Madhya Pradesh Government
Annual Plan for 2002~2003


Approach to the Tenth Five Year Plan

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  Over the last fifty years or so, planning for economic and social development has been an integral exercise. This is manifested in the formulation of five year plans. The transition from a traditional and subsistence economy of the fifties to a modern and industrial economy of the nineties has largely been the outcome of plan exercises spanning a total of nine five-year plans and a few annual plans. As we stand in the terminal year of the Ninth plan, our sincere endeavor to consolidate and add to the past gains in the framework of the Tenth plan cannot be overemphasized.

Planning has more substance to it than a mere allocation of resources among competing uses. Planning prescribes a direction towards which the economy is sought to be moved with a view to attaining pre-determined goals and objectives. And given the federal character of our polity, it is the combined effort of both Union and State governments towards achieving plan objectives that is given shape in the exercise of five-year plans.

The federal character of Indian polity with a unitary bias has long been established as an unchallenged perception. This is clearly reflected in the composition of public sector outlay wherein the Union government is accorded a substantially larger chunk of plan responsibilities Vis--vis State governments. Such a compositional mismatch is further reflected in the vertical devolution of financial resources under the aegis of Finance and Planning Commission.

Of late, the realisation that most development activities are taking place at the State level is gaining ground. This calls for greater decentralisation of plan responsibilities to States along with matching resources. Within States, further decentralisation of plan responsibilities is no longer a far fetched dream and Constitutional obligation in the light of seventy- third and seventy- fourth amendments, but a distinct and desirable developmental necessity.

The national level objectives at best provide broad guidelines to State level plan formulation. The decisive thrust and direction still remain the State’s prerogative and are thus based on State level specificities and peculiarities. The latter, therefore calls for a brief description to facilitate the designing of the approach paper to the Tenth five-year plan.

The approach paper to the tenth five-year plan envisaged an average growth rate of 8% for the Indian Economy as a whole. This is a gigantic task, given the global recession and also the historical growth rate of 5 to 6 percent in the last two years.  It is not something uncommon to the Indian planners to set huge targets, bordering dreams and fantasies before the nation. No wonder, we have ever achieved our plan objectives either in terms of numbers or in terms of time frame. However, the high growth target is justified, as it would motivate people and thus bring out the best of them. In order to achieve this high growth rate at the national level it is important to identify areas of high growth potential both in terms geographical as well as sectoral. India being huge country with vast inter-regional and intra-regional disparities, decentralisation of resources, planning and decision making should be the main strategy to achieve the objective of high growth.

Even after more than 50 years of development planning, above 30 percent of the population live below poverty line, nearly 30 percent of the people cannot even read and write and vast majority people do not have access to the safe drinking water. The globalisation, liberalisation and structural reforms have no meaning to these people. These are the prescription of the free market paradigm and only for those people who can participate in the market either as consumers or as producers. But, unfortunately vast majority of the Indian masses do not have capabilities to participate in the market. Thus, the Indian society is much larger than the Indian economy. The development planning has to build up capabilities of the all the people and enlarge opportunities for all, but not a select few. This process would enlarge the concept of freedom from the domain of the market to the civil society.

The single most significant change in MPs vision of development is the recognition of the agency of people as central to development. The relationship between state government and people has been perceived as one of the partnerships based on mutual sharing of rights and responsibilities. This has been guiding vision in the choice of strategies. This has been articulated as the new architecture of governance grounded on decentralisation, greater accountability and increasing space for direct community action. 

Decentralisation became the premise for development in the state, because it was seen to open up opportunities for new ways of doing things and because it was possible to create new partnerships.  The dichotomy between demand and supply could be dissolved. Stakeholders could be given greater control and ownership. The Panchayat system provided an institutional framework for decentralisation right down to the village level. The state government also introduced the system of District Government and recently the village government system, further decentralising the power of the state level administrative structure to the district and village level inevitably. The implication of this development vision is that development is measurable not just through creation of assets and resources, but through the effectiveness of the process of empowering communities to make choices and participate in creating those assets and resources. 

The district planning has become an integral part of the planning process. The plan allocations at the district level are based on socio- economic indicators to bring balanced regional development. More than 30 percent of the total plan allocation is made to the district sectors. The sectoral allocations are made following bottom up approach rather than top down approach. This method has ensure the horizontal sectoral integration at the district level to make district planning a more realistic exercise.  

