal of promoting the welfare of the poor and the common man should be at the centre-stage of our action plans for growth and development. I, therefore, find it very heartening that some Staves have now started bringing out Human Development Reports. That signifies a welcome shift in their focus on content and direction of development.

Friends, the objective of speedy growth and promoting people's welfare will be achieved only through governance that is efficient as well as corruption-free. Quality of governance is today the most important determinant of performance. In any system of good governance it is also necessary to have transparency and accountability. As you are aware, we now have the Right to Information Act. I was the Hon'ble Chief Minister to use this law as an effective instrument of improving the efficiency of delivery system in our public programmes such as public distribution system, schemes for employment generation and various development works which provide us possible dissemination and sharing of information on progress of the implementation. Then alone the impended benefits of these programmes would reach the needy poor in full measure. Then only the financial allocations for these programmes would get converted into real achievements.

Hon'ble Chief Ministers, I would like to share one more thought with you. The challenging task of nation-building and achieving higher rate of growth requires fullest cooperation and participation by all sections of society. You need an environment of healthy Centre-State relations and better inter-State cooperation. It is rather unfortunate that several inter-State disputes, particularly water disputes are lingering for years resulting in unaffordable delay in harnessing the full potential of our precious water resources and causing tremendous opportunity loss of economic growth and development. A State may have its own psychology of pursuing the self-interest. However, we cannot afford to abdicate our combined obligation and joint responsibility towards our countrymen. So, you all design a system that works in the best interest of all concerned. I would, therefore, plead for the need of expeditiously resolving all problems, pending disputes in the larger interest of our people.

My friends in India Today, you constitute the fourth estate of our democracy. With the tremendous powers and influence at your command, you are immediately placed to play a big and effective role in the task of building a national mood for good governance, growth and development. I, therefore, urge the media for greater focus and initiatives for better governance aimed at promoting welfare of common men. Today several initiatives are being successfully undertaken even in remote areas. Let us actively generate awareness about the good practices and success stories. This would encourage their adoption and application in other parts of the country as well.

Media can be of great support to our Chief Ministers who face formidable challenges in pursuing the path of progress and development particularly in a scenario of increasing resource crunch. Only the Chief Minister knows how rough is the road of development and what it means to overcome roadblocks and the speed breakers. They very much need your helping hand of constructive support to their positive initiatives.

Ladies and gentlemen, let us all join the race of growth and development and we must run this race fast. The eyes of our youth are focused on our actions. They are anxiously looking forward to the vision of a fully developed and prosperous India before the year 2020. All of us have an obligation to keep our promises and give them a better tomorrow. The role of our assurances and determination to work in this direction, in my view, would be the real success of today's Conclave.

Finally, let me say a word about the Awards being given today to recognise and encourage good performance of the States as measured and judged in your study. To me the real significance of today's Awards lies in bringing into focus the importance of balanced, socio-economic content of development for economic growth alone cannot ensure social progress. Moreover, the people in public life and particularly those in the high position in the State, the real award is a feeling of satisfaction and fulfillment derived from fortification of their efforts in overcoming under-development, alleviation of poverty and promoting people's welfare. Such Awards alone are there to treasure. I wish them all success and many awards in future.

Friends, I once again thank India Today for having given me the opportunity to be here at the Conclave. It has indeed been a great pleasure to share my thoughts with you all. Thank you.

MS. RINI KHANNA : Thank you Mr. Vice-President, Sir. We may now request you to please receive the first copy of the Special India Today issue on India's best and worst State from the Editor-in-Chief of India Today Group, Mr. Aroon Purie?

Ladies and gentlemen, to guide us through the process of the ranking of the States and their performance, we have the Executive Editor of India Today Mr. Rohit Saran helping Mr. Aroon Purie. I request the Vice-President to give away the Awards.

SHRI ROHIT SARAN : thank you Rini. Good afternoon, ladies and gentlemen. Finally we have come to the last section of today's programme, the most awaited, probably the most coveted also. We are going to be announcing the names of the winning States. There will be many names, and some of the names will be obvious ones which you have heard before in our last two Conclaves, some will be not so obvious and at least few of them will be far from obvious. So, you will have some suspense in next 20 minutes about so to come.

But, before I go into the award categories, I would just take a few seconds to explain the basic parameters. That needs to be explained so that you understand the awards, the rationale behind them and why they are due to win. My role is only of a communicator. The study is done for India Today by two experts - Dr. Bibek Debroy who most of the people in this hall would know as an economist par excellence. He writes on almost every issue under the sun and the moon. He has been assisted by Mr. Laveesh Bhandari who sits through masses of data, day and night. Both of them are present and in case after the Awards ceremony is over you have any questions about the methodology which are not answered in the presentation here, they will be here to answer those questions.

