New Delhi, June 6, 2012:

“Hon’ble Union Finance Minister, respected Shri Pranab Mukherjee ji, Hon’ble Deputy Chairman, Planning Commission, Dr. Montek Singh Ahluwalia ji, Hon’ble fellow Chief Ministers of the North East States, State Ministers present, senior Officers of the government of India and the North East States.

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First of all, I would like to thank Hon’ble Union Finance Minister for calling this meeting and providing us this dedicated platform to highlight our unique problems that we face in the North East States. Unlike other mainland States, Himalayan States are saddled with added responsibility to ensure environmental security, water security and also promote Nation’s integrity and sovereignty as unpaid soldiers living on international border. With a very limited elbow space for development, we have been called upon to identify our strength to promote our development agenda. However, in majority of cases central norms, fiscal regulations notified at the national level and many procedural bottlenecks often delay execution or restrict us to fully harness our development scope.

Therefore, in view of our strategic socio-cultural geography, we are required to be treated on a different footing following certain modified norms or exemption for central funding over and above the tailored made annual plans. These kinds of periodic financial packages have become more important and meaningful to us after the September 2011 earthquake, which has, undoubtedly put our socio-economic developmental stride at least five years behind. No doubt, the generous release of Prime Minister’s Special Package and the NDRF funds have provided us the immediate relief, but at the same time a special one-time release of a sizeable package of Rs. 200-250 crores as untied funds would certainly act as an economic kick-starter to our growth of development as we were pursuing before the earthquake.

Your Honour is aware that Sikkim joined the mainstream in 1975. This means, we missed out benefits accruing through to the five consecutive Five Year Plans, which other states of the Country enjoyed. This practically means that Sikkim joined the planning process much later. Therefore, infrastructural development saga of Sikkim State vis-a-vis other states of India and all other institutional interventions and delivery mechanisms were introduced and begun only in 1975.

As a landlocked and sensitive border state, Sikkim as part of the North East States, is a beautiful mountain state much known for peace and tranquillity. Its people are simple and peace loving and till now the State government has been able to fulfil the socio-economic aspirations of the people. From the National perspective it has strategic importance which I need not elaborate. Surrounded by three international frontiers, the safety and security of the State is invariably linked to the destiny of the Nation itself. Therefore, from the point of view of national security, both the State and the Central government have the unenviable task to maintain peace and harmony in a sensitive border state like Sikkim. This is possible so long as tempo of socio-economic development and resulting prosperity is made sustainable on a long term basis.

The complexity of mountainous terrain, limited land resource and marketing outreach poses many a challenge for the government. As a State it has all the paraphernalia, requiring to discharge all the Constitutional obligations of a State to maintain same level of administrative, judicial and legislative infrastructures like the case with the bigger states. However, unlike bigger states with larger revenue base, there are inherent limitations of revenue generation in the case of State like Sikkim.  Living in a border State, we cannot quite obviously provoke disquiet and widespread anxiety among our people by designing or imposing new or additional tax regime on them. We are, in a way, not in a convenient position to either impose new taxes or enhance the quantum of existing taxes. Therefore we are placed in a precarious position and our plan size that way is limited due to our limited scope to increase internal revenue substantially.

Additionally, the cost of living in the hill regions comparatively is much higher on account of higher cost of transportation including head-load carriage and adverse climatic conditions which entails greater expenditure as our maintenance cost of living are high compared to other people in the plain.  We have to contend with shorter working season due to extreme cold during winter and consequently arduous situation in summer coupled with widespread disruptions during monsoons as understood in the Indian context and also additionally to suffer the onslaught of south east china monsoon. Quite obviously, we live a very hard life as all these often affect our developmental and commercial activities leading to complete disruptions for weeks together.

Sir, ever since the year 1994, the State Government has brought about economic growth and prosperity in the State by achieving unprecedented success in diverse fields. Over the years, this effort of ours have been recognized and appreciated both at the national level and by the Central Government and various other organizations/agencies. Case in point is the three National Tourism awards bagged by the State, recently in which the State, among others, won recognition under the Most Innovative and Unique Tourism Project 2010-11. category for our ambitious Char Dham project now known as the Siddheswara Dham, which was consecrated by Jagatguru Shankaracharya Swami Swarupananda Saraswati in November 2011 and opened for public Darshan. Such awards have come in many other sectors such as in rural development, horticulture/floriculture, forestry and environment, health and family welfare etc. to name a few.