Keeping in view, the historical growth rate and potential of economy, we would like to target an average growth rate of seven percent for the State of Madhya Pradesh. This is slightly lower than the national target of eight percent. The state economy has been growing at an average exponential growth rate of 5.55 percent during the period 1993-1999. This requires an improvement of 1.45 percentage points over the previous period, which is very substantial. With an average ICOR of four, it is necessary to increase the capital investment by 7.8 percent of the NSDP to achieve the target growth rate of 7 percent.  This would imply that we require roughly Rs. 7000 Cr. investment in the initial year and an annual increment of 7 percent.   We anticipate the primary sector constituting roughly 40 percent of the NSDP to grow at 4 percent per annum, the secondary sector constituting slightly above 20 percent of the NSDP to grow at 8 percent per annum and the service sector constituting roughly 40 percent of the NSDP to grow at 9 percent per annum.  

The most critical part of the planning exercise is the financing the plan. The resource projections for the Ninth Plan were off the mark by miles, both in terms of central assistance to State plans as well as the State own resources. The expected central assistance to the State plan is falling short by 40 percent as against the projections.  The Balance from Current Revenues (BCR) is falling short by 50 percent as against the projections of the pessimistic scenario. The growth rate of the Central taxes during last two years has been sluggish to put it modestly. It is in this background, the State has to mobilise resources to finance a plan to achieve a growth rate of 7 percent and above.    

We projected the tax devolutions from the Center based on the growth rate given by the Planning Commission. The plan assistance from Center based on Gadgil-Mukharjee formula and for the Centrally Sponsored Schemes is assumed to be growing at 10%.  The State own tax revenues are assumed to be growing at 11.5% which is historical growth rate. The non-tax revenues are projected at 5.5%. The major proportion of the non-tax revenues is revenues from mining and forest and is dependent on policies of GOI.

The assumptions about the State own resources are based on the structure and the potential of the economy of the State.  The introduction of VAT from the coming fiscal year will not only result in reduced fiscal autonomy of the State Governments but also bring in revenue uncertainty in the short run. Thus, the fiscal policy of the State Governments has been reduced to non-plan revenue expenditure management, which has very little degrees of freedom. The major portion of the non-plan revenue expenditure is salaries and interest payments and these two parameters are given by the Center. Thus, the State Budgetary exercise is susceptible to Center's fiscal policy and the State Governments cannot achieve their fiscal goals of resource mobilisation without the cooperation form the Center.

 

Agriculture 

The agriculture sector forms the backbone of the Madhya Pradesh economy. It contributes almost one-third of the GSDP and provides employment to three-fourths of the labour force. With majority of the population deriving its livelihood from agriculture, its health has a direct impact on the prosperity of Madhya Pradesh. Any developmental initiative is therefore incomplete without due consideration to this sector. 

Agriculture development is a desirable not only for its direct impact on the lives of 70-80% of the population dependent on it, directly or indirectly, but also for its favourable impact on the other sectors of industry and services. Agriculture and the employment opportunities that it generates are critical to the size of the market for the industry and services sectors. Development process through employment creation, higher incomes and poverty alleviation is also reliant on a dynamic agricultural sector for its growth. 

The development objectives of employment generation, higher incomes, balanced regional development, poverty alleviation and quality of life can all be addressed through a focus on Agriculture & Allied sectors.

It is the main source of employment for the majority of the working population. In addition the allied sectors of Horticulture, Dairy and Inland fisheries provide ample employment opportunities, as they tend to be labour intensive in nature. Finally, through its impact on the RNFS it can further catalyze employment growth.

Growth in the sector will directly impact income levels, even more so through its stimulus on the non-farm sectors Rapid agricultural growth is central to sustained poverty alleviation as its is a source of employment to 70-80% of the population and provides about 60-75% of the rural incomes. Backward areas can be better targeted through development of agricultural activity in those regions.

 

From lack-luster growth rate of 1.5 percent to 2 percent in the eighties, the agriculture sector in Madhya Pradesh made rapid strides in the following decade, growing much faster than the all India average of 3.1%. The growth momentum that has evolved in the nineties shall be nurtured and sustained.

