PM's inaugural address in eleventh Inter-State Council Meeting

English rendering of excerpts of the PM's inaugural address in eleventh Inter-State Council Meeting at New Delhi

Chief Ministers and Lt. Governors of States and Union Territories, and my Cabinet colleagues,

I welcome you all to this important meeting of the Inter State Council.

There are only a few occasions when the leadership of the Centre and the States, assembles together. This forum of cooperative federalism is the perfect setting to deliberate on the interests of the people, address their problems, and take collective and concrete decisions. It highlights the vision of the makers of our Constitution.

Let me begin by recalling what our beloved former Prime Minister Shri Atal Bihari Vajpayee ji had said at this very forum sixteen years ago:

“In a democracy as big and diverse as ours, debate, deliberation and discussion help evolve policy that relates to the ground reality. More importantly, they enable the effective implementation of such policies.

The Inter-State Council is an inter-governmental forum that can be used for evolving policy as well as ensuring its implementation. I, therefore, urge the States to increasingly use this forum as an effective instrument to strengthen our democracy, our society and our polity.”

The Inter-State Council is certainly the most significant platform for strengthening Centre-State and Inter-State relations. There has been a long hiatus since the last meeting in 2006, but I am happy that through the efforts of Home Minister Rajnath Singh ji, the process has been restarted. Over the last one year, he has convened meetings of five zonal councils. The increased dialogue and connect has culminated in this gathering today.

The nation can progress only if the Union and State Governments walk shoulder to shoulder. It would be difficult for any Government to successfully implement a scheme on its own. Therefore, provision of adequate financial resources is as important as the responsibility for implementation.

With the acceptance of the 14th Finance Commission recommendations, the States’ share in central taxes has increased from 32 per cent to 42 per cent. This means that States now have greater financial resources to utilize in accordance with their requirements. I am happy to share that the total amount received by States from the Centre during 2015-16 is 21 per cent higher than the amount received in 2014-15. Similarly, Panchayats and Urban Local Bodies will receive 2.87 lakh crore rupees during the period of the 14th Finance Commission, which is substantially higher than last time.

The rights of States have been kept in mind, even in revenue received from the auction of natural resources, Auctions of coal blocks will yield 3.35 lakh crore rupees to States in the years to come. Auctions of other mines will yield an additional 18,000 crore rupees to states. Similarly, through amendments to CAMPA Act, we are attempting to free up about 40,000 crore rupees lying idle in banks, for disbursal to States.

The Union Government also wishes to share with States, the amount that is being saved as a result of transparency being introduced into the system. Kerosene is one example. Electricity connections are increasing in villages. The Union Government will provide 5 crore new cooking gas connections over the next three years. The supply of LPG will further increase. All these efforts have a direct bearing on the consumption of kerosene. Recently, the Chandigarh administration declared the city a kerosene-free zone. Now, the Union Government has launched a scheme, under which, if there is a reduction in the consumption of kerosene by a State, the Centre will disburse 75 per cent of the resultant savings in subsidy, as grant to that State. The Government of Karnataka, while moving swiftly on this initiative, has sent its proposal to the Petroleum Ministry. This has been accepted and the grant has been disbursed to the State Government. If all States decide to reduce kerosene consumption by 25 per cent, and actually do so, they can receive about 1600 crore rupees as grant this year.

Apart from Centre-State relations, the Inter State Council is an appropriate forum to discuss matters which are of concern to large segments of our population. How can we evolve consensus at the policy formulation stage? How can we address issues of mutual interest?

Therefore, in this meeting of the Inter State Council, besides the Punchhi Commission Report, three very important subjects have also been added to the Agenda.

One of these is Aadhaar. Parliament has passed the Aadhaar Act-2016. The passage of this Act enables us to use Aadhaar for Direct Cash Transfers for subsidy and other services.

As on date, 102 crore Aadhaar cards have been distributed in our country of 128 crore people. 79 per cent of our people now have Aadhaar cards. Among adults, 96 per cent people have Aadhaar cards. With your support, we shall connect every citizen of the country with an Aadhaar card by the year-end.

