New Media

Fiscal discipline boosts
M.P's image & credibility

Madhya Pradesh (M.P) is upbeat about its position within the country. The reasons are manifold. First, the state has a new and youthful Chief Minister in Shivraj Singh Chauhan, who is committed to implementing the promises made. Fiscal discipline is a major measure, followed by a host of others, including the development of infrastructure. The list is long.

Besides fiscal discipline, efficient fiscal management and austerity measures adopted by the state government during the last two years, have resulted in positive changes in the finances of the state. The credibility of the state in the financial market has shown unprecedented improvement, reflected in the over subscription of the development bonds floated by the government.
The state government is sincere in delivering on promises made. A special thrust and a sense of urgency is noticeable within government departments. To begin with, a special review cell has been created under the general administration department for this purpose and all concerned ministers have to constantly review progress.
The government has undertaken many fiscal reform initiatives during the year 2004-05. Some measures are of a macro economic nature and some are micro economic, relating to procedures and processes. The present government has made efforts to bring the revenue deficit down to Rs. 4,009 crore during the year 2004-05. The financial improvement has enhanced the state's image in the country.

The state government has also reversed the trend of spending borrowings on day-to-day expenditure. Today, a large part of the borrowings is spent on capital works. This will ensure that there is a return on the capital expenditure, which can be used to repay interest and the principal in the future.
Due to greater emphasis laid on the development of infrastructure by the present government, the capital outlay has gone up to Rs. 4951 crore in 2004-05 and is expected to cross Rs. 5000 crore this year.
The state government has also taken effective steps to curb tax evasion and to improve tax recovery, which resulted in an increase of 19 percent in revenue collections this year in comparison to the previous year.
An unprecedented increase in tax and non-tax revenue collection has also been registered by March 2005. An increase of 9.80 percent has been registered in excise revenue, 18.89 percent from commercial taxes, 12.55 percent from forest and 13.65 percent from mining. Under the small saving schemes 13.86 percent more amount has been collected during the financial year 2004-05 in comparison to the previous financial year.
Similarly, an increase of 28.35 percent has been registered in the revenue collected from stamp and registration.

As a result of the improved financial management, the state government did not have to resort to over-draft even for a single day in the last financial year as against 47 days of over-draft in the previous year. It is after a long period of 16 years that the state government did not have to resort to over-draft even for a single day. This year so far the state has not even resorted to ways and means advances (WMA). The state development loans have been oversubscribed by 35 percent. The state government has swapped high cost debt of Rs. 1227 crore with low cost debt resulting in savings of Rs. 56 crore. The state government has also taken liabilities of Rs. 3,000 crore of MPEB, which also improved the image of Madhya Pradesh among financial institutions.
A provision of Rs. 250 crore has been made for restructuring of public sector undertakings and discharge of liabilities. The Fiscal Responsibility and Budget Management Act has been passed by the state assembly, which would help transparency and fiscal stability. A guarantee redemption fund is being set up to set aside resources for loans guaranteed by the state government. A cyber treasury would also be set up in the state in the next financial year.
Amongst the administrative streamlining are quite a few steps. For example, a new rationalized excise policy has been formulated and overall state excise revenue has increased. A new dispensation has been put in place to provide copies of five-year khasra to farmers within 10 days of submitting application. Arrangements have been made for demarcation of land within one month after due payment of the land demarcation fee, a step in the right direction considering the time involved with this activity previously.

