PM asks states to remove inter-state trade barriers

Chandigarh, Sept 28 | Updated: Sep 29 2006, 05:30am hrs
Expressing concerns over northern states poor growth, Prime Minister Manmohan Singh on Thursday called for the removal of inter-state trade barriers to ensure Indias overall development.

To make a beginning, he asked ten northern states to go slow on fiscal incentives for industry, suggesting swift improvement in tax systems and free trade.

Worried about the disparate economic growth in these states, which had been trailing the national average, he said, The largest barriers to trade have been our tax systems. Tax systems have been put in place which act as hindrances. Tax breaks and shelters have been created to facilitate development of backward regions. Physical controls through permits and checkpoints increase transaction costs for commerce. When the whole world is moving towards dismantling barriers to trade and promoting trade facilitation, it is imperative that states in India too realise that these policies which may be driven by revenue or development concerns will not pay off in the long run. I am told that free flow of trade can add up to 2% to state growth rates across the region.

Singh was addressing the chief ministers' conclave, organized by PHDCCI, here.

Assuring the CMs of the region that the Centre would be a partner in progress, Singh said his government was committed to helping the region.

Singh observed human resources needed to be backed by top-class infrastructure. You must take advantage of the national urban renewal mission to change your urban landscape and make your cities modern, productive and attractive. He said northern India needed new urban centres and the region must see a wave of city development.

Speaking on the need for better governance, and therefore eGovernance, Singh remarked, In the final analysis, what will differentiate one state from another is the quality of governance and make public service more effective and efficient.

You will have to provide the leadership and vision to ensure that government institutions perform better, attitudes change and taxpayers get their moneys worth. E-governance can make a government more citizen friendly and business friendly.

On the need for power and water resources, the Prime Minister stated development and efficient management in these areas were vital for sustaining economic growth and improving the quality of life. The northern region can cooperate in many areas to provide a superior resource and infrastructure base. The region is criss-crossed by rivers. States should establish cooperative mechanism to manage water resources - both in quantity and efficiency. The region has a power shortage of over 10%. Here, too, states can cooperate to promote better generation and utilisation of power across the regions.