Nitish Demands 'Special Category State status' for Bihar

Patna, June 21 (UNI) Chief Minister Nitish Kumar today demanded the centre declare Bihar as '' Special Category State'' and provide it developmental and economic package.

Accompanied by Bihar Deputy Chief Minister Sushil Kumar Modi, who also holds the Finance portfolio, Mr Kumar handed over a voluminous memorandum to Mr Chidambaram during a meeting at One Ane Marg and requested him to initiate steps necessary to take Bihar on the developmental path.

The charter of demands included reconsideration of the conditions for availing debt relief facility under 12th Finance Commission, rescheduling of market loans, expansion of branches of banks and their strengthening, extension and enhancement of Bihar Special Component under Rashtriya Sam Vikas Yojana (RSVY) to the 11th five year plan and other things.

Mr Kumar requested the Union Finance Minister to consider the issues, favourably and assist the Bihar government in the development of the state.

Demanding Special Category status for Bihar, the memorandum referred to the resulotion, passed by the state Assembly on March 4, 2006, in this connection, and requested developmental and economy package at par with the packages given to Himachal Pradesh, Uttaranchal and North Eastern States.

In the memorandum, the state government had mentioned the huge financial dues to the tune of Rs 1669.50 crore which had to be realised from Jharkhand as per Bihar Reorganisation Act- 2000 and requested Mr Chidambaram for an expeditious settlement of the issue. As per the Act, payment of pensionary and other terminal benefit for the employees superannuated before the bifurcation are to be adjusted between Bihar and Jharkhand. Bihar has to receive from Jharkhand Rs 1669.50 crore as on 31.3.2005 without including the interest on such outstandig dues.

It further mentioned the dues on account of the state government Guaranteed Bonds under which dues of Rs 221.38 crore are outstandig as on 31.3.2005 which was likely to have increased by a few crores as of date.

The Bihar government had repeatedly taken up this issue with the Centre and the government of Jharkhand as in view of the FRBM Act adopted by Bihar, these dues are likely to adversely affect achieving the fiscal targets in terms of Fiscal and Revenue Deficits envisaged in the Act Requesting to reconsider the overriding conditions for availing Debt Relef Facility under twelfth Finance Commission, the Bihar government claimed to fulfil all other criterion. The overriding condition will make Bihar ineligible for the relief amounting to Rs 1926.02 crore.

This condition was wholly unjustifiable. Bihar had a low fiscal deficit of Rs 1241.87 crore, just 1.98 per cent of GSDP as the expenditure was very low in view of three month (crucial ones-Dec.-March) long freeze on expenditure following enforcement of the model code of conduct.

This was much lower than the trend level of fiscal deficit during the previous years. It was not possible for the new government to keep fiscal deficit at this low level right in the beginning when the target year as per the FRBM Act was to bring down fiscal deficit of 3 per cent of GSDP in 2008-09.

Bihar will not be aale to arrange for resources to finance its development plan due to this condition, said the memorandum and suggested this overriding condition should be done away with as long as the state government was adhering to the fiscal correction path.

Through the memorandum, the Bihar government requested Mr Chidambaram to reschedule market loans of higher interest rate by the financial institutions at 7.5 per cent as had been done by the Centre in respect of central loans. The state government could use the savings to finance its develoment needs. Charging interest rate higher than 10 per cent on loans was 'unfair'.

The state government had emphasised on adverse CD ratio in Bihar and informed the Union Finance Minister that in 2005-06 CD ratio hads improved from 29.86 to 32.10, but it was way behind the national average of 57 per cent.

In previous years many districts had CD ratios below 20 per cent.

Demanding clearcut instructions to the bankers for pushing up the CD ratio at par with national average, the government elaborated plans to execute various state schemes through the banks and requested Mr Chidambaram to cover all places by banking services.

The nationalised banks have to increase their lending in the rural areas of Bihar and will have to alter the pattern of lending so that more and more self-help groups were brought under the ambit of banking services and become viable by getting loans.

The memorandum referred to the poor number and strength of branches of banks and informed that as per RBI, report Bihar has one bank branch on average population of 22,248, wheres the national average is 15,000, and for other important states, it is on an average population of 9000 in Punjab, 11,000 in Maharashtra and 14,000 in West Bengal.

Bihar needs 2276 new bank branches (inluding RRB's) to reach the national average.

In the first phase, at least one commercial bank in each block should be ensured, 37 blocks in Bihar have no commercial bank branch. There are seven commercial Banks which have been assigned with the lead bank responsibility for various districts of the state.

However, their presence in the state is not up to the mark. The presence of all these lead banks should be ensured with at least one branch in each district.

The bank branches are starved of staff as around 700-800 bank branches are manned by a single official. Being hardpressed, they are not able to devote time for credit expansion.

These branches need to be strengthened by increasing manpower.

banking personnel with agriculture, veterinary background and other technical skills should be deputed in the cluster so that branch level loan proposals could be processed effectively.

Mr Kumar raised the paucity of fund hampering infrastructural development and demanded extention as well as expansion of the special components under RSVY to 11th five year plan. The government requested for substantial increase in allocation under the scheme, saying the Planning Commission, during the annual plan discussion 2006-07, had agreed in principle for the same.

Elaborating the scheme, the memorandum said the Centre had sanctioned the Bihar Special Component(RSVY) for improvement in the physical infrastructure of the state and during the 10th five year plan, Rs 4000 crore was proposed for improvement in electricity, rural connectivity, ground water-harvesting, watersheed development, forestry, horticulture and dairy.

The Empowered Committee of the Planning Commission had sanctioned Rs 3608.42 crore for these projects. Against this, only Rs 1472.32 crore was released as the Bihar Special Component plan RSVY was visualised only for the 10th Five year plan.

The government of Bihar had demanded a package of Rs 40142.76 crore at the time of bifurcation of the staste to mitigate the huge economic and financial setback caused by the event. The Bihar Special Component RSVY was started with a view to meeting this demand.

Considering the huge investment required for the development of Bihar Rs 4000 crore was allocated in the 10th five year plan which was too little an amount.

Keeping in view the importance of the Bihar Special Component RSVY development of the infrastructure of the state, it was necessary that the Bihar Special Component RSVY should be extended to the 11th five year plan with substantial increase in allocation under this scheme.

The memorandum further said to remove barriers to growth, accelerate the development process and improve the quality of life of the people, identification of backward districts within the state had been made by the Planning Commission on the basis of an index of backwardness and the impact of Left wing extremism.

UNI