 

High growth in agriculture in the long run can be achieved through increase in the area under cultivation and through more intensive and efficient cultivation of exiting sown area. This can be done by identifying the low growth areas and supplying critical inputs to increase the productivity in these areas. Given the high pressures on land, owing to growing urbanization and industrialisation, the former is likely to be a major constraint. Reclamation of wastelands is the only apparent solution, however, as the demand for land for non-agricultural uses is likely to continue, net area increase will perhaps be negligible.

 

In this scenario, improvement in yields is expected to be the primary contribution to agricultural growth. This would involve greater investment of resources in rain-fed areas, more efficient utilisation of irrigation facilities, and continuous flow of improved technology and farm practices. 

Industry  

The Present Industrial Policy seeks to consolidate the progress made in the past and lay the foundation for a vibrant economy based on 'Connectivity', the cornerstone of the State's Economic Development Strategy i.e. Physical Connectivity, Virtual Connectivity and Social Connectivity. In consonance with this vision, the Industrial Policy 2001-2006 seeks to connect industry to markets & suppliers, to infrastructure (both tangible & intangible), to technology, to government and to skilled manpower as an integrated effort towards economic development. 

The Policy seeks to connect industrial development to the overall economic development of the State by exploring and leveraging linkages and opportunities with other economic sectors. It aims to provide comprehensive infrastructure, aims at achieving larger value addition and streamline procedures and the regulatory framework by aligning institutional mechanisms with the new industrial paradigms and finally integrating private initiative into the industrial development process.

The Industrial Policy attempts to maximize the trade and industrial development potential of the state by adopting the following as its objectives:

Facilitate the rapid development of sustainable competitive advantage within the State

Provide access to world class infrastructure at the door-step of Industry

Simplify procedures and streamline administration so as to create a conducive environment for industry and commerce to prosper

Promote exports by providing requisite support to industry to become internationally competitive

Encourage the development of robust Small & Medium Enterprise (SME), Tiny Industries and Rural / Handloom Industry

Generate employment in the State through the development of a vibrant industrial sector

Promote balanced regional development by encouraging rural industry and local enterprise.  

The Government's strategy for industrial development aims at promoting industrial growth in the context of overall economic development of the state by fostering clusters around thrust areas, providing comprehensive infrastructure, facilitative administration, participative governance of industrial areas and competitive incentives. Further, it seeks to promote maximum integration of private initiative in the industrial development process of the State. The strategy for industrialization would facilitate industrial expansion and provide an enabling environment for units, large medium and small to evolve into competitive enterprises. 

Sustainable solutions to industrial development shall be evolved keeping in the view the strengths of the state. Focussing on the following simultaneously will do this: 

Cluster Development around sectors of strategic advantage to Madhya Pradesh Food & Agri. processing, Textiles & Garments, Minerals, Gems & Jewelry, Information Technology, Life Sciences, Tourism

Access to world class infrastructure to investors so as to enable them to compete effectively in a rapidly global in a rapidly globalising world

Ensure a facilitative regime which unleashes the energies of the private sector and creates an environment in which industry, both new and old, can thrive

Provide incentives & concessions to ensure the realization of the objectives of the State Govt and the true implementation of the identified Strategy

Rural industries are an important ingredient in the economic development process. A vibrant rural non-farm sector induces growth through employment generation resulting in higher incomes reducing poverty and finally brings balanced regional development. The government therefore seeks to promote rural and cottage industries in big way.

Mulberry silk related activities to be promoted in Hoshangabad, Narsinghpur, Balaghat, Mandla, Vidisha and Rajgarh districts. Saja and Arjun plantations shall be promoted as a part of Social Forestry programme. A proportion of all trees reared in forest nurseries will be of these varieties.

Production of Tussar Cocoon to be encouraged in Balaghat, Mandla, Dindori and Shahdol districts. A proposal for boosting the production and provision of financial assistance shall be prepared .         

TOURISM

 

The world has become a global community bringing people together and crashing distances between places. Travel has become global and the expanding Tourism market has not left any place untouched. Growing wealth and increasing propensity to travel has led to a huge demand for tourism. Tourism has emerged as a major economic activity characterised by the following: 

It has a high growth potential - The travel and tourism industry plays an important role in generating wealth through out the economy. This sector is expected to grow at the rate of 8.4% per annum in India and therefore offers a huge opportunity.