Let me go straight into some few points that I wanted to explain, what the study is and what the study is not. There are State studies and there are State studies. Many publications, many research organisations do that. One sees a lot of studies and ranking of States in investment attractiveness. We are not about that. We have also seen lot of studies in human development indicators. We are also not about that. We actually include both. The idea is to give to India Today readers a mix of quality of life both at work and life after work and, therefore, a mix of eight factors on which we tried to evaluate States' performance to represent that - both life at work and life after work.

Obviously, there are some overlaps. For example, infrastructure - well, it will affect life after work as much as it will affect life at work. So, the factors both that will lead to investment attractiveness and human development have been included in this study. There is no readership survey taken. There is no perception involved in this. One of the data that is used is objective data, all sourced from Central sources; that is sources from Central Government. This is for no other reason than the fact that if you source data from State Governments there may be issues of compatibility. Only the latest data is used. There is definitely a valid question and there have been questions in the past that how can you compare a State like Goa with a State like Uttar Pradesh. You obviously cannot, if you use selected data. We use all the data that is normalized in the sense that almost the entire data is divided by the common factor which usually is the population. So, we give the per capita indicators of all data which makes it somewhat more comparable.

We also had started, from last year, to divide the award-winning States in different categories of big and small. How does one define big and small? There is an issue of area and there is an issue of population and both affect a State Government's ability to administer. We will give you the both. The big States have been defined as the ones which have area of more than 35,000 sq. km. and a population of more than five million. You have to fulfil both the criteria to be qualified as a big State and there were 20 such States. Small States were ten and Union Territories were five. Just to give an example, how big and large can create confusion - Delhi, as Mrs. Dikshit rightly said in the presentation, is a city-State. In terms of area, if you rank all the 30 States together Delhi will be 29th. But in terms of population it is 18th. So, that poses its own challenge and at least that is what we think. For example, Arunachal Pradesh will be ranked at 29th in terms of population but it has area and size of 14th if you rank it in the list of 30. So, both have been included.

We have seven award categories. We have the award categories that are based on the annual rankings. There are eight factors that I just presented before you. On all the eight factors we have a best small State and a best big State. After the performance of all the eight factors is aggregated into one, and we have, therefore, the award categories for overall performance. We also have some special award categories that are only for this year. As Mr. Purie in his speech said, we studied the efficiency or we tried to study the efficiency of public expenditure in some States. Unfortunately, the data was not available for all the 30 States. So, this was restricted to between 17 and 20 States. We studied this for health education and water sanitation. Actually we wanted to and Dr. Debroy suggested that we wanted to study efficiency of public expenditure for bijli, pani and sadak because that is the new, seems to be, emerging the slogan for governance. But we could not, despite the best of our efforts, develop this index. So, we will probably try it next year. We have efficiency of expenditure, index for health education and water sanitation. We also have what is called most pro-poor growth index. What we tried to do in that, as was explained, we saw the growth rates of the States and we saw the poverty reduction rates of those States and we tried to get the ratio of the two. We also developed index of economic freedom which in parts has come out before this study. But we present to you the full of it.

We also added a category of the most improved investment environment States that have improved their investment environment in the last two years. We will come to that. So, let us get into the award categories right away. We will start with the eight factors on which States are rated for the last three years. The first category is Budget and prosperity which economists may want to define as macro economy. But the basis of this award is that it studies the prosperity of the Government and the prosperity of the people and combines the two. The top three big States in this category were Haryana, Himachal Pradesh and Punjab this year and the best State in this category was Mr. Purie will just announce the name.

[AWARDS CEREMONY]

Thank you very much. Before Rini comes, I will just want to remind you that if you do have any question relating to the methodology of this study you are welcome. What we went through is the what and who of this study. But if you have any question regarding the hows and whys of this study, the people who did the study - Dr. Debroy and Laveesh Bhandari - are here, you can ask some questions right now or during the lunch.

MS. RINI KHANNA : Thank you Mr. Saran. I would now like to request Mr. Ashish Bagga, Publisher and Executive Director, India Today Group to please give thanks.

SHRI ASHISH BAGGA : Hon'ble Vice-President, respected Chief Ministers, friends, on behalf of the India Today Group I would like to take this opportunity to thank all of you to have taken time out and to have made it here for the State of States Conclave. It has indeed been a pleasure to have you in our midst. I would also like to thank our principal sponsors Videocon and IL&FS who have partnered with us on this initiative and have made it a great success.

Lunch is ready to be served. Please pick up your copy of India Today - the latest issue which carries the State rankings and enjoy yourselves over lunch. Thank you very much. Lunch is being served on the counter to my left.

Index