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Need to review subsidies enjoyed by better-off sections of society, including the middle class: Jairam Ramesh

Rupashree Nanda,CNN-IBN
Mar 03, 2013 at 08:16pm IST

New Delhi: The Ministry of Rural Development was allocated just Rs 5000 crore, more than the Rs 74,000 crore in 2012. However, the big story in the Rural Development Ministry is the inability to spend the allocated amount. Expressing unhappiness over it, Rural Development Minister Jairam Ramesh said, "I accept responsibility" but states also have to increase their "absorptive capacity", promising to ease norms that so that funds flow faster to states. The Minister also advocated a "ruthless" approach and a review of subsidies that are enjoyed by the relatively better off sections in society. "When was the last time the fees in Delhi University were raised?" he asked.

Here is the transcript of the interview:

CNN-IBN: Was the announcement of a mahila bank made in the budget a political demand of the party?

Jairam Ramesh: It was a demand that was made by the Congress party in the Jaipur chintan shiver. It found place in the Jaipur declaration. 30 years ago, Mrs Indira Gandhi set up Nabard - national bank for agriculture and rural development in order to provide full support to agriculture and rural development. The Congress party felt that the time was ripe for a similar institution to promote women's self help groups, women's enterprises, women's businesses. The finance minister has listened to that demand. The initial share capital is a 1000 crore which should enable lending of 8000 - 9000 crores. Right now, most of the lending from banks from women's self help groups- 80%- is restricted to four states of Andhra Pradesh, Tamil Nadu, Karnataka and Kerala. And the new institution is required to promote women's self help groups particularly in the northern and eastern part of the country.

CNN-IBN: Where will the money (for the mahila bank) come from?

Jairam Ramesh:: It will come from the budget. It will not come from the trees. It will not fall from the heavens- the finance minister has said that there will be an initial capital of 1000 crores and it is going to be provided fro from the budget.

CNN-IBN: Instead of announcing new schemes, don't you feel that the focus should be on outcomes? What are the achievements?

Jairam Ramesh: Of course, no doubt about it. The finance minister has not announced any new scheme barring the new bank for women SHGs and the new Pradhan Mantri Grameen Sadak Yojana for upgradation of rural roads. Small initiatives here and there he has announced. By and large the focus has to be on consolidation, it has to be on ensuring outcomes and ensuring that you spend the money that has been allocated to you. But, you spend it wisely, transparently and, in a manner that enhances public accountability.

CNN-IBN: Before we go for more funds and more schemes, shouldn't there be an audit of the existing schemes?

Jairam Ramesh: Sure, no doubt. Audit is an on going exercise- concurrent audit, there is a post implementation audit- these are obvious things. Nobody can deny the need for better outcomes. But there are also areas where you need new schemes. The finance minister has spoken about extending the benefits of pensions, health insurance, maternity benefits to workers of the unorganized sector.

CNN-IBN: The big story in rural development seems to be the fact that you had been allocated over 70,000 crores but you have not been able to spend more than 55,000 crores - it is not a question of more funds but the fact that RD ministry has not been able to spend the allocated funds?

Jairam Ramesh: No doubt about it. It is not a story. It is the reality that we were allocated 74,000 crores and our revised estimate which is a reasonable estimate of actual expenditure would be closer to 55,000 crore rupees. The most important reason for that is that the administrative capacity of the states determines the extent to which funds are going to be spent. And we are pushing a lot of rural development funds into the poorer states - into backward states of eastern India and northern India where the administrative capacity is weak compared to the Southern states or western states. I cannot deny the fact that our actual expenditure is much lower than the expenditure that has been allocated to us. There is a constant battle to improve the expenditure capacity, the absorption capacity, and the implementation capacity and also improve and reform our procedures in the central government to ensure that funds are not delayed. We need to follow both the approaches to ensure better utilization of funds that are allocated to us.

CNN-IBN: As Rural Development minister, do you feel unhappy that the money has not been spent and would you take responsibility?

Jairam Ramesh: Of course, I am going to take responsibility. I cannot evade the responsibility- but in our Constitutional scheme of things , the central government provides the funds- we audit the funds, we sanction the money, we monitor how it is going to be spent... but the actual spending, giving out of contracts, starting of works is all the responsibility of the state governments. We had 24,000 crores for building rural roads, the states could not spend more than 10,000 crores. Sure, I take responsibility for it but I don't tender out the work, I don't appoint contractors, I don't actually start building the roads. I can only provide the money; I can only audit the money. So this is a joint responsibility. I am not shirking my responsibility and I have said - to the extent that our procedures need to reformed and changed in order to expedite fund releases we will do it ruthlessly. And I have made the point to the Prime Minister and the Finance Minister repeatedly - but the fundamental reality is that states have to substantially increase their absorptive capacity. They have to bring a far greater degree of professionalism into the implementation of this programme.

CNN-IBN: As elections draws closer, would there be more pressure on the finance minister to allocate more funds for the social sector? Pressure from the National Advisory Council?

Jairam Ramesh: You have to ask that either to the NAC or Mr Chidambaram. I cannot answer that question.

CNN-IBN: Would the party and the government back Mr Chidambaram as he aims for fiscal discipline?

Jairam Ramesh: All that I can speak for is the ministry of rural development . And all I can say is given the fiscal situation that the country faces, given the extraordinarily perilous situation of public finances, the fact that he has been able to find 80,000 crore budgetary allocation for rural development speaks volumes of the priorities of the government and of the congress party.

CNN-IBN: Environmental clearances have often been held up as the villain of the growth story? It happened during your tenure as the environmental minister. It is happening also during the tenure of Jayanthi Natarajan? Do you feel that more flexibility is needed?

Jairam Ramesh: This interview is on the budget and Rural Development. It is not on environmental clearances.

CNN-IBN: Now, should the focus be more on growth?

Jairam Ramesh: I think the finance minister was very very clear that we have to get the economy back on a 8% growth trajectory. And if we are not going to be on an 8 per cent growth trajectory, you are not going to have the resources required for all the social welfare programmes. I think we've had a temporary blip in 2012-13, we've had a 8 per cent growth over the 11th plan period and we hope to get back to, as the finance minister said, to 6 per cent plus next year and hopefully, the year after that we get back to 7.5 per cent to 8 per cent. But we have to keep the growth-inflation balance. We don't want to over-heat the economy. We don't want to rush to a 9% growth and stoke inflationary fears and expectations as well.

CNN-IBN: You have an ambitious food security bill that will cost 1, 20,000 cores...you have major schemes like the MNREGS...you have to spend a lot of money on that.... Should the focus be more on growth? Or on subsidies? Or should it be balanced?

Jairam Ramesh: The subsidies have to be targeted. Subsidies have to go to the sections of society which need the subsidies. Fuel subsidies are perverse subsidies. They are not enjoyed by people who need the subsidies. I am glad that the finance minister has increased the tax on SUVs - a good example of subsidy being enjoyed by a section of society that can afford to pay more. I think we must have a ruthless approach on subsidies - it should not be open ended, it cannot be perverse. It has to be focused on the vulnerable and the disadvantaged groups which require the subsidies. - whether it is fuel subsidy, food subsidy, fertilizer subsidy or whether it is educational subsidy. The middle class enjoys a huge educational subsidy- when was the last time the fees in Delhi University were raised? That's a middle class subsidy. There are many,many, many subsidies in our country that are enjoyed by the relatively better off sections of our society and those are the kind of subsidies that we need to review.


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