The government would like to encourage cultivation and marketing of medicinal plants and the processing of medicinal herbs will soon start at Sehore, Seoni, Satna, Chhindwara, Katni and Shahdol. Process is on for the establishment of small godown-cum-processing centres at Chhatarpur, Sidhi, Satna, Jabalpur and Dindori for collection, processing and sale of non-nationalized minor forest produce. A five-year strategy is in place to boost cultivation of medicinal and aromatic plants.
A Deen Dayal Self-employment Scheme has been introduced from August 2004 for educated unemployed youth from all sections. Under the scheme, a maximum amount of Rs. 50,000 is given to the beneficiary as margin money to obtain bank loan for self-employment. A margin money of Rs. 5.22 lakh has been deposited for loans in the last financial year for unemployed scheduled caste youth under the Rani Durgavati Self Employment scheme.
A Madhya Pradesh Trade and Investment Facilitation Corporation has been set up to facilitate industrial investment by major industrial groups and NRIs.
A special concession package has been announced to encourage food processing and herbal medicine industries. Electricity bills of farmers having irrigation pumps of 3 to 5 horsepower from January 1, 2001 to December 31, 2005 has been waived. Minimum charge on metered irrigation pumps is not billed. Following the principle of "billing only the actual consumption", it has been decided to carry out cent percent metering and so far, 48 lakh meters have been installed.
Arrangements are in place now for procurement on support price of crops immediately after harvesting. And a comprehensive strategy has been implemented to encourage formulas for preparing bio-fertilizers and bio-pesticides. Arrangements have been made for training farmers in application of modern techniques of cultivation of fruits, medicinal and aromatic plants and flowers.
Directives have been issued to municipal corporations, municipalities and nagar panchayats to ensure construction of rainwater harvesting structures in the new housing schemes in urban areas. A Simhastha Mela authority has been constituted in order to expedite disposal of pending court cases and 361 posts of civil judges created. All vacant posts from civil judge to district judge have been filled up in the lower courts. A recommendation is forwarded to the central government for filling up vacancies of judges in the high court.
Since roads are an integral part of infrastructure, the emphasis of the government is for widening and strengthening the road network. Madhya Pradesh has 72,000 km length of roads including 4600 km of national highways, 8300 km of state highways, 10,800 km of major district roads and 48,600 km of rural roads. Most of these roads were in devastating shape and thus the state government has given priority to improvement of roads in the state. A total length of 12,000 km roads has been constructed in the last two years.
A provision of about Rs. 2000 crore has been put in place for the construction of roads. Madhya Pradesh Road Development Corporation has been set up on 14th July 2004 to carry out work with private capital investments. The corporation has been given the status of a state highway authority and all the 29 state highways with a length of 8099 km are under the Corporation. The length of important district and other roads is 11,114 within the state.
In keeping with the promises made, adequate power supply has been ensured to farmers and there are no power cuts in the state. The consistent efforts by the state government, the recovery of electricity bills has increased by 25 percent in comparison to the previous year. Other measures have been taken to improve the condition of Madhya Pradesh State Electricity Board and separate companies have come into existence for generation, distribution and transmission of power.
The state government will generate 2,100 mw additional power to meet the gap between demand and supply and will become self-reliant in the power sector by 2008. The power plants, which are going to be completed within the next three years, include the 520 mw - Onkareshwar Hydel Power Project (by Dec, 07) and 500 mw - Birsingpur Thermal Power Project (by Dec, 06).
Negotiations with the private sector are on for investments in power generation. The projects to be covered under it include the 400 mw Maheshwar Hydel Power Project, coal based 2000 mw Mahan Thermal Power Project (Essar), 360 mw gas-based Aban Thermal Power Project (Jhabua), and the 430 mw gas based Guna Thermal Power Project (STI Power).
In the distribution sector 2641 km of 33 & 11 kv lines, 130 power transformers, 19 EHV sub-stations have been set up during 2004-05 & 2005-06.
A historic memorandum of understanding has been signed between the Central Government and the state governments of Madhya Pradesh and Uttar Pradesh, for the country's first river linking project to interlink Ken and Betwa rivers.
Madhya Pradesh and Rajasthan have agreed on a project for inter-linking Parvati, Newaj and Kalisindh rivers with the Chambal. On completion of the project, utilization of the entire water of the Chambal basin in both states would be a reality. At present only one-fourth water is utilized and the master plan for the project is underway.
An action plan has been implemented to create a better climate for capital investment, augmenting employment opportunities, removing industrial sickness and increasing economic growth rate. The policy has been implemented for a period of five years from April 1, 2005. Under the policy measures have been taken to develop M.P as an industry-friendly State.
Under the industrial promotion policy, Madhya Pradesh Trade Investment Facilitation Corporation Limited (TRIFAC) has been set to enable prompt disposal of proposals for an investment of over Rs. 3.0 crore. Besides, an industrial advisory council headed by the Chief Minister has been constituted and a high level empowered committee has been formed under it for single window clearance. The committee would take decisions in cases of establishment of mega projects involving capital investment of over Rs 25 crore. Besides, a textile advisory committee and a pharmaceutical advisory committee have also been formed. The high level committee has cleared ten proposals of over Rs. 22 crore so far.
Separate clusters are being developed keeping in view the resources of different areas. A Rs. 70 crore auto cluster is being set up at Pithampur (Indore), another Rs. 1800 crore auto testing track will also be set up there. A Rs. 67 crore engineering cluster is being developed in Bhopal and a pharmaceutical cluster is being set up at Pithampur. All these are likely to put Madhya Pradesh as a world class destination for investors both from India and abroad in the auto component industry.
An industrial infrastructure development fund has been set up to remove the financial difficulties in the development of industrial infrastructure. An information technology park is also being set up at Indore. Preliminary preparations have been made for establishment of a gem and jewellery Park at Indore for making ornaments, cutting, polishing, designing and marketing of precious stones at Indore. A stone park is being set up at Katni.
Infrastructure conforming to international standards is being developed on about 2500 acre in the country's first ever-Special Economic Zone in Indore with the status of a foreign territory. The state government has cleared the docks for establishment of the 60 lakh tonne per annum capacity, Rs. 9,000 crore Bharat Oman Petroleum Refinery, at Bina. After the Oman Refinery and the Bharat Petroleum Company presented their stands, the Madhya Pradesh government granted heavy concessions to facilitate its early establishment.