The Hindu : Strategy to push States on reforms

Online edition of India's National Newspaper
Friday, Feb 15, 2002

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National

Strategy to push States on reforms
By Alok Mukherjee

NEW DELHI, FEB. 14. After the successfully inducing States to go in for power sector reforms, the Centre is considering a similar move in case of reforms in other sectors.

Modelled on the lines of the Accelerated Power Development Programme (APDP) under which additional financial assistance to States is linked to undertaking reforms in the power sector such as compulsory metering of all consumers, operating State Electricity Boards on commercially viable lines and disbundling of power transmission and distribution operations, the new strategy under consideration is to link Central devolution of funds to achieving milestones in reforms programme.

The Finance Ministry is considering a proposal to hand over the task of monitoring the system of memorandum of understanding (MoUs) that it had signed with some States to the Planning Commission. Under the MoU programme, the States have been promised additional funds as and when they reach prior- identified milestones in terms of fiscal discipline, better resource mobilisation, including higher user charges for services provided by the Government.

The view in the Government is that the Finance Ministry is sometimes exposed to political pressure in case a particular State has not been able to achieve the targets listed in the MoU but still wants additional funds.

The Planning Commission, on the other hand, has been successful in warding off some of the pressure, the prominent example being the case of J&K where the Annual Plan finalisation was held up last year as the State had failed to achieve the targets listed out.

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