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Centre sets up panel on state loan waiver

The Sikkim government has urged the Union government to give the landlocked Himalayan province proper support for development. In response, the Centre has set up a special finance committee headed by Rajasthan Chief Minister Bhaironsingh Shekhawat to look into the demands from Sikkim and other states for waiver of Central loans.

Union Finance Minister Yashwant Sinha told a high-level delegation led by Sikkim Chief Minister Pawan Kumar Chamling in New Delhi yesterday that the special finance committee would submit its report of states' demand for loan waiver in a month's time. The finance minister also assured Chamling of the Centre's commitments for the economic development of the tiny Himalayan state and said that funds shall not be allowed to become a ''constraint''.

The delegation which met the finance minister included the state assembly speaker, members of Chamling's cabinet besides ruling Sikkim Democratic Front legislators.

They were told by Sinha that since the issue of introduction of income tax in Sikkim was a matter of sub-judice in the Supreme Court, the various legal, financial and political implications of introducing income taxes in Sikkim shall be examined with utmost care so that it does not adversely affect the people of the state.

Chamling told the finance minister that the central income tax which although was extended to the state long ago but yet to be enforced has become a very ''emotive'' issue. The imposition of the Central taxes would adversely affect the tranquillity and harmony in this multi-ethnic backward state.

Extending of direct tax laws in Sikkim would be a violation of the special provision of the Constitution relating to Sikkim as enshrined in Article 371(f), Chamling has said in a memorandum to the prime minister earlier this week. The chief minister also demanded that Section 26 of the Finance Act, 1990 be abrogated.

Expressing his fear that opposition parties in the state would exploit this ''politically sensitive'' matter, Chamling said that the previous Sikkim Sangram Parishad government led by Nar Bahadur Bhandari had agreed to the extension of the Act in 1993 and it had to pay a ''heavy price'' and was toppled in 1994.

Chamling urged the finance minister to either write off the the debt it has inherited from the previous Bhandari regime to the tune of Rs 4 billion or ''in case if it was not feasible to write off the loans, a debt repayment moratorium be given at least for a couple of years". He informed Sinha that the state had so far paid Rs 2.4 billion as ''interest'' on the loans and an annual payment in the current year is likely to touch Rs 700 million. This had severely ''starved'' the state of development resources, he said.

The chief minister also sought a special rehabilitation package of Rs 250 million to revive the ailing state-owned State Bank of Sikkim. The chief minister also sought Sinha's support for meeting the infrastructural requirements of the landlocked Himalayan state for an alternative national highway, as the state's only lifeline, the National Highway 31A, often remained cut off due to frequent landslides.

UNI

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