FIFTH

MEETING

OF THE

GOVERNING

COUNCIL OF

NITI AAYOGth15 JUNE 2019

SPEECHOF

SRI.H.D.KUMARASWAMY

HON'BLECHIEFMINISTER

GOVERNMENTOFKARNATAKA

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Honourable Prime Minister of India;

Honourable Union Ministers;

Honourable Chief Ministers of States and Lt Governors of

Union Territories;

Vice-Chairman, NITI Aayog;

Officers of the Government of India and States;

Ladies and Gentlemen

At the outset, I congratulate the newly elected

Government at the Centre and thank the Honourable Prime

Minister of India and Chairperson, NITI Aayog for giving

me the privilege of addressing the fifth meeting of the

Governing Council. I express our readiness to work together

in the spirit of utmost cooperation for the comprehensive

development of our people.

In Karnataka, we pursue a development model that

places citizens at centre stage. We believe in balancing

investment in human capital with investment in

infrastructure. Our fiscal consolidation efforts have

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continued to be prudent and effective, with all fiscal

indicators contained within the stipulated limits of the

Karnataka Fiscal Responsibility Act, 2002 (KFRA). Over

the last several years, the fiscal deficit could also be

maintained within 3% of GSDP as mandated by the KFRA.

In the context of implementation of GST, we have

always advocated cooperative federalism despite different

political formulations at various points of time. However,

due to many structural issues including the rates of tax, the

revenues under GST have not risen to our expectations in

the State. Inspite of implementation challenges of GST, the

State has made best efforts to bridge the revenue gap.

Effective steps taken to track the non-filers and bill traders,

data-analytic led enforcement and vigilance activities to

detect the suppression, capacity building programmes to the

officers, awareness to stakeholders and other similar

measures have had a positive impact in enhancement of

revenue when compared to the previous year. Current trends

point to the fact that State GST (SGST) component of GST

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has been on the rise. While the revenue gap is being bridged

by the assured compensation till 2022, the State has limited

scope to mobilize additional revenue thereafter. It is evident

that at the end of 2022-23 there would be a steep fall in

revenues of the State as compared to the protected revenue

of 2021-22 which would have accrued to the State due to

the constitutionally guaranteed compensation. This would

adversely impact developmental and other infrastructural

projects implemented in the State as well as committed

expenditure of the State Government. Thus, in case this

revenue gap is not bridged in the coming years despite all

compliance efforts, adequate compensation, in the manner

as envisaged in the Compensation Act, should be extended

beyond 2022. The State’s power of resource mobilization

has been taken over by pooled sovereignty under GST.

Known for its tax reforms and having stood steadfast in

support of GST in the interest of the country, Karnataka will

face a serious financial crunch after 2022 once the

compensation ends. It is time to devise a mechanism to

overcome erosion of the tax base in the days to come.

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My government is committed to inclusive development.

We have taken effective steps in deepening democracy

through robust Panchayat Raj Institutions. Karnataka is

aligning its policies and programmes keeping in mind the

Sustainable Development Goals. With Human Development

Reports prepared for each of the thirty districts of the State,

periodic preparation of state Human Development Reports

based on wide consultations, and a Special Development

Plan implemented in 114 backward taluks with an

investment of Rs. 30000 crore over 10 years, Karnataka

remains committed to the reduction of regional disparities

and the strengthening of human capabilities.

“Year of Water”, Rainwater Harvesting and Water-

related initiatives

In my previous address at this august forum, I had

emphasized that water scarcity will be a seriously limiting

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factor for growth in years to come. I had suggested that we

should dedicate the entire coming decade as the “Water

Decade”, for water conservation efforts. Karnataka is the

second most arid State in the country after Rajasthan. The

state has experienced 12 years of drought out of the last 15

years. We have therefore accorded very high priority to long

term measures to drought proof the State. We have declared

2019-2020 as Karnataka’s “Year of Water”. We have also

launched an important programme called “Jalamrutha” to

promote water literacy, to conserve water through revival

and creation of new water bodies, and to promote greening

through planting of 2 crore trees.

Karnataka also faces serious drinking water challenges.

Ground water table is depleting and ground water sources

are getting contaminated. Projects to pump treated sewage

water from Bangalore to fill 260 tanks in the neighbouring

arid districts at a cost of Rs.2574 crore are under

implementation. This will help to recharge ground water in

the drought prone areas. We have launched an ambitious

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programme called “Jaladhare” to tap sustainable surface

water sources like perennial rivers and reservoirs to provide

treated drinking water to all rural households and

habitations. This programme requires an investment of Rs

50,000 crore over a period of 5 years. About 18000 water

purification plants have been set up to provide purified

drinking water to rural habitations.

The Government of India has scaled down its

engagement with rural drinking water significantly. During

this financial year, Karnataka is investing Rs. 2800 crore

during 2019-20 for rural drinking water out of which the

share of the Government of India is only Rs. 400 crore. I

request the Prime Minister to significantly increase the

allocation to rural drinking water sector.

