The State of the Indian Mountain States

By R S Tolia • Random Thoughts • 24 Dec 2013

For past many years the Mountain States of India have been pressing a demand for being considered for additional resources as they confronted very specific disabilities and were burdened with developmental constraints imposed by environmental regulations. This demand, as it increased in crescendo, went by several names e.g. Green Bonus, Environmental Compensation and so on. Lead in this direction was taken by Uttarakhand, Himachal Pradesh and some major mountain States of the North Eastern India. In the annual National Development Council conclaves these very same mountain States kept on persisting with their demands and this went on for quite some time. A critical mass seems to have accumulated when mountain states after mountain states made out their case at the apex Development forum, the National Development Council ( NDC ). Two years ago, in November 2011 to be more precise, the Prime Minister Dr Manmohan Singh finally ordered constitution of a Committee to Study Development in Hill States arising from management of forest lands “with special focus on creation of Infrastructure, Livelihood and Human Development”. The writer of this column happened to be included as one of the two private members, serving on this important Committee.

Belated Acknowledgement

Two years and six meetings later this Committee has now concluded its deliberations and has now submitted its set of recommendations. At long last the apex Planning body of this country has acknowledged that while in a vast country like India State-specific requirements do exist for every state for meeting their development aspirations and targets of which poverty alleviation and creation of infrastructure command high priority, “certain States such as those in the Himalaya region stretching from Jammu & Kashmir to North East are at disadvantageous situation in terms of difficult terrain, severe weather conditions, large forest land, dispersed habitations, small and under-developed markets, long international borders, poor connectivity and inadequate general infrastructure.” It has also been appreciated now that “the cost of delivery of public services in these States is also higher compared to other States due to their typical topography ( which act ) as constraints in terms of development…With the procedures for environment clearances being generally identical for all States, the States having a large forest cover find it difficult to get environmental clearances, even for infrastructural projects which hamper their developmental initiatives.” To add to their already awesome list of hurdles, “there is no free or open land to take up compensatory afforestation, which by definition means converting open land into a forest by planting trees/seeds. As a result, the funds available under Compensatory Afforestation Fund Management and Planning Authority ( CAMPA) are also not available to these States, even though it is they who have put the money on NPV basis.” Besides, concludes this comprehensive analysis “ these States are unable to use forest resources for raising revenue and at the same time have to incur significant expenditure for maintain the forests.”

However, to address the specific needs of these States, there have been certain specific mechanisms such as tax devolution formulae used by Finance Commissions, budgetary support extended by the Planning Commission, besides special schemes, packages and policy measures. Fiscal incentives in terms of income tax/excise duty concessions have also been there, as we have witnessed after creation of Uttarakhand out of UP.

Many among these States have represented to the Government of India that it is not appropriate to apply the same yardstick for statutory requirements specially while considering central assistance to the States which have a large forest cover. The demand for a Green Bonus came out as an argument for having more forests and other valuable eco-system, the benefits of which were indeed shared with the country at large. It has been suggested that this can be done by explicitly changing the Gadgil Mukherjee formula or by having some alternate compensation mechanism. The States of Jammu & Kashmir, Himachal Pradesh and Uttarakhand have also very forcefully argued for a parity with the other eight Hill States of North East India by being allowed to contribute only 10 per cent as their share in the Centrally Sponsored Schemes.

Inadequate Previous Measures

There have indeed been previous efforts to compensate the States for maintaining high forest cover, for example the Twelfth Finance Commission had provided Rs 1,000 crores to States, to be disbursed on pro rata basis. The Thirteenth Finance Commission also recognized the need for incentivising forest conservation and compensating the States for economic disadvantages arising from maintenance of forest cover. This Commission recommended a forest formula and allocated a sum of Rs 5,000 crore for compensating States for these purposes. However, apart from Arunachal Pradesh which received an allocation of Rs 728 crore over a 5 year period, the allocation to other States have been much lower, Sikkim getting Rs 40 crore and Uttarakhand Rs 205 crore. True, these releases are in addition to CAMPA funds the releases under CAMPA funds have been through an ad hoc arrangement with the amount released at Rs 100 crore. Thus both Finance Commission added with CAMPA funds together appear insufficient to provide resources on a scale which would enable these State Governments to take up major infrastructural projects.

Undoubtedly, large amount of funds are being provided for the Special Category States, plus 10 per cent of the Plan outlay of the non-exempted Ministries is to be spent in the NE States and the non-lapsable pool for certain Plan resources are also being made available to the Department of NER to make investment in infrastructure. A window has also been opened under NLCPR, operational since April 2012, which allows central Ministries dealing with infrastructure projects access to these funds from NLCPR( Central). However, in practice, it has been found that just making available resources is not enough to meet the desired objectives. There are equally important issues such as those pertaining to land acquisition, forest clearances, disturbed law and order conditions and inadequate capability of the institutions to implement major projects in the region. Deliberations during the meetings held between the representative of these States and the Ministries revealed that the Indian Mountain States require solutions that fall in the domains of process issues as well as special financial dispensations.

