The Telegraph
Since 1st March, 1999
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Vajpayee hemmed in by a million mutinies

New Delhi, Dec. 21: The National Development Council meeting to clear the Tenth Plan turned into a virtual battlefield, with Congress-ruled states demanding more money, better deal on Central loans and review of thorny issues like the government’s disinvestment policy.

At the end of the meeting today, Prime Minister Atal Bihari Vajpayee conceded the need to build a consensus for taking hard decisions on reforms. “Some of the reform issues are contentious and speedy progress is possible only if we build broad consensus,” he said. “I propose to consult with the chief ministers at an early date with a view to strengthening a common understanding on these important issues.”

Sources said if Vajpayee had not made the concession, there was every possibility that the meeting, called to rubber stamp the plan document, could have for the first time in history turned into one which disapproved of it.

Chief minister after chief minister expressed doubts on the GDP growth target of 8 per cent set by Vajpayee. “The Tenth Plan is too ambitious, clearly verging on the impossible,” Rajasthan’s Ashok Gehlot bluntly told the Prime Minister.

The states also forced Planning Commission deputy chairman K.C. Pant to concede that the government would again “study” a demand that half of the Central funds for financing development plans come as straightforward “grants”. Currently, states get 70 per cent of the money as high interest bearing loans and a mere 30 per cent as “grants”.

Karnataka chief minister S.M. Krishna led the attack. “Politicisation of the allocation decisions in an open economy will only be detrimental to healthy growth,” he said. States have always said these grants are money due to them under a formula devised to share revenues between them and the Centre and this needs to be revised.

The chief ministers also remained dissatisfied with the Centre’s informal offer of a debt swap made on the sidelines of the conference. Finance minister Jaswant Singh offered to retire up to Rs 30,000 crore in state debt at an interest rate of about 9 per cent. But the chief ministers stuck to their stand that the rate should be between 6.5 and 7 per cent at which the Centre was raising capital.

Officially, Singh offered what had already been conceded as sweeteners to at least make the states agree to implement a uniform nation-wide Value Added Tax regime from April 1, 2003.

One of the sharpest ideological battles was over disinvestment. While Orissa chief minister Naveen Patnaik, an NDA ally, and Punjab’s Amarinder Singh expressed concern over attempts to sell off public sector undertakings in their states, Kerala’s A.K. Antony circulated a written speech, saying the Centre, “in the name of economic reforms”, was only disinvesting in profit-making PSUs.

“Disinvestment in profit-making PSUs should be deferred and the process needs to be reviewed,” Antony said.

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