Today the simple Aadhaar card has become a symbol of empowerment. Benefits now flow only to people genuinely entitled to receive them, with money getting directly credited to their bank accounts. This has not only brought in transparency, but also resulted in savings of thousands of crores of rupees, which are being utilized for development.

Friends, Babasaheb Ambedkar had written – “The path of social reform like the path to heaven at any rate in India, is strewn with many difficulties. Social reform in India has few friends and many critics.”

The words written by him continue to be relevant even today. Therefore, eschewing criticism, we must lay emphasis on promoting social reform schemes through mutual cooperation. Many of these schemes have been designed by sub-groups of Chief Ministers under the aegis of the NITI Aayog.

Another important area of discussion in the Inter State Council is Education. India's greatest asset is its youth. More than 30 crore children are currently of school-going age. Hence, our country has the potential to provide the world with skilled manpower for many years to come. The Centre and the States must work together to provide our children an enabling environment in which they can develop their skills and prepare themselves for today's needs.

In the words of Pt. Deen Dayal Upadhyay: “Education is an investment. While planting trees, we do not charge them any fee.” We are aware that these trees will give us oxygen in the future, and benefit the environment. Likewise, education is also an investment that benefits the society.

Pt. Deen Dayal Upadhyay ji said this in 1965. Since then we have come a long way in terms of education. But a lot still remains to be done with regard to the standard of education. We must discuss the extent to which our system of education is genuinely educating our children.

The best way of improving the standard of education among children is to make them aware of the purpose of education. Merely going to school is not education. Education should generate curiosity among children. It should teach them how to attain and enhance knowledge. It should motivate them to continuously keep learning throughout their lives.

Swami Vivekananda also used to say that education does not mean merely attaining bookish knowledge. The aim of education is character building. Education means strengthening the mind, and enhancing one's intellect, so that one can become self-reliant.

Given the kind of efficiency and ability that is required in the economy of the 21st century, it is our responsibility to ensure that our youth are equipped with at least some skill-sets. We have to prepare our youth to think logically, think out of the box, and work creatively.

Internal Security is another important issue on the agenda today. We have to discuss internal security challenges confronting the country, the solutions to these challenges, and mutual cooperation in this regard. The internal security of the country cannot be strengthened until we focus on intelligence sharing, ensure greater coordination among agencies, and equip our police with modern approach and technology. While, we have come a long way, we need to continuously increase our efficiency and capacity. We must constantly remain alert and updated.

The meeting of the Inter State Council provides an opportunity for exchange of views in an extremely free and frank manner. I am sure you will share your thoughts and suggestions on all the agenda items. These will be of tremendous value.

The more we are able to forge consensus on these vital issues, the better we shall be able to tackle them. In doing so, we shall not only strengthen the spirit of cooperative federalism and Centre-State relations, but also secure a better future for our citizens

India felicitated for Maternal and Neonatal Tetanus Elimination (MNTE) and yaws-free status India:

India felicitated for Maternal and Neonatal Tetanus Elimination (MNTE) and yaws-free status India: first nation to be formally acknowledged to be yaws-free “proud moment for India to have achieved these two momentous public health milestones”: J P Nadda

“Proud moment for India to have achieved these two momentous public health milestones”. This was stated by Shri J P Nadda, Union Minister of Health and Family Welfare as he received the official citation from WHO and UNICEF, in the presence of Smt. Anupriya Patel, Minister of State, Health & Family Welfare, for Elimination of Maternal and Neonatal Tetanus and for being YAWS-free, here today. India is the first country to be officially acknowledged as being Yaws-free. India was validated for Maternal and Neonatal Tetanus Elimination (MNTE) in April 2015, much ahead of the global target date of December 2015.

Speaking at the occasion, Shri Nadda stated that following the success of polio eradication programme, these achievements reflect the dedication of the country towards achievement of health equity and universal health coverage. This has been possible due to the commitment and dedication of the lakhs of health workers, various stakeholders and concerted efforts of planners and policymakers, he added. He congratulated them all for this singular honour the country has achieved in a short span of time. He further added this accomplishment is significant as India has achieved this important milestone of being Yaws-free much before the WHO global target year of 2020.

