56th Meeting of National Development Council held at New Delhi. In the meeting Chief Minister Prem Kumar Dhumal has emphasized upon the uniform funding of 90:10 for all Special Category States. Chief Minister said that problems of the hill States were different from that of the other States. Special approach needed to be adopted by the Central Government alongwith special dispensation of financial resources to ensure their development. He said that Western Himalayan States prepared a Common Base Paper which had been sent to the Planning Commission in 2009. He said that Planning Commission should translate the recommendations made in the Common Base Paper by the North-Western Himalayan States into financial allocations during the 12th Five Year Plan. Reiterating issues raised in Common Base Paper, Chief Minister stressed for compensation to hill States based on opportunity costs, on account of the eco-services being provided by them, liberal funding for creating and upgrading strategic infrastructure in border areas on strategic considerations.

Chief Minister said that central industrial package in all Western Himalayan States should be extended and States proposed for imposing generation tax on hydro power and enhancing free power royalty should be approved. He said that norms for cost of infrastructure development and social sector projects/schemes in hill States should be different than other States due to topographical consideration. He said that 20% enhancement should be made in the present income criteria for BPL families for hill States due to relatively higher cost of living. Other point which he emphasized was special package for tourism development in hill States and enhanced allocation for calamity relief to hill States as they are relatively more vulnerable to natural calamities. Emphasising to refund the State for State’s efforts for conservation the precious forest wealth by the State of Himachal Pradesh, he said that the forest wealth of Himachal Pradesh has been valued at over Rs. 1.50 lakh crore. Scientific logging could yield revenues to the tune of Rs. 1000 crore per annum to the State. By not felling its forests, Himachal was helping all down stream States with benefit of drinking and irrigation water, control of flow of silt and providing a carbon sink etc. He requested for devolution of funds in the form of ‘Green Bonus’ to Himachal Pradesh for the efforts being made by it in environmental conservation.

Prem Kumar Dhumal said that Special Category States have been categorized because of hilly terrain and high cost of delivery of public services and their low tax base. Unfortunately the devolution of funds by the successive Finance Commissions and through the Planning Commission has never sufficed to meet the revenue deficit gaps and the development needs of these States. The earmarking of 30% of NCA funds for Special Category States was determined way back in 1969 when there were only 3 such States. Now the number has increased to 11, but the earmarking of funds remains the same. The Gadgil-Mukherjee Formula needs to be revised and earmarking needs to be increased to at least 40% during the 12th Five Year Plan for Special Category States, he added. Highlighting some specific issues of Himachal Pradesh which required special attention of the Planning Commission while financing the 12th Five Year Plan, Chief Minister said that the unfavourable award of the 13th Finance Commission for the State had derailed the entire planning process in Himachal Pradesh and has posed a threat to the impressive gains made by the State over the years. The 13th Finance Commission has recommended an overall increase of only 50% of total devolution over the 12th Finance Commission Award for Himachal Pradesh while giving an average increase of 126% to the other States. He said that the Commission has grossly under estimated our committed liabilities on account of salary, interest and pension payment. The Commission has assumed an average annual growth of 2% over the period 2010-2015 in salaries whereas the D.A. increase alone is 18% in 2010 and 13% in 2011. Had the 13th Finance Commission recommended a grant at par with other States, State would have been entitled to receive an additional share of Rs. 10725 crore over the period from 2010 to 2015, he added. He said that special financial package should be given to the State to tide over its imminent financial problems.

Chief Minister said that besides unfavourable award of the 13th Finance Commission, the implementation of 6th Pay Commission recommendations has further wrecked financial position of the State. While it was true that these recommendations were for the Central Government employees, no one can deny the fact that they have a cascading effect on the States too. The ongoing inflationary pressures and subsequent DA liabilities have only added to the difficulties of the State. Prem Kumar Dhumal said that the Planning Commission, recognizing the Plan financing problems of the Special Category States had constituted a ‘Group on Finances of Special Category States’ to explore a reasonable solution to compensate such States during the post 13th Finance Commission Award. The report of this group was yet awaited. He said that the Planning Commission should devolve a suitable interim package, till the report is finalized and accepted by Govt. of India.

