According to official sources, the prime minister will stress upon the states to sign MOUs with the finance ministry for streamlining their fiscal situation. Uptil now only eight to nine states have sign the MOUs with the finance ministry and committed themselves to improving their respective fiscal positions.

The meeting, apart from chief ministers of certain important states, will be attended by finance minister Yashwant Sinha and deputy chairman of the Planning Commission K C Pant.

Sources pointed out that meeting will also review the overdraft position of states which has reached menacing proportions. Amount of overdrafts taken by the states totalled less than Rs 90,000 crore in 1997-98. The overdrafts went up to Rs 1.6 lakh crore in 1998-99 and jumped up to Rs 2.6 lakhs crore in 1999-2000. The amountis likely to increase further during the current financial year manifesting the precarious position of the state finances.

The other important issue likely to crop up during the meeting is urgency of increasing user charges for items like electricity, water and transport. Although most of the states in principal have agreed to enhance the user charges, they have shied away from implementing it for fear of political backlash. Both the prime minister and union finance minister are likely to make a case for increasing user charges to economic levels. Sources added that this would help the utilities garner funds for growth on one hand and prevent misuse of scarce resources on the other.

The meeting will also take stock the progress being made in implementing the value added tax (VAT) regime. Although most of the states have implemented the floor rates of sales tax as decided at the meeting the state finance ministers, some have yet to initiate requisite steps. The issue is likely to crop up at the conferenceand states will be persuaded to implement the decision with regard to floor rates of sales tax.