FIFTH
MEETING
OF THE
GOVERNING
COUNCIL OF
NITI AAYOGth15 JUNE 2019
SPEECHOF
SRI.H.D.KUMARASWAMY
HON'BLECHIEFMINISTER
GOVERNMENTOFKARNATAKA
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Honourable Prime Minister of India;
Honourable Union Ministers;
Honourable Chief Ministers of States and Lt Governors of
Union Territories;
Vice-Chairman, NITI Aayog;
Officers of the Government of India and States;
Ladies and Gentlemen
At the outset, I congratulate the newly elected
Government at the Centre and thank the Honourable Prime
Minister of India and Chairperson, NITI Aayog for giving
me the privilege of addressing the fifth meeting of the
Governing Council. I express our readiness to work together
in the spirit of utmost cooperation for the comprehensive
development of our people.
In Karnataka, we pursue a development model that
places citizens at centre stage. We believe in balancing
investment in human capital with investment in
infrastructure. Our fiscal consolidation efforts have
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continued to be prudent and effective, with all fiscal
indicators contained within the stipulated limits of the
Karnataka Fiscal Responsibility Act, 2002 (KFRA). Over
the last several years, the fiscal deficit could also be
maintained within 3% of GSDP as mandated by the KFRA.
In the context of implementation of GST, we have
always advocated cooperative federalism despite different
political formulations at various points of time. However,
due to many structural issues including the rates of tax, the
revenues under GST have not risen to our expectations in
the State. Inspite of implementation challenges of GST, the
State has made best efforts to bridge the revenue gap.
Effective steps taken to track the non-filers and bill traders,
data-analytic led enforcement and vigilance activities to
detect the suppression, capacity building programmes to the
officers, awareness to stakeholders and other similar
measures have had a positive impact in enhancement of
revenue when compared to the previous year. Current trends
point to the fact that State GST (SGST) component of GST
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has been on the rise. While the revenue gap is being bridged
by the assured compensation till 2022, the State has limited
scope to mobilize additional revenue thereafter. It is evident
that at the end of 2022-23 there would be a steep fall in
revenues of the State as compared to the protected revenue
of 2021-22 which would have accrued to the State due to
the constitutionally guaranteed compensation. This would
adversely impact developmental and other infrastructural
projects implemented in the State as well as committed
expenditure of the State Government. Thus, in case this
revenue gap is not bridged in the coming years despite all
compliance efforts, adequate compensation, in the manner
as envisaged in the Compensation Act, should be extended
beyond 2022. The State’s power of resource mobilization
has been taken over by pooled sovereignty under GST.
Known for its tax reforms and having stood steadfast in
support of GST in the interest of the country, Karnataka will
face a serious financial crunch after 2022 once the
compensation ends. It is time to devise a mechanism to
overcome erosion of the tax base in the days to come.
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My government is committed to inclusive development.
We have taken effective steps in deepening democracy
through robust Panchayat Raj Institutions. Karnataka is
aligning its policies and programmes keeping in mind the
Sustainable Development Goals. With Human Development
Reports prepared for each of the thirty districts of the State,
periodic preparation of state Human Development Reports
based on wide consultations, and a Special Development
Plan implemented in 114 backward taluks with an
investment of Rs. 30000 crore over 10 years, Karnataka
remains committed to the reduction of regional disparities
and the strengthening of human capabilities.
“Year of Water”, Rainwater Harvesting and Water-
related initiatives
In my previous address at this august forum, I had
emphasized that water scarcity will be a seriously limiting
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factor for growth in years to come. I had suggested that we
should dedicate the entire coming decade as the “Water
Decade”, for water conservation efforts. Karnataka is the
second most arid State in the country after Rajasthan. The
state has experienced 12 years of drought out of the last 15
years. We have therefore accorded very high priority to long
term measures to drought proof the State. We have declared
2019-2020 as Karnataka’s “Year of Water”. We have also
launched an important programme called “Jalamrutha” to
promote water literacy, to conserve water through revival
and creation of new water bodies, and to promote greening
through planting of 2 crore trees.
Karnataka also faces serious drinking water challenges.
Ground water table is depleting and ground water sources
are getting contaminated. Projects to pump treated sewage
water from Bangalore to fill 260 tanks in the neighbouring
arid districts at a cost of Rs.2574 crore are under
implementation. This will help to recharge ground water in
the drought prone areas. We have launched an ambitious
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programme called “Jaladhare” to tap sustainable surface
water sources like perennial rivers and reservoirs to provide
treated drinking water to all rural households and
habitations. This programme requires an investment of Rs
50,000 crore over a period of 5 years. About 18000 water
purification plants have been set up to provide purified
drinking water to rural habitations.
The Government of India has scaled down its
engagement with rural drinking water significantly. During
this financial year, Karnataka is investing Rs. 2800 crore
during 2019-20 for rural drinking water out of which the
share of the Government of India is only Rs. 400 crore. I
request the Prime Minister to significantly increase the
allocation to rural drinking water sector.
