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Special Category Status to the Uttaranchal state: Can it Deliver?

By Suresh Nautiyal

WITHIN six months of its birth, the border state of Uttaranchal has acquired the special category status with retrospective effect from April 1, 2001. As a result, the new state will get liberal assistance from the central government. The local units of the national parties as well as several
regional organizations, including the main Uttarakhand Kranti Dal, were demanding extension of the special category status to Uttaranchal which in their opinion fulfilled several criteria like hilly and difficult terrain, low population density, strategic location, economic and infrastructure
backwardness apart from the nonviable nature of its finances. Also, the fact that majority of its population resides in the hilly and difficult terrain and that the state is a geopolitically sensitive area having its borders with the China occupied Tibet in the north and with Nepal in the east. Besides, Uttaranchal was the only hilly states without such a status.

The Centre granted the new status to the state on May 2, 2001, fulfilling the commitment in the hope that the state would move steadily on the track of all-round development. The 27th state of the Indian Union, which had come into being at the stroke of midnight of November 8-9, 2000, becomes the 11th state to enjoy this status. All the eight states of the northeast (Arunachal Pradesh, Assam, Meghalaya, Nagaland, Manipur, Tripura, Mizoram, and Sikkim), besides Jammu & Kashmir and Himachal Pradesh are already in this category.

Devised in 1969 under Gadgil formula on central assistance to the states, the states with this status get 90 per cent of the central assistance as grants and 10 per cent as loans. This much more than what the general category states get from the Centre. As regards the Uttaranchal state, the Planning Commission had decided in February this year to accord "special category" status to the newly-formed state and a note was sent to the Union Cabinet for its approval. The Uttaranchal chief minister, Nityanand Swami, had also vigorously pursued the matter. However, his premature announcement in this regard had only made him a laughing stock.

Having adorned with the status, the Union government may bring some measure of relief to the state whose non-Plan revenue deficit during 2000-01 was about Rs 1,700 crore and The maiden budget (2001-2002) with Rs 1,261.03 crore deficit. Ironically, the new state will be shelling more than Rs 530 crore as interest towards the World Bank and other lending agencies. Due to these constraints, the finance minister of the state could not provide much for creation of basic infrastructure for amenities like drinking water in rural areas, fuel and fodder, generation of employment nearer home and construction of new bridges in a state where bridges form an important part of communication. And strangely, a paltry sum of Rs four crore has been provided for disaster management, which needs special attention in the seismically volatile region. Besides, the interest payment on the public debt liability was not less than Rs 450 crore during the last fiscal. Even today, the BJP-led state has not been able to manage sufficient funds or resources to meet the committed expenditure on salaries, pensions, interest payments, etc.

In view of this, the special category status was essential for the very survival of the state. But, will it deliver? That is the million dollar question. Besides the regional organizations' demand for special category status, they have been demanding a special package for the all-round development of the new state. They still hold the view that merely according the special category status to the hilly state would not deliver the expected results as most of the grants were expected to meet the salary bills and the non-plan expenditures. According to these organizations, a provisions of Rs 25,000 crore economic package as well as Rs 20,000 crore annual package were essential if the new state were to catch up with other states. The UKD holds that the difficult
geography of the state should be the criterion for allocation of special funds for the new state.

The new status for the border state is not more important than how the additional funds are utilized by the state government. While giving information about the possible new status to Uttaranchal even before formation of the state, a member of the Planning Commission had argued that the people there should not insist for a special status. On an ardent inquiry, he gave an example of the northeastern states which have already been enjoying the status for several years and still there were no development activities taking place, matching the level of central grants to
them. He told that the reason was simple for continued economic backwardness of the northeastern region. The funds allotted by the Centre were not properly utilized there, he informed. Instead, the funds were diverted to the non-plan expenditures, even siphoned-off by the nexus of politicians, bureaucrats, and the corrupt contractors.

The Planning Commission member, who was confiding privately, told that the new state must not depend on the grants-in-aid for the development of the region. "'We have been pumping money into the northeastern and other hill states like anything, yet there are no rays of hope, not to talk about development in those states. We do not want to see the same thing happen in the new state," he had lamented. Sad enough that members of the same families were holding reigns of
important state-functionaries. For example, one member of the family was an influential political leader, other a senior bureaucrat, and the third one a contractor with unparalleled clout. Such a nexus allowed these family members to decide among themselves how to siphon-off the government funds without leaving any trace of their misdeeds. It is feared that the same thing may happen in the new state, where Mafia were already powerful enough to influence policy decisions.