It is an employment intensive industry - Tourism generates employment opportunities at various levels especially for the unskilled and semi-skilled people. By 2010 it is expected to account for at least 1 in every 15 jobs in India.

It has a large multiplier effect - A traveler's spending flows through the entire economy and increases the circulation of money in the state.

It catalyses the growth of other sectors - Tourism acts as a catalyst for the development of other sectors. It stimulates the provision for better infrastructure, impacts industry - especially the small scale and rural industry and also creates a pull for agricultural produce

Tourism thus has a large role to play in the economic development of any state. Madhya Pradesh has the advantage of having a large number of diverse tourist destinations. Tremendous diversity and mystique, the cultural heritage, cuisine, festivals and art and craft make Madhya Pradesh an ideal tourist destination. In view of the huge economic benefits, the potential growth rates, as well as the potential for broad based balanced regional growth that can be achieved, the Government of Madhya Pradesh has identified Tourism as on of its growth engines. 

Despite MP's strengths as tourist destination and the Government's initiatives, MP has not been able to attract tourists or investors to the state. This can be attribute mainly to issues of connectivity to the destinations, few marketing and promotion initiatives, lack of recreational facilities for the tourist and an unfriendly tax structure. 

The state has identified three key intervention areas to give a thrust to the tourism sector in the State. These are:

Ensuring connectivity to destination

Marketing and promoting MP as a tourism destination

Creating a favourable environment for private sector participation in tourism development.

The State envisages its role as that facilitator, leaving the main thrust of development to the private sector.

Infrastructure 

The infrastructure sector mainly consists of power, roads and irrigation.  

The power sector in the State is facing severe crisis, which is a national phenomenon. The T&D losses in the State are higher than the national averages. The vertically integrated large sized State Electricity Board is not conducive for providing satisfactory services to the consumers.  For bailing out the power sector from the present crisis, the process of reforms has already been initiated in the State by signing of an MoU with GoI for achieving time bound reforms and restructuring of the power sector.  MP Reform Bill has also been enacted for the State on 20th Feb 2001.

 

The MP Reform Bill has a provision that tariff for any category of consumer should not be lower than 75% of cost of supply to that category of consumer.  This position has to be achieved in the phased manner i.e. within 5 years from the date of implementation of the Reform Act.  This has also been clearly mentioned in the MoU signed between GOMP and GOI. The power supply to agriculturists having pump capacity up to 5 HP was given free of cost since 1994.  However, from 1st Jan 2001, this facility has been restricted to very limited SC/ST agricultural consumers who are having land holding up to 1 hectare with pump capacity up to 5 HP.  Now present tariff for metered agricultural consumers is Rs. 1 per unit only.  As per the MoU signed with the Govt. of India all un-metered consumers including agricultural would be provided with the meters by Dec. 2001. The cost of power supply during the year 2000-2001 for the LT category was Rs. 5.6 1 per unit and the average cost of supply was Rs. 4.37 per unit as against agricultural tariff for metered connection of Rs. 1 per unit.  Therefore, for reducing such a large gap between the cost of supply and tariff charged to the consumer, a substantial period is required to avoid the steep rise in the agricultural tariff and to prevent the consumers from the tariff shock. 

         

The Government already set up the State Electricity Regulatory Commission in 1998 under the provision of ERC Act, 1998. The new MP Reform Act has provisions for strengthening the powers of Regulatory Commission. The Act also provides for reorganization of the existing State Electricity Board.

 

At present the T&D losses in the State are 47 percent.   Various steps are being taken for reducing the T&D losses every year.  The first step towards this is task is metering of all EHV and HV feeders for effective energy audit.  This work would be completed soon.  With the completion of this work, it would be possible to identify high loss areas and to take remedial measures in those areas.  The work of 100% metering at the consumers' end has also been started.   A scheme has also been posed to the PFC for funding.  In addition to above quality electronic meters are also been installed on all industrial and big consumers.   The major reason for high T&D is theft of energy.  Various measures are being taken to curb the theft of energy and will be eliminated within a specified time frame.  Besides, thorough checking of connections, a new Urja Vidheyak 2001 has also been enacted.  This Act provides for additional powers for entry, search and seizure.  Recovery provisions have also been made stringent similar to the Income Tax Act.  However, the procedure for billing and assessment of theft case has been simplified.  So with all the above measures, it would be possible to achieve reduction in T&D losses by 5% initially for first 3 to 4 years.  However, after that, achieving the same level of reduction in loss would require more funds for improving transmission and distribution systems.