Drought Situation

During 2018-19, some parts of the State experienced

severe floods, and on the other hand, most of the State was

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declared drought-affected. High intensity rainfall during

August caused major damage to agriculture and plantation

crops and public infrastructure. Many were rendered

homeless.

During Kharif 2018-19, 100 taluks were declared

drought-affected. The estimated loss due to Kharif drought

was about Rs 16,660 crore. A memorandum seeking

financial assistance of Rs.2434 crore from the National

Disaster Response Fund was submitted to the Central

Government. However, only Rs.949 crore was released

from NDRF for drought relief in 72 severely affected taluks.

The input subsidy amount is directly credited to the bank

accounts of farmers through Aadhar-enabled payment

service.

During Rabi 2018-19, 156 taluks were declared as

drought affected. The estimated loss during Rabi to

agriculture and horticulture crops was Rs. 11,384 crore.

Memorandum was submitted to Government of India on

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Rabi drought seeking financial assistance of Rs. 2064 crore

under NDRF. The High Level Committee is yet to be

convened to decide on the quantum of relief from NDRF.

Karnataka is also a pioneer state in deploying rain

enhancement technology of “Cloud Seeding” during 2016-

17. This according to a technical evaluation resulted in 27

percent increase in rainfall. This year also we are

undertaking cloud seeding operations.

MGNREGA is a very important programme for tackling

rural distress, particularly caused by the recurrent droughts.

However, payment of wages and material bills is a serious

challenge. At times NREGA workers’ wages are not paid

for several months. My Government has been taking

initiative to make advances from our budget to make

payment of wages on time.

During 2016-17 and 2017-18 the State Government

made advances of Rs 2175 crore to MGNREGA over and

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above its State share. During 2018-19 we have made an

advance of Rs.432 crore towards payment of wages and

Rs.650 crore towards payment of material bills. The Central

Government has reimbursed over 1757 crore. However, the

Government of India is yet to reimburse over Rs 1500 crore

advance paid by the State Government over and above its

share. I request the Prime Minister to significantly increase

the allocation of MGNREGA so that the MGNREGA

workers are not subjected to hardship due to delays in

payment of wages.

Aspirational Districts

Regarding the special developmental needs of

aspirational districts, the State is making an effort to

converge, integrate and focus attention for balanced and

inclusive growth. For aspirational districts, the Government

of India may consider including the construction of new

school classrooms, as well as toilets and compound walls

for anganwadi centres under MGNREGA. While all efforts

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are being made to converge schemes, I request the

Government of India to provide untied grants for better

integrated development of each aspirational district.

Transforming Agriculture:

APMC Act &Essential Commodities Act

In 2013, the Government of Karnataka appointed a

committee to develop a comprehensive roadmap to reform

the existing system of agricultural marketing. Based on the

recommendations of the committee, Karnataka introduced a

series of reforms in the areas of technological upgradation,

electronic auction, enhanced sampling and assaying process,

market integration through virtual platforms etc to bring

transparency and efficiency in the agricultural markets of

the state.

Out of 162 agricultural markets in the state, 160 markets

are now covered under the unique Unified Marketing

Platform (UMP) of Karnataka. 75 markets have set up

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assaying labs and cleaning and grading equipment have

been introduced in 61 APMCs. Three computer training

centres have been established along with a structured

training programme to train APMC staff.

The Government of Karnataka has formulated Retail

Trade Policy 2015 to boost the State’s position in the retail

trade within the country, further accelerate investment flow

to underdeveloped regions of the state, create employment

opportunities, and leverage retail trade as a tool for socio-

economic development of the State.

Security Related Issues

In Karnataka no district is categorized as naxal-affected

as per the laid down criteria. There have been no violent

naxal incidents since 2012. All proactive and preventive

measures are being undertaken to ensure that the present

situation would not deteriorate to naxals establishing a

foothold in the area.

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Other Issues:

The draft “New Education Policy” is currently being

discussed at several fora across the country. Investment in

education is one of the best ways of developing human

capital for the future of India. Recognising the importance

of early childhood development for better outcomes later in

life, I suggest that we should give special emphasis to early

childhood care, nutrition and education. To provide a bright

future to the children of India, we must strengthen

initiatives for supplementary maternal and child nutrition,

especially in the “First 1000 Days” of the life of a child,

from conception.

Karnataka has been at the forefront of the Global Digital

Revolution. Bengaluru City is hailed as the technology

capital of India and is rated as the most dynamic city in the

world. Karnataka has always been a pioneer in taking digital

technologies to rural areas. Our flagship programme

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“Bhoomi” made digital land records available to villages

more than a decade ago. Now we are leading the digital

push to Panchayats across the State. Three of Karnataka’s

path-breaking digital initiatives, Bhoomi, Kaveri and

Mojini, have been integrated to seamlessly deliver land

records to the citizens, thus safeguarding their land and

property rights.

As part of the Karnataka Geographical Information

System (KGIS), over 4 lakh assets have been mapped, about

120 layers generated and organized, and a GIS portal

launched for more targeted functioning of developmental

departments of the Government. Mobile applications have

also been developed for the use of citizens.