The Union Health Minister stated that India has shown the world that there is no such thing as impossible. These are likely the greatest lessons, and the greatest inspirations for the rest of the world, the Health Minister added. The Health Minister appealed to sustain this achievement of Maternal & Neonatal Tetanus Elimination (MNTE) by health system strengthening; high routine immunization coverage and promotion of institutional/Clean Delivery/clean cord practices and effective surveillance system. The gains in keeping India free from preventable deaths continues with introduction of newer vaccines such as Rotavirus vaccine, IPV, Adult JE and soon-to-be introduced Measles-Rubella in the public health programme of the country, the Minister added.

Smt Anupriya Patel, Minister of State for Health and Family Welfare said that this is a huge public health feat. She further added that this has been possible through continued efforts of political leadership and hard work of health workers. Smt. Anupriya Patel congratulated all stakeholders and said that this achievement is particularly significant as both MNTE and YAWS have been achieved much before their target dates.

Dr. Poonam Khetrapal Singh, Regional Director WHO-SEARO congratulated India and said that these are achievements for entire humanity and not just India. She further added that this has been possible because of education and early treatment of vulnerable population. She said that lessons learned from these two huge public health milestones should guide other programmes as well. The achievements will not only improve the health of marginalized communities, but will also enhance their socio-economic status and contribute to India’s wider development, Dr Singh noted.

India completed validation of maternal and neonatal tetanus elimination in all of its 36 states and union territories in April 2015, much earlier than the target date of December 2015. While progress continues to be made, by June 2016, 19 countries have still not reached the maternal and neonatal elimination status. The elimination of Maternal and Neonatal Tetanus as a public health problem means that in our country the annual rate of Maternal and Neonatal Tetanus is now less than 1 per 1000 live births.

The Health Ministers also released Immunization Handbook for Medical Officers; Routine Immunization Monitoring Guidelines & SOPs; INCHIS survey report of Mission Indradhanush; Guidelines for establishing sentinel stillbirth surveillance; Maternal & Child Health Guidelines on Birth Defects Surveillance and Still Birth; “Yaws Disease - End of Scourge in India” booklet along with the new Communication Plan for Routine Immunization featuring Shri Amitabh Bachchan.

Mr. James Gitau, Country Representative (officiating), UNICEF; Shri Bhanu Pratap Sharma, Secretary (HFW); Dr. Jagdish Prasad, DGHS; Shri C K Mishra, ASnMD (NHM); senior officers from the Ministry and representatives of various Development Partners were also present at the felicitation ceremony.

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Prime Minister to chair the Inter-State Council meeting tomorrow

Prime Minister to chair the Inter-State Council meeting tomorrow

The Prime Minister Shri Narendra Modi will chair the eleventh meeting of the Inter-State Council here tomorrow. The Union Ministers and Chief Ministers of all states are expected to attend the meeting.

The Prime Minister is the Chairman of the Inter-State Council. During the eleventh meeting of Inter-State Council being held tomorrow, following issues will be discussed:

i). Consideration of the recommendations of the Punchhi Commission on Centre-State relations,

ii). Use of Aadhaar as an identifier and use of Direct Benefit Transfer (DBT) for providing subsidies, benefits and Public services,

iii) Improving quality of school education with focus on improving learning outcomes, incentivising better performance, and

iv). Internal security

The Inter-State Council Secretariat, under the Ministry of Home Affairs (MHA), Government of India, also organises the Zonal Council meetings under the chairmanship of Union Home Minister. During the year 2015, all the five Zonal Council meetings namely East, Central, North, West and South have been held in that order. Apart from this, the meeting of North Eastern Council (NEC) with all the Chief Ministers of the North Eastern States was held under the Chairmanship of Union Home Minister Shri Rajnath Singh. During the current year, the Eastern Zonal Council meeting was chaired by Home Minister Shri Rajnath Singh in Ranchi, Jharkhand on June 27, 2016. During these meetings, the subjects such as economic and social sectors, infrastructure, health, security related matters and various other developmental schemes were discussed by Shri Rajnath Singh with the concerned Chief Ministers and other participants.

