Kamal Nath says time has come to re-think
Speaking at a state organised workshop in the state capital of Madhya Pradesh Montek Singh Ahluwalia said the need for considering a rewriting the Fiscal Responsibility and Budget Management Act in the changing contexts in view of the increasing financial needs and fiscal limitations of States is impending
Madhya Pradesh chief minister Kamal Nath said the time has come for states in India to rethink about their finances and economy. Speaking at a workshop organised by the state on ‘Alternative Finance for Projects’ Nath said:
“Global economies are changing rapidly hence the financial institutions and government must reconsider their economic processes.”
He said that it is becoming challenging to mobilize financial resources for the changed and constantly changing India and its States. India has the largest young population and we need funds to fulfill their ambitions. Therefore, banks, state governments, and private sector institutions need to adopt and adapt. Stressing on alternative processes and innovative ideas he said that it has become necessary to focus attention on the economic activities that generate jobs.
The CM took no remorse in saying that a state like Madhya Pradesh, there are abundant natural resources utilising them for greater economic activities it is lagging by far. He added that efforts are being made to make Madhya Pradesh’s agriculture fully modernized so that the economic activities associated with agriculture can also be expanded.
Montek Singh Ahluwalia, former deputy chairman of the erstwhile Planning Commission addressing the workshop as a keynote speaker said
“The need for considering rewriting the Fiscal Responsibility and Budget Management Act in the changing contexts in view of the increasing financial needs and fiscal limitations of States is impending.”
There is a need for enacting a law for public-private partnerships to overcome the budget constraints for socially important economic infrastructure projects, he said.
Ahluwalia said that designing projects, making budget provisions for them and completing them within available resources is a common practice across the world. The fact is that governments have limited financial resources for ambitious projects.
The governments have many tasks, responsibilities, priorities and social obligations apart from economic infrastructure projects. There are many challenges in completing them simultaneously. As a result, the speed of projects slows down and they start lagging behind. He said that there is a need to think beyond the conventional approach of depending on budgetary resources. In such a situation, States look towards the private sector for assistance.
The private sector is fearful of risks and threats while the governments are bound by the welfare principles beyond the loss and profit. Both have their limitations. Therefore, there is a need for a law to work in cooperation between the two.
Ahluwalia said that instead of managing finances for large economic infrastructural projects, the system of providing guaranteed by the state should also be considered. The governments should assume the role of a friend in managing the financial risks for the projects. For example, in order to deal with the ill effects of climate change, infrastructure projects of economic importance should be given a guarantee.