Drought Situation
During 2018-19, some parts of the State experienced
severe floods, and on the other hand, most of the State was
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declared drought-affected. High intensity rainfall during
August caused major damage to agriculture and plantation
crops and public infrastructure. Many were rendered
homeless.
During Kharif 2018-19, 100 taluks were declared
drought-affected. The estimated loss due to Kharif drought
was about Rs 16,660 crore. A memorandum seeking
financial assistance of Rs.2434 crore from the National
Disaster Response Fund was submitted to the Central
Government. However, only Rs.949 crore was released
from NDRF for drought relief in 72 severely affected taluks.
The input subsidy amount is directly credited to the bank
accounts of farmers through Aadhar-enabled payment
service.
During Rabi 2018-19, 156 taluks were declared as
drought affected. The estimated loss during Rabi to
agriculture and horticulture crops was Rs. 11,384 crore.
Memorandum was submitted to Government of India on
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Rabi drought seeking financial assistance of Rs. 2064 crore
under NDRF. The High Level Committee is yet to be
convened to decide on the quantum of relief from NDRF.
Karnataka is also a pioneer state in deploying rain
enhancement technology of “Cloud Seeding” during 2016-
17. This according to a technical evaluation resulted in 27
percent increase in rainfall. This year also we are
undertaking cloud seeding operations.
MGNREGA is a very important programme for tackling
rural distress, particularly caused by the recurrent droughts.
However, payment of wages and material bills is a serious
challenge. At times NREGA workers’ wages are not paid
for several months. My Government has been taking
initiative to make advances from our budget to make
payment of wages on time.
During 2016-17 and 2017-18 the State Government
made advances of Rs 2175 crore to MGNREGA over and
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above its State share. During 2018-19 we have made an
advance of Rs.432 crore towards payment of wages and
Rs.650 crore towards payment of material bills. The Central
Government has reimbursed over 1757 crore. However, the
Government of India is yet to reimburse over Rs 1500 crore
advance paid by the State Government over and above its
share. I request the Prime Minister to significantly increase
the allocation of MGNREGA so that the MGNREGA
workers are not subjected to hardship due to delays in
payment of wages.
Aspirational Districts
Regarding the special developmental needs of
aspirational districts, the State is making an effort to
converge, integrate and focus attention for balanced and
inclusive growth. For aspirational districts, the Government
of India may consider including the construction of new
school classrooms, as well as toilets and compound walls
for anganwadi centres under MGNREGA. While all efforts
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are being made to converge schemes, I request the
Government of India to provide untied grants for better
integrated development of each aspirational district.
Transforming Agriculture:
APMC Act &Essential Commodities Act
In 2013, the Government of Karnataka appointed a
committee to develop a comprehensive roadmap to reform
the existing system of agricultural marketing. Based on the
recommendations of the committee, Karnataka introduced a
series of reforms in the areas of technological upgradation,
electronic auction, enhanced sampling and assaying process,
market integration through virtual platforms etc to bring
transparency and efficiency in the agricultural markets of
the state.
Out of 162 agricultural markets in the state, 160 markets
are now covered under the unique Unified Marketing
Platform (UMP) of Karnataka. 75 markets have set up
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assaying labs and cleaning and grading equipment have
been introduced in 61 APMCs. Three computer training
centres have been established along with a structured
training programme to train APMC staff.
The Government of Karnataka has formulated Retail
Trade Policy 2015 to boost the State’s position in the retail
trade within the country, further accelerate investment flow
to underdeveloped regions of the state, create employment
opportunities, and leverage retail trade as a tool for socio-
economic development of the State.
Security Related Issues
In Karnataka no district is categorized as naxal-affected
as per the laid down criteria. There have been no violent
naxal incidents since 2012. All proactive and preventive
measures are being undertaken to ensure that the present
situation would not deteriorate to naxals establishing a
foothold in the area.
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Other Issues:
The draft “New Education Policy” is currently being
discussed at several fora across the country. Investment in
education is one of the best ways of developing human
capital for the future of India. Recognising the importance
of early childhood development for better outcomes later in
life, I suggest that we should give special emphasis to early
childhood care, nutrition and education. To provide a bright
future to the children of India, we must strengthen
initiatives for supplementary maternal and child nutrition,
especially in the “First 1000 Days” of the life of a child,
from conception.
Karnataka has been at the forefront of the Global Digital
Revolution. Bengaluru City is hailed as the technology
capital of India and is rated as the most dynamic city in the
world. Karnataka has always been a pioneer in taking digital
technologies to rural areas. Our flagship programme
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“Bhoomi” made digital land records available to villages
more than a decade ago. Now we are leading the digital
push to Panchayats across the State. Three of Karnataka’s
path-breaking digital initiatives, Bhoomi, Kaveri and
Mojini, have been integrated to seamlessly deliver land
records to the citizens, thus safeguarding their land and
property rights.
As part of the Karnataka Geographical Information
System (KGIS), over 4 lakh assets have been mapped, about
120 layers generated and organized, and a GIS portal
launched for more targeted functioning of developmental
departments of the Government. Mobile applications have
also been developed for the use of citizens.