 

Under the Power Sector Development Programme, Asian Development Bank approved a loan of $350 million. The loan comprises of two parts, viz (i) a policy of $150 million  for financial restructuring of Madhya Pradesh State Electricity Board (ii) a project of $200 million for strengthening and upgradation of transmission and distribution systems in the State. Project implementation will commence in January 2002 and will be completed in December 2005.

 

Another important area of infrastructure is roads. The condition of the roads in MP is very bad. This sector has been neglected for quite sometime as more plan resources flowing into social sectors. Without roads it is not possible to have a road map for the development of the State. On the one hand the resource constraint of Government and un-viable traffic levels on majority of the routes for private investment on the other hand choked the investments into this sector.   The State Government is raising Rs. 500 Cr. bonds through Special Purpose Vehicle (SPV) to subsidise the private investment in order to make it financially viable.  This money would be used to leverage substantial private investment. Also, the State Government is taking advantage of the Centrally sponsored scheme of Rural roads and an investment of about Rs.700 cr. is expected to take place in the year 2002-03. The tax collected from the agricultural market yards is being used to develop the road infrastructure. It is also proposed to leverage these resources to mobilise private investment into the roads.

 

The other important component of the infrastructure is irrigation, which is the most important input to increase the agricultural production and its productivity.   The total irrigation potential crated by the end of year 2000 is about 20 lakh Hectare and about 9.25 lakh Hectare is being utilised. The ultimate irrigation potential of the state from surface irrigation and ground water is expected to be 60.9 lakh Hectare and 52 lakh Hectare respectively. When the above potential is harnessed, the percentage of irrigation to net sown area would be 75%. Assuming 40% irrigation by private sources and 60% by Government sources, the Irrigation potential to be created from Government sources works out to be about 67 lakh Hectare. Out of this, potential anticipated to end of Ninth Plan is of the order of 20.5 lakh Hectare. It would not be possible to achieve the ultimate potential with present available resources and thus efforts would be made to obtain funds from NABARD, AIBP, External funding agencies like JBIC (Japan Bank), World Bank etc. In the mean time it is proposed to encourage minor irrigation through water shed development     

Social Sectors

According to the Constitution of India, it is the responsibility of the State Government to provide universal elementary education. The Government of Madhya Pradesh has been proactive in the field of school education and has undertaken a large number of initiatives.

The Government is committed to universalisation of primary education in the state. The focus shall be on providing better infrastructure, improving quality of education, improving access for the disadvantaged groups, and encouraging community participation and early education initiatives. The State proposes to continue the EGS (Education Guarantee Scheme) and has achieved the target of one school in radius of one Km. The community participation is already in vogue and will be encouraged in future also. The state government has decided to have a Middle School within a distance of 3 KM from every habitation. The process of establishing these middle schools has been initiated and has been expanded to cover the entire state. The state proposes to provide a high school and higher secondary education within a distance of 5 KM in the coming years.   The Government would ensure the availability of amenities like drinking water and toilets in all schools.  

Sarva Shikha Abyiyan (SSA) is being launched to universalise elementary education and provide infrastructure support. The state has already submitted SSA Plan to the GOI. State government has taken a decision to establish digital libraries in each district.  In order to improve the quality of education imparted in the schools the state shall continue the program of providing training to about one-lakh teachers every year. There would be a regular review of the course content and curriculum of school education and the same would be updated. The State Government has also decided to establish a school of excellence in each district during the year 2002-2003. Vocational education is being provided in the state through 300 higher secondary schools. The government has decided to revamp this programme and make it more effective and also introduce IT as a teaching tool. 

It is also important to solve the problem of high drop out rates. The government proposes to involve NGOs for spreading awareness about benefits of education. It has been considered to adjust the school timings according to the agriculture calendar and providing flexible timings to ensure attendance. Incentives are being provided to girls and SC/ST students in the form of scholarships, distribution of free books and uniforms and mid-day-meals. Women's Polytechnics have been started for providing vocational education for girls. There is a reservation of 30% for girls in co-education polytechnics also. 

