States not ready for decentralised foodgrains procurement: Naidu

Our Economic Bureau

New Delhi, May 22: ANDHRA Pradesh chief minister Chandrababu Naidu has said that state governments were not in a position to support decentralised procurement of food grains and would face several problems if given the responsibility.

Speaking to reporters during a seminar on ‘Fiscal Policies to Accelerate Economic Growth’, Mr Naidu said that since no state had made any prior preparation on the front, they were ill-equipped. “All of a sudden, no state government is in a position to handle the issues associated with procurement.”

Mr Naidu said that he was confident that the committee of chief ministers constituted by the government to deliberate on the issue would work out a feasible solution.

Addressing the seminar, Mr Naidu said that for bringing about fiscal reforms, it was important to decrease establishment expenditure, undertake public sector reforms and encourage public participation in decisions to spend public money in an effecient way.

In his presentation, Planning Commission secretary Dr NC Saxena pointed out that share of states in overall Plan expenditure was expected to fall to 37 per cent by the end of the Ninth Plan from 41 per cent during the Eighth Plan and 50 per cent during the Fourth Plan. State Plan resources have increased by only 21 per cent in ten years from the Seventh Plan to the Ninth Plan, he said.

The contribution of the balance of current revenue to the financing of state plans, which was as high as 28 per cent in the Sixth Plan, has now fallen to (-) 52 per cent in the Ninth Plan, he said. State governments are borrowing more and more to finance non-plan revenue expenditures, rather than capital expenditure, he said. “If reckless borrowing is not kept in check, some states may be forced to declare financial emergency in the Tenth Plan.”

Dr Saxena said that in order to wipe off the revenue deficit in five years and bring down the combined fiscal deficit of 10 per cent of GDP to 2 per cent, some tough decisions had to be taken, like putting a freeze on new hiring, downsizing and redeployment in essential sectors, radical changes in the conditions of the civil service, liquidation of public enterprises, tax reforms and better governance necessary for tax compliance.