5th Governing Council Meeting of NITI AAYOG , Speech of The Chief Minister

I would like to bring to the attention of the Governing Council of the NITI Aayog, which includes the elected leaders of the people of India, certain important issues facing the States of our country.

I am of the considered opinion that we should discuss these issues on a priority basis in the larger interests of a healthy cooperative federal setup. We have been mentioning a great deal about cooperative federalism, a concept in which governments representing various administrative jurisdictions are equal partners in shared decision making on issues of common interest.I feel that we should introspect as to how far we are from this ideal. Cooperative Federalism is still in conceptual stage and very little structural changes have been made in the last four years to make this work on the ground. The 15th Finance Commission is on its job of preparing its recommendations which according to time schedule will be finalized by October, 1 2019.

Some States including Kerala have expressed genuine concerns on some of the items in the Terms of Reference of the 15th Finance Commission. These need to be addressed at the earliest in the interest of healthy co-operative federalism. It is indeed pertinent to add here that in the scenario after the doing away with the Five Year Plans at the national level, the States have lost Gadgil formula, grants which they used to get as Plan assistance earlier. Besides, the States now have also to bear a higher share, that is, 40 percent instead of the earlier average 25 per cent in the case of many Centrally Sponsored Schemes, which are categorised as core schemes. This has resulted in shrinking the State governments’fiscal space.I hope that my colleague Chief Ministers would agree with me that the NITI Aayog in the present form has not played the much expected role of a facilitator in the last four years. There is growing realisation that it is perhaps not a substitute for the erstwhile Planning Commission. Kerala is continuing with the Five Year Plans and implementing many development programmes
through its Thirteenth Five Year Plan. The adverse impact of the transformation of the Planning Commission to the NITI Aayog is that States like Kerala have lost a source of funding for its State Five Year Plans. Having briefly said this much about the current unresolved issues in our federal system, I proceed to offer my views on the subjects listed in the agenda of this Governing Council Meeting.

1. Rainwater Harvesting Rainwater harvesting is crucial when potable drinking water is becoming scarce. Studies have pointed to trends of decline in normal monsoon rainfall, while there is an increase in frequency of abnormal rainfall events.Kerala accords priority to rainwater harvesting by involving the State Government agencies, Local Governments and peoples’ participation. Roof top rain harvesting has been experimented in Kerala. It is a unique device for channeling water to the open dug wells for recharging Ground water table. Besides,the Government of Kerala has a Green Mission, known as Haritha Keralam, which aims at conserving, cleaning and clearing up water bodies. This is one of the four missions we have, the other three being in the sectors of health,education and housing and financial inclusion. Our Municipal Building Rules provide for rainwater harvesting. In addition to these initiatives, the message for water conservation is being taken to young minds, in whose hands we are going to entrust our future. This year, this was the theme which, I conveyed to children on their school reopening, through a letter addressed to them. The children are being told that we cannot afford to have the double standards of loving and longing for water during summer and neglecting it during the rainy season. Kerala has very strong laws on monitoring the health of various water bodies and their preservation by having a data bank and restricting unbridled construction by reclaiming paddy fields. We have taken special measures for increasing paddy cultivation keeping in mind water conservation also. Kerala is utilising schemes under Mahatma Gandhi Rural Employment Guarantee Act (MGNREGA) to dig rain water pits and well recharging for harvesting rain water.
2. Drought Situation and Relief Measures

I take this opportunity to seek support for my view that in a drought situation, we must not hesitate in spending on demand based employment programmes by citing the need for fiscal austerity.In a drought scenario,lack of gainful employment and dampening of demand can lead to another round of slowdown in the economy, which needs to be warded off in the larger interest of the society. During 2018-19, Kerala experienced unprecedented floods during and after the South-West Monsoon season. But the North -East Monsoon season was 3.34 per cent deficient. Due to a relatively warmer summer and delay of summer convectional rainfalls several parts of the State faced drinking water scarcity. Cases of sun burns and heat stroke were reported. The State Disaster Management Authority, the District Administrations and the Local governments took prompt action in creating awareness among the public about the precautions to be undertaken and for supplying drinking water to the areas which experienced water scarcity.
3. Aspirational District Programme –Achievements and Challenges Let me now turn to the Aspirational Districts programme. The programme has the idea of monitoring progress of districts, which are lagging behind in social and economic indicators when compared to the best achievers in the respective States and the country. The combined impact of Central and State schemes are proposed to be measured. Kerala is of the opinion that one size fits all approach of the Centrally Sponsored Schemes goes against the basic principles of co-operative federalism. In our view, the Aspirational Districts programme has carried this one step further.  A Central official is involved in monitoring this programme and districts are allotted to Ministries of Government of India and the NITIAayog. The Central component of the Centrally Sponsored Schemes should not be viewed as a gratis from the Centre to the States. The States also contribute a share to these schemes. It is the responsibility of all tiers of government to strive towards achieving the aims laid down in the Directive Principles of state policy of the Constitution. The State governments and the Local governments should not be viewed as entities in a pyramidal hierarchical structure below the Central Government. This in my humble view, is neither helping inclusiveness nor the concept of co-operative federalism. Of late, Centre has been increasingly spending on the subjects in the State List. This has resulted in centralisation in the design of welfare schemes, which by economic reasoning, can be effectively done by the governments at the State and local level. This also results in States losing the much needed flexibility in implementation of schemes in social and economic sectors. Centralisation of the development schemes restrains the local level initiatives and innovation in delivery of the services. The aspirations of a district or an administrative unit at the local level are best met through democratic de-centralisation of power to them. The first and foremost aim to fulfill aspirations of the population of a locality is the de-centralisation of power to them as mandated in 73rd and 74th constitutional amendments. Serious efforts towards achieving the goals in this regarding all States of the country will be a much better option for catching up with the objectives of the Aspirational Districts programme. A more centralised control will not be in accordance with the constitutional amendments regarding decentralisation. Kerala has taken effective steps in this regard. The Governing Council Meeting should not omit to take note of the fact that incursions into the areas of legislative competence of the State governments enshrined in our Constitution will weaken our federal system and make cooperative federalism lose its content as well as its spirit.

