The annual National Development Council meetings of India's chief ministers rarely produce anything more than dreary rhetoric. So this year's February 19 gathering was hardly expected to be very different.
Less than a month later, the cynics were proved wrong. The oratory at the 48th NDC had translated into a significant initiative after all. On April 9, in an unreported and unfeted ceremony, the finance secretary of Punjab signed a memorandum of understanding (MoU) with a joint secretary in the expenditure department of the finance ministry.
This was the first result of recommendations by a chief ministerial panel under finance minister Yashwant Sinha. In return for rescheduling ways and means advances from the Centre, the state government agreed to a set of conditions that would have delighted any international lender.
More From This Section
Among its many stringent terms _ all of them to be met by June _ are savage expenditure cuts and a 15-per cent slashing of subsidies on such politically-sensitive items as electricity and water (see box).
Over the following week, four more state secretaries put their signatures on the dotted line _ Mizoram (April 10), Himachal Pradesh (April 12), Rajasthan (April 16) and Nagaland (April 17). With variations, all of them have had to agree to rigorous reform. In less than a year, all states are expected to sign up.
Even bureaucrats in North Block, hardened as they are to state governments' incurable and politically-motivated profligacy, say this is radical by any standards. Finance minister Yashwant Sinha has called the signing of the MoUs "the silent revolution". With reason. They were signed after parleys that were kept so strictly confidential that only a handful of officials knew of them. And they have implications that few politicians would care to deal with.
Recent experiences of raising charges on power and water and withdrawing other state largesse have all raised howls of protest. Orissa suffered, Chandrababu Naidu is dreading its consequences when he faces elections this December and Punjab is still struggling to raise power tariffs.
So the MoUs and their conditions, which are to be strictly monitored by the Planning Commission, can be considered no mean achievement. And the manner in which the Centre managed to pin down spendthrift states to conditions, which even the World Bank has had trouble extracting, reveals an extraordinary story of cooperation among institutions that rarely see eye-to-eye on any issues: the finance ministry, the Planning Commission and the state governments.
Says a quietly-elated Yashwant Sinha, "This i