Sitting here in the Capital, it's not unusual to think of the North-east as one huge trouble spot, yet Nagaland and Mizoram are spearheading some of the more radical attempts by the state governments to correct their fiscal balances.
A few months ago, with the Rs 70 crore (Rs 700 million) central assistance, Mizoram became the first state to offer the government employees the voluntary retirement scheme. It removed 1,000 drivers, sold their vehicles and is now employing taxis for ministers and bureaucrats.
Nagaland, which enacted the Community Empowerment Act last year to allow village councils to collect user-charges on power, saw a 300 per cent hike in its collections this year. Councils can keep 10 per cent of it for local uses.
Move a bit closer to the mainland, and you'll find a change of scene even in the Left-ruled West Bengal, where bonuses to government employees were halved last year. It may be abolished this year, saving another Rs 200 crore (Rs 2 billion).
Under the Shiksha Bandhu programme, West Bengal is hiring teachers on contracts and at half of the usual salaries.
It has hiked land revenue for the first time in 50 years to net Rs 80 crore (Rs 800 million) and water charges to net Rs 120 crore (Rs 1.2 billion) for the first time since the Left Front came to power in 1976.
The state's non-tax revenues are projected to rise from Rs 776 crore (Rs 7.76 billion) in 2001-02 to Rs 1,808 crore (Rs 18.08 billion) in 2002-03.
Haryana, one of the 21 states that have signed the Medium-Term Fiscal Restructuring Policy programmes with the
Centre, has turned around its power board, from a Rs 633 crore (Rs 6.33 billion) loss in 1999-00 to a Rs 116 crore (Rs 1.16 billion) profit in 2001-02.
Installation of 10,000 electronic meters every week through last year and checking of theft have seen revenues going up 46 per cent in the last two years.
Rajasthan, similarly, has been cracking down on power theft--last year electricity to 700 villages was cut for non-payment and transformers were removed--and revenues have risen up to 50 per cent over three years.
Farmers in Rajasthan pay Rs 85 per month per horse power of pumps, perhaps the highest farm tariff in the country.
The state government has hiked water charges to collect an additional Rs 95 crore (Rs 950 million) in a year and today collects around a fifth of operations and maintenance costs from usersthis is to be hiked to 50 per cent in another two years.
Two years ago, tariffs for the state road transport undertakings were indexed to prices of oil and rubber, and DA for employees11 other states have done the same.
Andhra Pradesh has water user associations which collect user-charges in irrigated areas, and they are allowed to retain 10 per cent of it for local uses.
Madhya Pradesh has hiked power tariffs twice in the last two years, because of which revenues have jumped 64 per cent this year.
Says Ranjit Bannerji, joint secretary in the finance ministry, who monitors MTFRP, most states have been stringent about not releasing additional bonus for employees.
While the Centre has released additional DA for its staff, taking the total DA component of salaries to 52 per cent, states like Kerala have kept the DA rate at just 38 per cent. For several others, like West Bengal and Tamil Nadu, the figure is 41 per cent.
Keeping the DA frozen and the government downsizing (through measures like hiring contract-teachers) have helped Madhya Pradesh reduce establishment costs from 70 per cent of revenue receipts in 1998-99 to 45 per cent today.
In Kerala, salaries, interest and pensions added up to 102 per cent of revenue receipts in 1999-00. It has declined to 85 per cent.
The PSU reforms is another area where states are beginning to score. The country's first major VRS was done in the Gujarat State Textile Corporation which got rid of 18,000 employees over 27 mills in the mid-90s.
Orissa has shut seven PSUs after giving VRS to 14,000 employees over the past two years, while Andhra Pradesh has closed 19 PSUs after VRS-ing 21,000 employees. With the Rs 50 crore (Rs 500 million) central aid, Nagaland closed three sugar mills after giving VRS to 850 employees.
Maharashtra, one of the worst states in terms of fiscal imbalance, is trying to make a start by setting up a divestment
commission whose recommendations will be statutory.
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