Orissa seeks Rs 13,096cr Central aid

Orissa has demanded a special economic package of Rs 13,096crore from the Centre over a period of next five years.

The proposed package has mostly sought Central assistance on three components ""debt relief, sectoral development and employment generation.

Orissa chief minister Naveen Patnaik has written a letter to prime minister Manmohan Singh in this regard.

Patnaik said the first component is aimed at addressing fiscal distress and consolidation and restructuring of the state finances so that desired fiscal space is created for undertaking development work.

This component seeks Central assistance of Rs 3, 778 crore towards debt write off, Rs 400 crore for interest relief on debt and Rs 830 crore compensation for the loss of royalty on coal and other major minerals due to non-revision of royalty in time, thus totalling a sum of Rs 5,008crore.

The second component envisages Special Central assistance of Rs 7,869 crore for intensive sectoral interventions in identified thrust areas, such as horticulture ""Rs 200 crore, fisheries ""Rs 135 crore, forestry ""Rs 600 crore, irrigation ""Rs 2,408 crore, road connectivity "" Rs 4,276 crore and tourism infrastructure ""Rs 250 crore.

The third component asks for financial support of Rs 219 crore to implement various self-employment programmes in the state. The letter pointed out that Orissa, with a population comprising around 86 per cent rural, 22.21per cent scheduled tribes and 16.2 per cent schedule castes, has the highest incidence of poverty among all states in the country.

The state is also in a serious debt trap with the debt burden being 63 per cent of the gross state domestic product (GSDP) and 329 percent of the state's total revenue in 2003-04. The letter said, the assistance provided by the Centre in various shapes is inadequate to meet the state's huge requirement.

The chief minister said, the state government has taken several reform measures including expenditure compression, revenue augmentation and good governance to improve the situation.

He claimed that a number of development initiatives, including improvement in road, irrigation and other productive infrastructure have been taken during the last five years.

Although these steps have started showing results, due to the enormity of the crisis the state is unable to achieve fiscal consolidation on its own without Central intervention, he argued.

With all its rich natural resources and reform efforts, the state still faces serious handicaps in attracting private investment because of its weak infrastructural linkages, he said and pleaded that without a structural change in the nature of financial assistance to the state, it will not be possible to break the vicious circle of poverty.

Patnaik pointed out that the state's own efforts need to be supplemented with substantial support from the Centre in order to accelerate the pace of reform and development process.