I am happy to say that our State has been tremendously

successful in the Aadhar seeding of beneficiary Bank

accounts. It is a matter of great pride that Karnataka has

succeeded in making Aadhar-linked payments to farmers’

bank accounts for distribution of input subsidy and crop

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insurance claims, besides scholarships to students, maternity

benefit cash transfers, etc.

Karnataka's most successful digital application has been

an in-house developed software application to implement

my Government's Crop Loan Waiver Scheme. Crop loans of

about 40 lakh farmers were seeded with Aadhar after

seamlessly obtaining digital data from core banking

solutions of banks. Aadhar, along with in-house Name

Matching Algorithm, has saved more than Rs 5000 crore by

identifying single farmers having multiple crop loans. Each

waiver has been electronically remitted into the farmer's

loan account via National Payment Corporation of India

Ltd.

As part of ongoing initiatives to use the potential of

technology to guide better policymaking, Karnataka

proposes to set up an Open Source Data hub in

collaboration with IIIT-B, which will enable data mining of

information related to developmental programmes. This will

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also enable sharper research and analysis by a host of

institutions in Bengaluru’s academic ecosystem.

The State contributes about Rs. 3 lakh crore of IT

exports and over 35% of India’s biotech industry revenue.

The State capital, Bengaluru, continues to retain its lead as

the Start-up Capital of the country being home to over 7,000

Start-ups.

Karnataka has been very proactive in associating with

Government of India to extend the railway network in the

State. In several cost sharing projects, the State has agreed

to provide land free of cost in addition to contributing 50%

of the project cost. The magnitude of our investment may be

gauged from the fact that the State has agreed to contribute

almost Rs. 10,000 crore in addition to providing required

land as on date. The Railway line coverage in Karnataka is

only16.9 km per 1000 sq.km. However, it is increasingly

becoming difficult for the State to endure such a heavy

financial burden. I request the Government of India to share

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our burden for the ongoing projects and increase its share to

at least two-thirds of the project cost including the cost of

the land. As regards new projects, the Ministry of Railways

should take them up from their own resources.

Karnataka has taken up the development of many

regional airports. Government of India may evolve a

specific policy to support the States in implementing such

projects that not only improve regional connectivity but also

enhance attractiveness of smaller cities as business or tourist

destinations. The States could provide the land while the

Government of India could support development of no frills

regional airports.

While the State Government has given its clearance for

the much needed Suburban Railway project, Government of

India has asked to revisit some of the issues. This may

delay the project further. I request the Government of India

to clear the project as proposed.

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The ranking system adopted by NITI Aayog should be

more participative, scientific and transparent. For example,

giving 58th rank to Bengaluru in Ease of Living Index is

unacceptable as Bengaluru is widely rated as the most

preferred city for work in the country by reputed agencies.

In order to enable small and marginal farmers to

continue farming without the pressure of debts accrued due

to repeated droughts, my government has waived crop loans

upto Rs.2 Lakh in respect of commercial banks and upto

Rs.1 Lakh in respect of co-operative banks.

In view of the increased renewable power generation in

the State, managing the grid frequency has become a major

challenge. Government of India is requested to allocate Rs.

6000 crore for implementation of Pumped Storage Project

which will help to balance the grid in the entire southern

region.

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So far as Centrally Sponsored Schemes (CSS) are

concerned, as a consequence of several policy decisions,

including the restructuring and closure of schemes and

reduction in the central share to 60% or even 50%, the

overall estimated grants from Government of India under

CSS schemes decreased from Rs. 16,525 crore in 2014-15

(RE) to Rs. 10,099 crore in 2019-20 (BE). These figures

denote a drop in grants from 15.17 % of the overall revenue

receipts in 2014-15 (RE) to 5.55% in 2019-20 (BE). This

has forced the State to make up the shortfall from its own

resources, thereby affecting other initiatives.

Regarding subsidies, our view is that the subsidies

which arise because of specific central legislations or

policies should be borne by the central government itself

and the state should not be expected to share a portion of

them.

The erstwhile JnNURM and UIDSMT programmes

have contributed in upgrading the infrastructure in our cities

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especially in sectors of water supply, sanitation and

sewerage management. The Government of India should

continue to provide assistance for upgrading infrastructure

in urban areas other than those covered under the Smart

Cities Programme.

At the national level, priorities must be identified with

specific goals and outcomes backed by sufficient funding

support from the Centre. The States should be free to

identify their own priorities and goals in addition to

national-level priorities which they may strive to achieve

with their own available resources.

The states which perform well and adhere to the set road

map in achieving the national priorities must be

demonstrably incentivized. Similarly, devolution of

resources from the Centre must encourage efficiency and

incentivize states that manage their resources well.

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The role of NITI Aayog becomes very important in the

context of different levels of development within the

country and the state. In order for the country to join the

comity of progressive nations and to ensure a high level

growth and development, it is essential that all regions

within the country progress, and that human resource, the

most precious asset of our country, is nurtured.

I look forward to this forum being used to achieve this

great vision in a democratic manner and in the spirit of

cooperative federalism.

Jai Hind, Jai Karnataka

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