I am happy to say that our State has been tremendously
successful in the Aadhar seeding of beneficiary Bank
accounts. It is a matter of great pride that Karnataka has
succeeded in making Aadhar-linked payments to farmers’
bank accounts for distribution of input subsidy and crop
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insurance claims, besides scholarships to students, maternity
benefit cash transfers, etc.
Karnataka's most successful digital application has been
an in-house developed software application to implement
my Government's Crop Loan Waiver Scheme. Crop loans of
about 40 lakh farmers were seeded with Aadhar after
seamlessly obtaining digital data from core banking
solutions of banks. Aadhar, along with in-house Name
Matching Algorithm, has saved more than Rs 5000 crore by
identifying single farmers having multiple crop loans. Each
waiver has been electronically remitted into the farmer's
loan account via National Payment Corporation of India
Ltd.
As part of ongoing initiatives to use the potential of
technology to guide better policymaking, Karnataka
proposes to set up an Open Source Data hub in
collaboration with IIIT-B, which will enable data mining of
information related to developmental programmes. This will
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also enable sharper research and analysis by a host of
institutions in Bengaluru’s academic ecosystem.
The State contributes about Rs. 3 lakh crore of IT
exports and over 35% of India’s biotech industry revenue.
The State capital, Bengaluru, continues to retain its lead as
the Start-up Capital of the country being home to over 7,000
Start-ups.
Karnataka has been very proactive in associating with
Government of India to extend the railway network in the
State. In several cost sharing projects, the State has agreed
to provide land free of cost in addition to contributing 50%
of the project cost. The magnitude of our investment may be
gauged from the fact that the State has agreed to contribute
almost Rs. 10,000 crore in addition to providing required
land as on date. The Railway line coverage in Karnataka is
only16.9 km per 1000 sq.km. However, it is increasingly
becoming difficult for the State to endure such a heavy
financial burden. I request the Government of India to share
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our burden for the ongoing projects and increase its share to
at least two-thirds of the project cost including the cost of
the land. As regards new projects, the Ministry of Railways
should take them up from their own resources.
Karnataka has taken up the development of many
regional airports. Government of India may evolve a
specific policy to support the States in implementing such
projects that not only improve regional connectivity but also
enhance attractiveness of smaller cities as business or tourist
destinations. The States could provide the land while the
Government of India could support development of no frills
regional airports.
While the State Government has given its clearance for
the much needed Suburban Railway project, Government of
India has asked to revisit some of the issues. This may
delay the project further. I request the Government of India
to clear the project as proposed.
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The ranking system adopted by NITI Aayog should be
more participative, scientific and transparent. For example,
giving 58th rank to Bengaluru in Ease of Living Index is
unacceptable as Bengaluru is widely rated as the most
preferred city for work in the country by reputed agencies.
In order to enable small and marginal farmers to
continue farming without the pressure of debts accrued due
to repeated droughts, my government has waived crop loans
upto Rs.2 Lakh in respect of commercial banks and upto
Rs.1 Lakh in respect of co-operative banks.
In view of the increased renewable power generation in
the State, managing the grid frequency has become a major
challenge. Government of India is requested to allocate Rs.
6000 crore for implementation of Pumped Storage Project
which will help to balance the grid in the entire southern
region.
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So far as Centrally Sponsored Schemes (CSS) are
concerned, as a consequence of several policy decisions,
including the restructuring and closure of schemes and
reduction in the central share to 60% or even 50%, the
overall estimated grants from Government of India under
CSS schemes decreased from Rs. 16,525 crore in 2014-15
(RE) to Rs. 10,099 crore in 2019-20 (BE). These figures
denote a drop in grants from 15.17 % of the overall revenue
receipts in 2014-15 (RE) to 5.55% in 2019-20 (BE). This
has forced the State to make up the shortfall from its own
resources, thereby affecting other initiatives.
Regarding subsidies, our view is that the subsidies
which arise because of specific central legislations or
policies should be borne by the central government itself
and the state should not be expected to share a portion of
them.
The erstwhile JnNURM and UIDSMT programmes
have contributed in upgrading the infrastructure in our cities
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especially in sectors of water supply, sanitation and
sewerage management. The Government of India should
continue to provide assistance for upgrading infrastructure
in urban areas other than those covered under the Smart
Cities Programme.
At the national level, priorities must be identified with
specific goals and outcomes backed by sufficient funding
support from the Centre. The States should be free to
identify their own priorities and goals in addition to
national-level priorities which they may strive to achieve
with their own available resources.
The states which perform well and adhere to the set road
map in achieving the national priorities must be
demonstrably incentivized. Similarly, devolution of
resources from the Centre must encourage efficiency and
incentivize states that manage their resources well.
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The role of NITI Aayog becomes very important in the
context of different levels of development within the
country and the state. In order for the country to join the
comity of progressive nations and to ensure a high level
growth and development, it is essential that all regions
within the country progress, and that human resource, the
most precious asset of our country, is nurtured.
I look forward to this forum being used to achieve this
great vision in a democratic manner and in the spirit of
cooperative federalism.
Jai Hind, Jai Karnataka
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