A Comprehensive New Deal for Inclusive Growth

The recommendations that have been made by this Study Committee promise to be a New Deal for these backward Mountain States as these go much deeper in addressing what has hampered their growth so far. Firstly, the Process Issues comprise of those initiatives which are required to speed up development process and may not really require any special financial compensation. To begin, Relaxation in Norms have to be made for Himalayan and NE States, as these being identical for all States, the States with large forest lands and hilly terrains, suffer from a constraint. Thus there exists a clear need to take a view on the relaxation of forest clearance norms for Himalayan States in line with Left Wing Extremism ( LWE), in order to ensure fast tracking of clearance for infrastructure projects. Ministry of Environment and Forests ( MoEF ) would be required to scrutinize specific proposals in consultation with the respective States and a time bound approach will have to be followed and there is a need to have a co-ordination committee, for fast tracking and sorting out issues, as these emerge. Permission to use CAMPA funds for densification of forests with low canopy cover will have to be given a more general applicability and for development projects automatic diversion limit would require to be upped from present just 1 ha to 10 ha.

Similarly diversion of forest land up to an area of 10 ha from the present limit of 5 ha would require to be given to the respective State Government, for infrastructure projects. A need for streamlining the policy and procedures, cutting down on multiple stages, has also been highlighted, during these deliberations. To expedite E&F clearances the need of an office in each of the Himalayan and NE States has also been flagged. Finally, a time bound system for receiving, processing and granting of clearances will have to be strictly followed, in no case extending over one year. For the border roads projects there exists a need for permitting right-of-way up to 100 meters and up to 60 meters for widening, against 24 meters prevalent as of now,

Take from Uttarakhand 2013

Uttarakhand’s tragic event of June 2013 was obviously in every one’s mind which underscored the importance of undertaking development work while taking full cognisance and adopting practices that mitigate the vulnerability of these regions to extreme events. It stands now emphasized, as never before, that the bye-products of development work, be it the disposal of excavated earth, or the cutting of hill sides, should be designed and undertaken in a manner which minimises any increase in the vulnerability of the area to extreme events. Obviously such measures will also go on to add to the cost of building much needed infrastructure, which underscores the recommendations that have been made by this Study Committee in regard to fiscal assistance that has to be provided to these mountain States.

Best Practices of Alpine Nations, Use of ISRO

The Study Committee has been of the view that the Union Government should take immediate steps to set up a  platform for close interaction between the agencies enjoined with this task in the European Alpine nations, particularly Switzerland and Austria, so that the best practices and technical framework can enrich safer development works in our own Himalayan and other Mountain regions. Excellent work undertaken by ISRO was recalled and it was also suggested that the Remote Sensing organisations under ISRO outfit should be mandated to not only update the task they had undertaken in 2001 but further hone up the same for effectively tracking Landslide Hazard Zonation ( LHZ ), which had for all practical purposes predicted a calamity as big as crumbling of Varunavrat in Uttarakashi in 2003. Proposals submitted by ISRO for strengthening of the existing facilities for Disaster Risk Reduction and Sustainable Development were also taken on board for implementation by this Committee.

Fiscal Package

Deliberations of the Study Committee, made fully conscious during several rounds of deliberations between the Mountain States and the Ministries, of the special burden carried by the eleven mountain States of India on account of ( a ) historically weak infrastructure and economy and ( b ) the constraints of having to care and protect for a disproportionate share of the nation’s forests, mountains, water sources, bio-diversity and general environmental heritage, recognised the sheer inadequacy of all fiscal and procedural dispensations that had hitherto been made by the Finance Commissions and regulatory regimes for them.

The Study Committee has recommended a substantial sum of fiscal transfer to be earmarked as compensation for the Himalayan/Mountain States on account of the special burden that they carry for the rest of the Nation. These transfers have been recommended to be linked to the development of economic and social infrastructure, e.g. roads, railways, airport, drinking water, minor irrigation, horticulture, schools, skill training centres, professional colleges, health care centres etc. These are to ensure that the fiscal transfer results in creating valuable economic and social assets on the ground and it relieves the stress on the general finances of the State government.

This fiscal compensation has been calculated to be at least 2 ( two) per cent of the Gross Budgetary Support ( GBS ) to the Plan each year. At the current level this GBS comes to about Rs 10,000 crore for 2013-14 and each year thereafter.

Next Steps

It could be safely concluded that the need to adequately provide not only financial resources but also ensure that the Mountain States are treated at a footing quite different and distinct from the remaining States of India has at long last been accepted by our apex planning body, the Planning Commission of India. In its latest recommendations it has now shifted the responsibility of sustainable development on each of the eleven Himalayan and Mountain States. It is now up to the political and administrative leadership of these States to ensure that what the Planning Commission has provided to them is not frittered away. There could not have been a better New Deal for the Indian Mountain States than what has been provided by the Planning Commission in its latest set of recommendations.

 

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