The members of the Inter-State Council consist of Chief Ministers of all states, Chief Ministers of Union Territories having a Legislative Assembly and Administrators of UTs not having a Legislative Assembly, Six Union Ministers and eleven Union Cabinet Ministers/Minister of State (Independent Charge) as permanent invitees. The six Union Ministers Shri Rajnath Singh, Smt Sushma Swaraj, Shri Arun Jaitley, Shri M. Venkaiah Naidu, Shri Nitin Jairam Gadkari and Shri Manohar Parrikar are the members of the Inter- State Council. Union Ministers Shri Suresh Prabhu, Shri D. V. Sadananda Gowda, Shri Ramvilas Paswan, Shri Ravi Shankar Prasad, Smt Harsimrat Kaur Badal, Shri Jual Oram, Shri Thaawar Chand Gehlot, Smt Smriti Zubin Irani, Shri Dharmendra Pradhan, Shri Piyush Goyal and Smt Nirmala Sitharaman are the permanent invitees to the Inter-State Council.

The tenth meeting of the Inter State Council was held on December 9, 2006 in New Delhi. 

Uniform civil code: One nation, one law

A uniform civil code is an idea whose time has come. But there are complex issues that first need to be resolved

It’s not a term that rolls easily off the tongue. Yet, a ‘uniform civil code’, or to use its more convenient acronym, UCC, has been gaining currency over the past few months. Last week, the flutter of commentary rose again when the Narendra Modi government asked the Law Commission to examine the feasibility of bringing about a UCC.

The concept of one nation, one law is more than a neat hashtag and goes back to the drafting of the Constitution. Back then, the issue was hotly debated—some members of the Constituent Assembly argued for a common personal law for marriage, divorce, inheritance and adoption, while others believed that this was a goal to be achieved in stages. The directive principle—“shall endeavor to secure for citizens a uniform civil code”—was a compromise since the time was not right.

The time has never been right in the sixty plus years since we adopted the Constitution. Yet, we have a new mood in the country.

It’s a mood that is looking with considerable less tolerance at existing gender gaps, particularly where personal laws and religion are concerned. As women threaten to storm male-only mosques and temples, as the courts gird up to examine existing inequities, is it finally time?

Historically, the idea of a UCC has received support from two seemingly opposed constituencies: women’s rights groups and right-wing parties and organizations. Yet, the first stage of reform of the personal laws of Hindus—giving women the right to choose or divorce their partners, some rights in the property of their fathers and husbands, abolishing bigamy—faced considerable opposition from the then Jana Sangh—the precursor of the Bharatiya Janata Party (BJP) as well as the Rashtriya Swayamsevak Sangh (RSS). For many, it’s ironic that the push for a UCC now comes from the BJP.

But the Congress’s track record is no better and it will, in all probability, never live down the shame of pushing back the rights of Muslim women by passing the perversely named Muslim Women (Protection of Rights under Divorce) in 1986. The passage of the Act by the Rajiv Gandhi government effectively reversed a Supreme Court judgement that granted maintenance to divorced Muslim women.

Where do we go from here, and how do we move forward? Can we put aside past acrimonies and suspicions?

Several issues remain.

The first of these is the argument that the time is still not right. Muslims all over the world are under siege. Moreover, there is suspicion among the minorities in this country about this government’s true intentions—common law or majoritarianism? Controversies over beef, saffronization of school and college curriculums, love jihad, and the silence emanating from the top leadership on these controversies have done little to instill a feeling of confidence. Can the government build bridges and instill confidence?

Second, while a UCC has remained a wonderful principle, nobody has actually spelt out what this common code will look like. What are the nuts and bolts of this law? Is it to take the ‘best’ practices from all religions and, if so, which ones? How would it deal with polygamy not just among Muslims but also Hindus and tribals? What will happen to the tax exemptions and breaks granted to the Hindu Undivided Family (HUF)?