As a result of polices of economic liberalisation and opening up of the global markets, the demand for skilled technical personnel from both the manufacturing and service sectors has increased. Economic development by way of attracting industry and the services sector to the State calls for the supply of skilled and trained manpower at executive, supervisory and shop floor levels. Investment in technical education, training and skill up-gradation for ever-increasing numbers who join the work force is a major challenge. The state government has taken a large number of measures in this direction. These initiatives need to be strengthened and expanded. 

The health policy of independent India of setting up an extensive health care delivery system across the entire nation was based on Bhore Committee report of 1946. The focus of the policy was on setting up a primary health care system across the country to ensure availability of basic health care for every individual. However, this policy of primary health care was challenged by many international agencies, as it would be expensive to provide primary health care. They suggested selective primary health care. This approach would essentially select and priortise a limited number of major diseases and attack them through specific programmes. The focus was on delivering medical care for selected diseases rather than encouraging participation by communities in defining their health needs, and professionalise rather than deprofessionalise the health.  This approach is technology focus approach, where delivery of health care through health professional is the focus, and thereby it detracted any society and community and medicine interface. It also ignored the aspects of community empowerment vis-a-vis medical services. Thus, the primary health care centre as main vehicle to deliver good and effective medical-care has been subjugated by programmes and initiative that are disease specific. 

The health indicators like Birth Rate (30.7), Death Rate (10.6) and Infant Mortality Rate (91) are above the national average. The health policy of the state would strive to bring these indicators to the national level. The policy intends to concentrate on both preventive & curative medicine.  In order to achieve the goal of health for all it is necessary to adopt community participation approach as being done in education. The latest amendment in Panchayat Raj Act has created substantial space for community participation and local control over health. The scheme of training Jan Swastha Rakshak is a step towards this direction. More than 600 hospitals/health centers are being managed by citizens themselves. With this kind of peoples' participation in the health sector would enable us to achieve the health goals. 

A large majority of the population of the State belongs to socially and economically backward people. The participative development approach adopted by the State would in the long run bring this people into the mainstream of development. In order to accelerate the development process of this community the government has been taking up many schemes and programmes.  

TECHNOLOGY INTIATIVES

A latecomer to the Indian information technology revolution, Madhya Pradesh has nonetheless made a lot of progress in the last couple of years. The state has an annual IT turnover of 100 Cr. with IT exports contributing 20 Cr. State government has put in efforts to ensure the wide spread usage of IT in the state. It had set up a state level task force on IT that announced an industry friendly IT policy. 

Madhya Pradesh has formulated an IT Policy that lays down the vision and policies of the state. The IT Policy envisions the creation of a " Seamless Society with Global Opportunities". Madhya Pradesh aims to become a large player in the IT sector targeting a 5-10% share of the All India IT output by the year 2008. It aims to achieve high Standards in IT literacy creating approximately one million jobs by the year 2008. The focus of the IT policy is to impact the social sector by promoting the use of IT across society and in the process develop skilled manpower for a vibrant IT led economy. 

The Government of MP wants to extend the benefits of the Information Technology revolution to the common man and use IT as an accelerator for the socio-economic development of the state. It has therefore recognised Information Technology as a thrust area and a growth engine for the state. 

Madhya Pradesh is endowed with rich and varied expanse of natural resources including diverse soil and agro-climatic conditions, forest, bovine and aquatic wealth. Bio-technology has great potential for providing a wide range of benefits by application across sectors such as agriculture, animal husbandry, fisheries, human health, forestry and environmental protection. The present and future requirement of food, health and livelihood security can be addressed only by ensuring the sustainable use of these resources. 

The State Government therefore proposes to initiate a concerted action plan to ensure the sustainable use of its diverse bio-reserves, to promote the use of applications for deriving benefits for a wide range of sectors like agriculture, animal husbandry, human health etc. and to encourage research, education and application centered development in biotechnology.

As seen from above, the State is making sincere efforts to bring all the people into the development process and enable them to participate in this process. The approach of the plan is to create political, economic and social opportunities to all people of the State through democratic decentralisation, so that the people empower themselves rather than waiting for the State to empower them.