We are consistently striving to bring about all round development of the people by focusing on health, education, economic sectors, capacity building and rural development while preserving our ecology and environment and the cultural heritage. Various welfare measures such as Mukhya Mantri Aawas Yojana, free education upto the level of class XII, free health service including Chief Minister’s Comprehensive Annual and Total Checkup for Healthy (CATCH) Sikkim programme, free supply of power to BPL families up to 50 units etc, are some of the unique initiatives taken by the government to achieve the target of all round development of the people.

The government realizes that for progress and development, the future generation must be given the opportunity to get the best of education to face the challenges of a global economy. Today, the State has over 350 bright students of poor families studying under a special scholarship scheme in the top private/public schools within the State and the country. The State has also taken the responsibility to provide full scholarship to any Sikkimese student who qualifies to study in any of the top twenty universities of the world. All these are being done with a clear vision to prepare the manpower for the future.

Another unique programme which perhaps is the first of its kind in the country is the capacity building institute established in the state. It provides opportunities to unemployed youths and school dropouts to acquire meaningful skills to seek jobs or for self employment. There are networks of 30 livelihood schools located in various parts of the State, all of which are under the management and control of the capacity building institute. The main objective behind this initiative is youth empowerment through skill development so that they remain gainfully employed,   contributing their share in the nation building process. As far as possible, trainings are oriented towards meeting local employment demands as also imparting business and entrepreneurship skills to the trainees who, otherwise, may end up being anti-social elements or deviants in the society.

We are aware that we need to create more and more employment opportunities for our people as we progress in the field of education and human resource development. Much has been achieved in the field of education, already. According to 2011 census figures, 82.20 % of our people are literate as against the national average of 74.04 %. The State has set itself a goal to achieve 100% literacy by the year 2015.

We have initiated concerted action in the field of tourism, horticulture, floriculture. In order to re-attain our pre-earthquake tract record glory, soon we will be marching to better tomorrow. The Economic Package that I have referred to above would be allocated in these areas. But at the same time, it is difficult to projectise each and every requirement and hence we have asked for untied funds. We stand committed to make Sikkim state a fully organic state by 2015. Central support in the form of infrastructure and marketing are necessary.

Absence of large corporates in the State, compels the Government to be a major player for generation of employment opportunities in the State. This is borne out by the fact that our financial implication on salary alone is likely to exceed      Rs. 1300 crores in the current financial year. For a resource starved State, this is a huge amount but at this stage of development we do not have much alternatives other than to keep our masses fully engaged in constructive activities.

However, Sir, I am quite optimistic about the future as we have taken up number of measures targeting revenue generation and employment as also improve the general condition of our people. We are earnest about our goals and have identified over 16 missions covering wide spectrum of economic, education, health and other social sector issues most of which are expected to be achieved by 2015. This is road map and all our developmental activities are oriented towards achieving the mission goals.

Today in Sikkim we have made the Panchayati Raj Institution strong and vibrant through the process of decentralization both in terms of power and funding. More than 70% of our budget is allocated for the development of the rural sector as part of our policy initiative ever since 1994. Most of the projects in the rural sector are now being implemented through registered cooperative ventures, thus ensuring active participation of the rural masses in the development process. Adequate reservation in the panchayati Raj system has ensured equal participation by weaker sections of the society in the decision making process, also.

The Chief Minister’s Rural Universal Financial Inclusion Programme aims to provide universal access to formal banking services to rural Sikkim and to empower rural women. It entails opening of a saving bank account in the name of the mother of the nuclear family. Over 65,000 rural families are expected to get the benefit from this innovative scheme. This will ensure efficient and timely delivery of social benefit schemes like MG-NREGA, old age pension, Rural House schemes etc by direct transfer of funds to the saving account of the beneficiaries. The preparatory activities and pilot MG-NREGA wage transactions are already being implemented in 25 Gram panchayats and a total amount of Rs. 30 lakh has already been transacted in favour of 6000 families.