One way forward is to look at the UCC in terms of gender reform, a line favoured by many, including myself. But there is a caveat here, too. Can you look at parity of law for all women without first looking at parity between men and women? For instance, says former additional solicitor-general Indira Jaising, will our law-makers consider a concept of shared labour in marriages that would necessarily mean an equal division of assets acquired in the life of a marriage in case of a divorce?

One argument in favour of a status quo and against a UCC is that the courts have in innumerable cases given secular laws precedence over personal, religious codes. In the past 12 months alone, a two-judge bench ruled that Muslim women are entitled to maintenance beyond the iddat(roughly three months) period. It upheld a previous Allahabad high court judgement that “polygamy was not an integral part of religion”. It has questioned why Christian couples must wait for a two-year separation before filing for divorce when it is just one year for others. Earlier still, it gave Muslim women the right to legally adopt children even though this goes against their personal law.

The problem with this line of argument is that it looks at justice on a case-by-case basis. It presupposes also that all minority women have access to lawyers and the courts.

There is another alternative—change from within. Already social organizations within the realm of religion have begun demanding an end to practices such as triple talaq. The All India Muslim Personal Law Board has not, so far, responded favourably even though an online petition by the Bharatiya Mahila Muslim Andolan demanding a ban has already attracted over 50,000 signatures.

And yet, there can be no turning back, no drowning out of voices demanding justice. This Eid, the three-century old Aishbagh Eidgah in Lucknow opened its doors to women to offer prayers for the first time in its history. It was a tiny step towards what could be a new beginning.

India needs a robust corporate bond market

Large firms should get most of their funds from the bond market, not banks

published more than three years ago, this newspaper had warned that the deterioration in the asset quality of banks would be an important challenge for the Indian economy. This was at a time when the first cracks were already evident to those who were prepared to look beyond both the breezy confidence of senior bankers as well as the regulatory forbearance that had been put in place after the global financial crisis. The editorial, published on 2 June 2013, concluded “Indian banks will have to clean up their books before they are ready for the next economic upswing”.

Much has happened since then. Under pressure from the Reserve Bank of India (RBI), public sector banks have begun to admit the extent of their bad loan problem. It is not a pretty picture. A lot of the problem loans are linked to business groups with strong political connections, aka crony capitalists. There has also been a parallel debate about how to strengthen the banks, which includes a range of issues from governance reforms to discounted sales of bad loans to recapitalization by the government.

The Indian banking mess also provides an opportunity to ask some more fundamental questions about the structure of the Indian financial system. RBI has added an important new element to this debate in its new Financial Stability Report , which has a section on the optimal configuration of a financial system, or how much of funding is through banks and how much through the bond market. According to the central bank, “with banks undertaking the much needed balance sheet repairs and a section of the corporate sector coming to terms with deleveraging, the onus of providing credit falls on the other actors”.

India continues to have a financial system that is dominated by banks, making it more similar to the financial system in countries such as Germany rather than the US. There has been a heated debate among economists about whether an optimal financial system should be dominated by banks or the bond market. Without going into this rather technical debate, it is worth reiterating that India needs a more robust bond market.

There are two reasons for this. First, Indian banks are currently in no position to rapidly expand their lending portfolios till they sort out the existing bad loans problem. Second, the heavy demands on bank funds by large companies in effect crowd out small enterprises from funding. India needs to eventually move to a financial system where large companies get most of their funds from the bond markets while banks focus on smaller enterprises.

Of course, this transition is not as easy as it sounds. Indian policy makers have struggled for nearly two decades to get a robust corporate bond market off the ground. Several administrative issues that were identified by the committee headed by R.H. Patil in 2005 have since been sorted out. Yet, the Indian corporate bond market continues to be small and shallow.

It is worth pointing out a few structural issues. First, most of the bond market activity has been restricted to small private placements that are held to maturity by passive investors, thus limiting the growth of a secondary market. Second, the sheer size of the annual government programme to fund the fiscal deficit has killed investor appetite for corporate bonds. Third, there are significant obstacles to risk-based pricing of corporate bonds—ranging from the lack of a robust benchmark interest rate to the relative lack of derivative products which investors can use to hedge.

