Financial Daily from THE HINDU group of publications
Friday, Sep 17, 2004
Industry & Economy
AP Govt seeks more funds for core sector
New Delhi , Sept. 16
THE Congress Government led by Dr Y.S. Rajasekhara Reddy in the State does not feel any qualms in demanding its pound of resources from the Central Government even at the cost of embarrassing the Centre by highlighting how the Centre had vacated itself from investing in central public sector undertakings post-reform and thus sitting on a surplus pile.
In an additional memorandum submitted to the Twelfth Finance Commission, headed by Dr C. Rangarajan, the State Government stated that prior to 1991, Central public sector played a very crucial role in building Indian economy, especially for employment and revenue generation and for removal of regional disparities.
In keeping with its commitment for regional balanced development, the Central Government used to ensure that proportionate industrial investment was made in all the States. Besides, the Centre also used the industrial licensing mechanism to ensure that there was reasonable dispersal of industrial location in all regions of the country.
It cited the case of Andhra Pradesh itself where many large public sector units such as BHEL, HMT, HAL, IDPL, HCL, ECIL, BHPV, MIDHANI, BDL, Vizag Steel Plant, Ordnance Factory, NFC, BEL and many more such projects were set up by the Central Government.
These projects together with their ancillaries provided employment to lakhs of workers in the State, besides generating substantial revenues to the State Government.
Besides, during the first three decades after Independence, it said many prestigious R&D laboratories such as CCMB, DRDL, DLRL, DMRL, NIN, NRSA, NGRI, IICT, Sriharikota Satellite Launching Pad, ICRISAT were set up in Andhra Pradesh and this had positively helped Andhra Pradesh to emerge as one of the key knowledge hubs in the country.
"With the Government of India opting out of further investment in public sector and with the removal of licensing system for industrial promotion, it has essentially become the responsibility of the State Governments to develop world class infrastructure for attracting industrial investments, which requires substantial additional investments by the State Governments compared to the pre-1991 era," the additional memorandum noted with dismay.
This implied, it added, that "there are more surplus funds in the hands of the Central government, now that they have stopped investing in public sector and by implication those funds should be transferred to the State Governments for creation of infrastructure," the State has argued ingenuously and ingeniously.
As such, it urged the Twelfth Finance Commission to come with "a methodology to make greater allocations to the States that have been embarking upon creation of good infrastructure facilities and setting up of institutions like special economic zones."
It also urged upon the need for additional devolution to State Governments embarking on setting up exclusive institutions for upgrading the skills and productivity levels of our labour.
Stating how the opening up of the Indian economy has led to closure of many domestic industries which was partly due to the declining aggregate demand for industrial goods from within the country, the State Government memorandum pointed out that both industry and agriculture suffered heavily.
In Andhra Pradesh, it said, the contribution of agriculture to gross state domestic product (GSDP) fell from 24.65 per cent in 1994 to 13.13 per cent in 2003 and even in absolute terms.
Whereas the GSDP of the State rose from Rs 61,114 crore in 1994-95 to Rs 91,055 crore in 2002-03, the agricultural GSDP fell from Rs 13,305 crore to Rs 11,958 crore at constant prices.
This is a sector that employs 55 per cent of workforce in the country and 65 per cent in the Andhra Pradesh. So it urged the Finance Commission to consider making higher allocations to States that set up technology missions for addressing the problems of the farming sector.
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