We are also in the midst of reconstruction of around 8000 houses damaged during the last earthquake at a cost of Rs. 391 crores

The progressive stance of the State government has started yielding positive results cutting across sectors. The GSDP at Constant Prices rose from Rs. 1739.32 crores in 2004-05 to Rs. 3343.11 crores in 2009-10 and it is expected to maintain growth rate of 8.95 % per annum. Per Capita Income at constant Prices also rose from Rs. 30,730 during 2004-05 to Rs. 55,441 during 2009-10 and this is likely to increase to Rs. 59,806 during 2010-11. The encouraging growth has been reflected in terms of reduction in poverty level from 30.9 % in 2004-05 to 13.1 % in the year 2009-10 as against national level of 29.8 % for the same period.

Even though the State has been facing resource crunch, Sikkim State has been a law-abiding and fully following the central directives.  It has not lagged behind to implement the recommendations of the 13^th Finance Commission to bring about fiscal reforms. The Fiscal Responsibility and Budget Management Act was passed during the financial year 2010-11. The 13^th Finance Commission has awarded incentive of Rs. 200 crores to be released within the period of three years in recognition of the effort put by the State in achieving considerable progress in fiscal reforms. With the implementation of the FRBM Act, the state is now entitled to state specific grants for various projects amounting to Rs. 400 crores for the award period of 2010-15 along with debt interest relief facility provided by the 12^th Finance Commission.

Sir, we are grateful to the Central Government for the increased plan outlays in the past. But at the same time I am constrained to point out that we have not been able to reap the benefits of some centrally sponsored schemes such as JNNURM, AIBP etc.  Besides, we understand that the Government of India has not extended JNNURM beyond 31^st March. Although these components inflate our annual State’s Plan allocation, we are not able to access the funding fully as they come with stringent conditions, for which it is not possible for a hilly State like Sikkim to fulfil due to inherent ground conditions. Under the circumstances, as of now most of these National schemes which are earmarked within the plan just remain a cosmetic increase leaving the State with less plan resources to take up other centrally sponsored schemes under NEC and NLCPR which have state share components. As a result many such schemes remain incomplete for want of State share contribution.

With FRBM enacted, there is little room to manage the resources to bridge the deficit gap. One way is to reduce non-plan revenue expenditure and the next alternative is to increase internal revenue generation both of which are difficult options in a State like Sikkim, as explained earlier. The last option is to borrow within the limits imposed by FRBM Act and Rules. Unfortunately, in the last financial year, this option too failed to materialize as RBI could not raise second instalment of market borrowing amounting to Rs. 40 crores.

In view of the restricted resource position, the SCA (untied) are being used for on-going projects. Further, because of the damages caused by the September, 2011 earthquake, internal resource generation by way of trade tax, user charges from the energy and tourism sectors led to substantial shortfall in revenue. This trend is likely to continue for some years especially in the power sector as the commissioning date of some of them have been deferred on account of damages caused by the earth tremor. This means, the State is likely to face resource gap in the near future unless the Centre comes forward to help the State to tide over the difficulty through appropriate interventions.

Accordingly, in my humble submission, I would like to place the following issues for kind consideration of the Union Finance Ministry:

1)    Grant of special package of Rs. 600 crores for completion of ongoing projects as well as to bridge the resource gap. The details of the ongoing projects will be submitted in due course of time.

2)    Grant of special package of Rs. 150 crores for roads and bridges, to improve internal road connectivity duly facilitating, among others, marketing of horticulture and floriculture produce which is a priority sector in the state.

3)    To develop some mechanism to account for cash balance of the last financial year in the ensuing financial year to curtail, otherwise, inflated fiscal deficit on account of booking expenditure against such cash balance.

4)    Sanction and release of Centrally Sponsored Projects on time to discourage building of cash balance on account of release of central funds at the fag end of the financial year.

5)    To maintain status quo in respect of Rural Infrastructure development Fund (RIDF) interest rate at 6.5% for North East States taking into consideration that project costs in the hilly areas are much higher than those of favourably located States.