It is highly unlikely that the corporate bond market will ever replace banks as the primary source of funding. Yet, India needs a more lively corporate bond market. It can also play a part in disciplining companies that borrow heavily to fund risky projects, because borrowing costs would spike. Just think: what if Vijay Mallya had to depend on the corporate bond market rather than friendly banks to fund his airline ambitions? An efficient bond market would have poured cold water over these ambitions through higher interest rates unlike the banks which restructured his loans through sweet deals.

How can India develop a robust corporate bond market?

Seven failures of economic liberalization

We’re all celebrating 25 years of the 1991 reforms, with good reason, but there are also several areas where our hopes have been belied

We’re all celebrating the 25th anniversary of the economic liberalization of 1991, with good reason. The end of the licence raj and the opening up of the economy to private and foreign capital has been a success story. But there are also several areas where our hopes have been belied. Here are a few of them:

Share of manufacturing in GDP%

One would have expected that the New Industrial Policy, unveiled in 1991, would have been just what the doctor ordered for the manufacturing sector and India would soon take its place among the manufacturing powers of East Asia. But chart 1 shows that in 1989-90, the share of manufacturing in the gross domestic product was 16.4%; in 2015-16, after myriad new manufacturing policies, its share was at 16.2%. True, this doesn’t mean the sector hasn’t grown. But since manufacturing holds out the promise of jobs for the masses and its productivity is also relatively higher, it was hoped that its share in the economy would increase. That hasn’t happened.

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Combined fiscal deficit of centre and states

One underlying reason for the crisis of 1991 was the indiscriminate rise in government borrowing in earlier years. It was only to be expected therefore that after the crisis, the government would do all it could to curb its fiscal deficit and that of the states. Unfortunately, as chart 2 indicates, that didn’t happen. By 2000-01, the combined fiscal deficit of the centre plus the states, as a percentage of GDP, had risen beyond the 1991 level. In 2014-15, the combined fiscal deficit, as a percentage of GDP, was higher than it was in 1995-96.

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Tax to GDP ratio

One reason why government deficits remained high is that, in spite of robust economic growth, tax revenues weren’t buoyant. Widespread tax evasion is probably the reason, along with a plethora of sops given to companies. Chart 3 shows that the central government’s gross tax revenues as a percentage of gross domestic product have remained below the 1991-92 level, in spite of recent efforts.

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Central government expenditure

The disinclination to reduce the fiscal deficit had the effect of raising the central government’s interest burden, as it had to pay out ever-increasing interest on its outsize borrowings. The upshot was deterioration in the quality of the deficit. The government was borrowing to fund, not productive capital expenditure on infrastructure, but unproductive revenue expenses. The chart shows that in 1990-91, capital expenditure accounted for 30% of total central government expenditure. The budget for the current fiscal year puts the share of capex at a mere 12.5%.

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Average employment per non-agricultural establishment

Economic liberalization has failed to provide secure and decent jobs to the mass of the population. Chart 5 shows that in spite of all the reforms, the number of employees per non-agricultural establishment has been coming down steadily. It was an average of 2.39 employees per establishment in the 2013 economic census, compared to 3.01 persons in the 1980 economic census. This means the vast majority of the establishments in India are in the informal sector, with neither the capital nor the technology to improve productivity.

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Distribution of employment according to size of employment

Before the 1991 liberalization, 37.11% of employees used to work in establishments employing 10 or more workers. Instead of increasing, that proportion has been steadily coming down and in 2013, only 21.15% of employees worked in establishments employing 10 or more workers. Workers in small enterprises for the most part eke out a precarious existence in the informal sector with no job security and precious few benefits.

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Mortality rate

And finally, surely economic liberalization should result in better care for our children. Chart 7 shows the country has made considerable progress on that front, with the under-five mortality rate coming down from 125.8 per thousand in 1990 to 47.7 per thousand in 2015. But as the chart shows, neighbouring Bangladesh and Nepal, much poorer than India, have both brought down their under-five mortality rates more than India. The chart suggests you don’t really need to be the world’s fastest-growing major economy to ensure your kids survive.