Attracting attention of the Government of India for withdrawal of the industrial package given to Himachal Pradesh, Chief Minister said that the excise duty exemption for setting up industrial units was earlier upto 31st March, 2013 for Himachal, which was curtailed by the Government of India to 31st March, 2010. This has adversely impacted the investment climate in the State, accentuating the regional imbalances. Chief Minister welcomed that the approach paper for synergizing activities of MNREGS with agricultural operation. He said that in Himachal Pradesh majority of agriculturists are small and marginal farmers. The loss of crops due to destruction by wild animals can be prevented by including crop protection as one of the admissible activities under MNREGA. He said that the State had already taken up this matter with Ministry of Rural Development and was awaiting a response. The 12th plan should also look for funding the States for creating basic infrastructure for storage and marketing of agricultural produce. Crop insurance would need to be not only diversified but also simplified. The 12th Plan must look at possibilities of introducing subsidized innovative insurance schemes for agriculture and allied activities.

He suggested for improving the impact of MGNREGS. The cost of material and transportation in the hills is very high. In the present scheme, the wage material ratio was uniformally 60:40. He said that the ratio should be made 40:60 for the hilly States. This will help in not only creating durable community assets at the grass root level but will also prevent possibility of misutilization of funds. He urged that the number of days granted as wage employment under this should be increased beyond 100 days. In the first phase all the BPL families may be given the entitlement of working beyond 100 days. Presently the MGNREGS guidelines do not allow for the construction of village paths. In a State like Himachal Pradesh, the construction of roads to every habitation is not possible. He requested that the construction of village paths may be allowed in order to facilitate movement in the hilly areas.

Chief Minister said that State had taken up the issue of change of criteria for the allocation of funds under Rashtriya Krishi Vikas Yojna for Himachal Pradesh. Our plan allocation for Agriculture and Allied Sectors in the State ranges from 11-12 percent which was very high compared to other States. He suggested that such States giving high allocations be incentivized while deciding RKVY allocations. He requested for those States allocating more than 10% of the Plan outlay for agriculture and allied activities, should be provided atleast 50 percent of that outlay under RKVY during the 12th Five Year Plan. Chief Minister requested that keeping in context with the identified issues of tourism, the 12th Plan should made provision for creating an all weather International airport in Himachal Pradesh. He requested that subsidized Heli Taxi services on the pattern of the North-Eastern States should be started in Himachal Pradesh for tribal areas during winter season for the local population and also to enable tourists to conveniently visit the different parts of the State. He urged for opening of Indian Institute of Management in the State.

Prem Kumar Dhumal said that Government of India should enhance allocation for the construction and maintenance of National Highways in the State. Similarly, the allocations under the Central Road Fund (CRF) should also be increased under the 12th Five Year Plan. The Central Sector Flagship Programme like Pradhan Mantri Gram Sadak Yojna has not benefitted the hill States to the extent as was envisaged. Chief Minister said that Himachal Pradesh Vidhan Sabha had passed “The Himachal Pradesh Electricity (Taxation on Generation) Bill, 2011 (No. 13 of 2011) to levy a nominal tax. The Bill has been sent to President of India for assent was still awaited, which should be accorded at the earliest. Prem Kumar Dhumal said that in order to improve on governance State had taken initiatives to prepare the Results Framework Document, as a basic tool for performance evaluation of the State Government Departments. The Himachal Pradesh Legislative Assembly has recently enacted ‘The Himachal Pradesh Public Services Guarantee Act, 2011’ to ensure time bound delivery of services to the citizens. Service delivery has to reach the last citizen at the grass roots level. It is proposed that the Gram Panchayats be brought in the State Wide Area Networks in the 12th plan period.