6)    Ceiling imposed on borrowing for State like Sikkim under the FRBM clause for long term soft loan may be lifted and a 5 year moratorium granted for free access to financial institution for need-based market borrowing.

7)    To allow carry over of shortfall in market borrowings to the next fiscal year in view of loan limitation imposed by FRBM Act or when such borrowings are not accessed due to higher cash balance.

8)    To develop some mechanism to raise market borrowings in case of smaller states through RBI.

9)    Revision of scheme formulation and guidelines to meet the special requirements of the hilly and difficult areas instead of basing it on common guidelines being made applicable across the board for all states.

10)                       Reference difficulty to access central funding under certain CSS including JNNURM etc. we seek your kind intervention to facilitate easy, untied transfer of funds for a more need-based relevant schemes identified under state roads, schools, power, water supplies etc.

I hope the issues raised by me will get due consideration of the Hon’ble Finance Minister for finding appropriate solutions.

National Highway 31A is the only lifeline of Sikkim linking Siliguri and Bagdogra, the nearest rail head and airport, respectively. In case of any disturbance to this vital link, the State remains cut off with the rest of the country for days and weeks together. Of course, we are grateful to the Central government for sanctioning the airport and the railway projects to improve the connectivity to the State which will take some more time to be functional. Likewise, an alternative highway project which was under active consideration of the Central government is also yet to materialize. Upgradation and extension of our roads falling under the purview of BRO should be expedited before more harm is done to our existing infrastructure.

As people living in the border State, we have witnessed that Infrastructure on the other side of the border has been world class. A matching network of infrastructure building should commence in Sikkim also as national project. Not only border areas but district and important towns connectivity is equally important and should be treated for development as national projects and not leave it to the State budgetary resources. Because these roads are lifeline for the entire state and everything is regulated through these roads.

There is also the issue of internet and telecommunication connectivity which is of vital importance these days to bring about the desired change wide spectrum of development. I firmly believe that the Ministry of Finance would come out generous to help us address all these issues in areas such as education, power, water supply, communication and transport connectivity etc. to create long terms socio-economic stability in Sikkim.

State Plan is drafted every year. However, we cannot foresee actual cost implication in terms of risk management and rehabilitation of damages likely to be caused due to natural calamity during monsoon seasons. Although we get a little over Rs. 20 crores under NDRF every year to take care of these calamities, this is hardly sufficient. The major brunt of calamity is borne by the state, district roads for which we would require immediate restoration in public interest and we have no separate allocation provided under state plan leading to spill over owing to this. Therefore, once in 5 years, this may be assessed and the exigency cost borne by the State may be provided for as additional component in State plan. To start with, the Finance Ministry may give us Rs. 150 crores for this financial year.

Sir, I conducted 42-day tour, in stages, covering the whole State, accompanied by the elected representatives and senior bureaucrats, during the last financial year. This was an effort to understand the peoples’ hardships at their door steps and evolve measures and schemes to solve many of their problems. It was also to gain additional insights into our development impacts from the grass root level as part of an exercise to formulate 12^th Five year plan proposals and take stock of the status of schemes sanctioned for the rural sector. The decisions taken during the tour has been documented and laid before the august House in the last Assembly session. This is an indication of the importance given by the State Government to bring about inclusive growth and development as envisaged in the national plan proposal.

Our states from North East in general and Sikkim, in particular, is uniquely placed. As a landlocked, earthquake-prone hill State, we encounter multiple problems imposed by natural calamity and our locational disadvantage. This impacts our development drive and many a times we lose out our momentum in our planning process and implementation of various developmental schemes earmarked for us by the Centre and schemes identified at the state level based on our natural resources. Therefore, we require more support to address our unique problems. And towards that aim, today’s interaction has been very fruitful.

I take this opportunity to convey my thanks to the Finance Ministry for convening this special meeting to hear our problems. And hearing each other on a regular interval will facilitate a more intimate understanding of our problems we face in the far flung areas, so far away from New Delhi. My special thanks to the Hon’ble Union Finance Minister for chairing the session.

Thank you and Jai Hind“

 

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