4. Transforming Agriculture –Need for Structural Reforms with emphasis on a. Agricultural Produce Marketing Committee (APMC) Act and b. Essential Commodities Act, 1955. Yet another important item on the agenda of this meeting is the reforming of agricultural produce marketing. State shave their own legislation in this regard as this is an item in the State List of the Seventh Schedule of the Constitution. Now, a model act which will be uniform for all States has been circulated. Let me clarify that Kerala has no APMC Act. I am not going into clause by clause details of the new draft model act, 2017 in this regard. But the focus in this draft model act is on bringing in corporate farming and putting farmers indirect contact with corporate trading entities, with the expectation that the income standards of the farmers will improve. Let me submit that nothing can be farther from reality. In a society with highly unequal bar gaining powers and monopoly power, these corporate entities would have, the exploitative conditions will worsen in all probability. Our State has demonstrated that through peoples’ participation, intervention of the cooperative movement and the government, procurement of agricultural produce at fair prices is possible. We have taken effective steps in paddy procurement by ensuring remunerative prices for farmers. I wish to point out here that we need to look beyond certain restrictive assumptions and prescriptive policies. We need to learn from popular experiences. Essential Commodities Act,1955, prescribes ceiling on holding of stocks of commodities. The purpose behind this legislation is to legally prohibit hoarding of commodities with the motive of reducing supply to cause increase in prices.

In other words, the intention is to prevent hoarding of essential commodities. The draft legislation on Agricultural Produce Marketing Committees and Contract Farming envisages the need for larger holding stocks of agricultural commodities. Hence, these draft model legislations propose to exempt agricultural commodities from the limits prescribed in the Essential Commodities Act. As a word of caution, it is to be mentioned here that this relaxation can be misused by hoarders to create a situation of rising prices in the market. In our country, price rise of food grains and other essential commodities are mainly supply side phenomenon. It is felt that necessary safeguards and power to bring to market, stocks held above a limit, in times of need have to be seriously considered to protect the consumers, especially those from poor and vulnerable sections of the society, who will be hurt most from a hoarding induced price rise.

5. Security Related Issues with specific focus on LWE Districts Regarding left wing extremism, it is our stated position that attention and focus has to be on the alleviation of conditions of deprivation and marginalisation in the society. At the same time, security apparatus needs to be vigilant and curb any kind of extremism and terrorism threatening the peace and security of common people. Government of Kerala is addressing these twin concerns with equal importance. Towards Meaningful Cooperative Federalism –What We Need to Do? Before parting, let me reiterate my point that a meaningful cooperative federalism would require more flexible fiscal space for the States which shoulder substantial social sector obligations, as per the constitutional division of powers. Government of Kerala is of the firm opinion that States should be able to perform their constitutionally assigned developmental role effectively. Mechanical application of deficit targets should not be allowed to hamper this. Deficit targets should be flexible to State specific and situation specific realities. Kerala has the recent experience of not being able to avail of assistance after the devastating floods of 2018 because of the rigid fiscal constraints being followed without the needed flexibility. The 11 gravity of this can be realised only when considered against the fact that the State suffered damage amounting to Rs 31,000 crore, which is approximately 4 percent of its Gross State Domestic Product. There is also urgent need to address the States’ concerns on certain items of the Terms of Reference of the 15th Finance Commission. For a strong nation, strong Centre, strong States and vibrant Local governments are the essential pre-requisites. I conclude by placing before the Governing Council the suggestion for re-energising the constitutional body, the Inter-State Council,   to discuss matters of importance desired by the Chief Ministers and by the Union. The agenda of such meetings should be decided in consultation with the Chief Ministers. This will be in the interest of a meaningful cooperative federal setup

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