The recent decision of the state government to sell liquor vends to the 'public' was one such decision. Due to immense pressure from the local organizations to announce a strict liquor policy, the Swami government instead offered the liquor vends to the members of the 'public'. But how many of them are members of the public at large? In fact, several of them are the stooges of
the same liquor mafia. In reality, only the names have changed, not the reigns. Also, the influential political leaders continue to get the tenders passed in favour of their 'own people' or relatives who do the business in their names but the real investments are of the political bosses. This is nothing
but a replica of what has been happening in the northeastern states.

It is not very long when a close friend of a close relative of an Uttaranchal minister was nabbed for his involvement in smuggling of the natural resources of the region. The person who was arrested had told that he was conducting the unauthorized business in association with a close
relative of the minister. Besides, there are other political bosses who blatantly showing favours to their kith and kin. In view of this, what the people in the new state must do is maximize the
human potential there and harness its natural resources in a sustained manner in order to ensure right kind of development. There is an urgent need for a shift from external funds to greater local control over resources and their utilization in the overall development of the state. It is fortunate that there is no sense of alienation among the people of Uttaranchal. Unfortunately, the high sense of alienation among the people at large in the northeastern states has instilled a feeling in them that there was nothing wrong in pocketing the funds acquired from the 'Indian' government. "If they are ready to provide large funds, what is wrong in pocketing them," is the general feeling there.

This reason being out of mind in Uttaranchal, the state government there can do a lot to stop the funds from being diverted elsewhere. The point is that the state government must create a mechanism wherein this type of corruption is detected right at the beginning and the additional
funds from the central government are kept for the useful purpose. Besides granting the special category status to the new state, the Centre is also expected to look into the demand of royalty to Uttaranchal from those states utilizing waters of the rivers originating from the new state.

In a status paper, the regional organizations have argued that such a provision was necessary for a new state whose economy was absolutely dependent on grants due to faulty policies pursued by the government over the years. Kashi Singh Airy, ex-MLA and top leader of the UKD and Rajendra Dhasmana, a prominent social activist, point out that the bare necessities of the new state have to be taken into account, otherwise the socially and economically deprived region would not become a viable state. Also, there is demand for a Himalayan Development Authority under the Centre in view of fragile eco-system of the region. In fact, an expert committee headed by SZ Kasim and instituted by the Planning Commission had proposed formation of such an authority. According to Airy, protection of Uttaranchal, which is a major part of the Himalayan region, was a precondition for protection of whole northern India. Besides, the main focus remains on the new state's right over its natural resources including water as nowhere in the country was a provision for rights over the natural resources of a state by another state.

The tussle between the truncated Uttar Pradesh and the new has not settled till now. Apart from this, apportionment of the assets and the liabilities have not taken place between Uttaranchal and Uttar Pradesh. The local demand has been for apportionment on the basis of geographical areas rather than on the basis of population ratio. The argument is that the region being scarcely populated due to its difficult geography and large-scale migration due to non-availability of job opportunities the region had less population. Also, the Uttar Pradesh government seems to be in a mood to pick up a fight with the Uttaranchal government. The Rajnath Singh government is not willing to take those employees who have had opted to be absorbed by the Uttar pradesh
government in the wake of bifurcation of the state.

Also, on the liabilities side, Uttarakhand suffers from a legacy of neglect. This is evidenced by low social and quality of life indicators, migrant labour, poor infrastructure, especially power and telephone and water reticulation. There is also a virtual absence of any modern industry or business enterprise. Given the parlous state of Uttaranchal's finances and its 'cap in hand' dependence on grants from the Centre for practically everything, most the really hard decisions involving money and resource allocations are also going to be made in Delhi. According to Mark Annand, a concept designer from New Zealand, the affairs of Uttaranchal were going to remain in a bipolar condition for some time. "The level of expectation on the new state apparatus and the probable response and socio-economic realities are likely to remain far apart for years to come," he pointed out. There is a tremendous need to develop, articulate and communicate a convincing and sound development agenda for this special region. "There is an enormous need to lift the game above the petty concerns and self limiting perspectives of the old feudalism," points out Annand.

Since the 1960's, with the emergence of border security concerns, roads have been developed extensively in the region. While many of these roads are rudimentary, physical communication is now possible to most points however travel times are much greater than for equivalent distances on the plains. Life revolves around subsistence agriculture and commodity trading oriented
to, and largely controlled by, plains interests. There is also a virtual absence of any modern industry or business enterprise.


Author: Suresh Nautiyal ( Click here to read Profile of Author)
Phone: (011) 6252460.

(Formerly a Special Correspondent with The Observer, the writer is a
Delhi-based Freelance Journalist accredited by the Press Information Bureau,
Govt of India).