November 16, 2001

    The Prime Minister, Shri Atal Bihari Vajpayee inaugurated and chaired the Seventh Meeting of the Inter-State Council here today. Apart from Chief Ministers, other Ministers and senior officials of various States, Union Home Minister Shri L.K. Advani, Union Human Resource Development Minister Shri Murli Manohar Joshi, Union Minister for Law, Justice & Company Affairs Shri Arun Jaitley were also present on the occasion. The Home Minister Shri L.K. Advani delivered the welcome address.

    Following is the text of the inaugural address delivered by the Prime Minister on the occasion :

    "I welcome you to the Seventh meeting of the Inter-State Council.

    Since the last meeting of the Inter-State council on 20^th May, 2000, as many as 10 States, including the three newly-formed States of Chhattisgarh, Jharkhand and Uttaranchal, have their new Chief Ministers. May I ask you to join me in extending a hearty welcome to all of them to this meeting of the council, the first they are attending?

    As you are aware, the Inter-State Council was constituted in 1990 by a Presidential Order under the provisions of Article 263 of the Constitution for discussing subjects in which some or all of the States of the Union Government have a common interest. Over the last few years, we have sought to make the Council an active forum for free and frank discussions on issues that have a bearing on the Centre-state relations.

    I believe that this is an effective means of evolving a common perception on issues and their resolution. It strengthens the partnership between the Union and the States, which is the mainstay of our democratic polity as well as our cooperative federalism.

    I must express my deep satisfaction – and I am sure all of you share my satisfaction – at the cordiality and spirit of cooperation that mark the Centre-State relations today in spite of an unprecedented degree of political pluralism in our country. Speaking for myself, I have never encountered any difficulty in interacting with Chief Ministers who belong to parties other than those represented in the National Democratic Alliance.

    This shows the growing maturity of democracy in India. It is also indicative of the increasing convergence of our desire to achieve faster all-round development and find effective solutions to the pressing problems facing the States and the country. The time has now come to transform this convergence into a robust practical consensus, so that our actions match our intentions.

    The recommendations of the Sarkaria Commission have created a lively debate in the country. Naturally, as befits a vibrant democracy, citizens and politicians have responded to these with diverse viewpoints. I am sure that the Agenda items under discussion today will also evoke a multiplicity of views and opinions.

    As many as 59 recommendations from different chapters of the Sarkaria Commission’s Report are for consideration before us. The Standing Committee has already considered these recommendations and its opinions have been incorporated in the Agenda papers. I am glad that there have been in-depth discussions on these issues in the Standing Committee. I would like to convey my thanks to the Committee members for their valuable suggestions.

    Without going into the specifics of the Commission’s recommendations, or what the Standing Committee has opined on them, I would like to underscore an important premise, which must guide our debate. And that is the need to strengthen the States without weakening the Centre.

    India – the prosperous, progressive, self-confident and united India of our dreams – can only be envisioned as one with a strong Centre and strong States. In this vision developed by the founding fathers of our Constitution, the Centre is expected to provide the overall guidance to the nation and the State Governments are expected to provide a good administrative interface with the people.

    The vision precludes any notion of a confrontation between the Centre and the States, or between the States. If any differences crop up on any issue at any stage, we have over the years developed many reliable institutions to deal with them democratically and in keeping with the overall interests of the nation. The Inter-State Council is one of them.

    At the last meeting of the Council, we had taken decisions on 46 recommendations of the Sarkaria Commission. In pursuance of these decisions, a Committee of State Finance Ministers has made substantial progress towards reforms in domestic trade taxes. Several steps were initiated to facilitate movement towards a regime of Value Added Tax. A uniform floor rate of sales Tax is in place almost in the entire country.

    The period of overdrafts has been extended from seven days to ten days. The normal ways and Means limit of the States with RBI has been enhanced. We have also amended the NABARD Act and increased the representation of States from two to four on the Board of Directors of NABARD.

    Let me now dwell on the major problems facing the Centre and the States.

    Chief among them is the threat posed by terrorism and religious extremism. The recent terrorist attacks on the United States of America have starkly highlighted both the global scope and the extreme severity of this threat. They compelled the civilised world to launch a decisive campaign against the forces of terror, which had found a safe haven in Afghanistan.

    No country has perhaps suffered as much under cross-border terrorism as India has, during the past 10-15 years. Successive governments at the Centre and in the affected States have fought this menace resolutely. We have also achieved notable successes against this challenge.

    Nevertheless, our experience against terrorism has clearly demonstrated that we have to have a combat programme, whose crucial ingredient has to be sustainability. Sustainability is a product of strong political will, capabilities of security forces and, last but not the least, an enabling legislative framework.

    All of us know, TADA has lapsed and we have no other law in place to deal effectively with terrorism. I would like the Chief Ministers to give their views on whether there is a need to strengthen the existing legal framework to assist our relentless battle against terrorism.

    The Law Commission has opined that such a need does, indeed exist. It has also been the longstanding demand of our security forces. Several States have already put in place laws against organized crime.

    It is this context which explains the recent promulgation of the Prevention of Terrorism Ordinance by the Centre. We will discuss this issue in greater detail in tomorrow’s Chief Ministers’ Conference on Internal Security. I am confident that our deliberations will be free and frank, and will yield a consensus that answers adequately to the national need.

    If internal security is one major subject that calls for the closest possible cooperative interaction between the Centre and States, development is another. Here I would like to once again draw your attention to two pressing development issues.

    I can hardly overemphasize the need for the States to develop and implement their own programmes of fiscal self-reliance. The traditional belief that the solution to the financial problems of the States lies in higher allocation of funds by the Centre no longer holds good for two reasons. Firstly, it is not a sign of responsible management of State finances. Secondly, the capacity of the Centre to provide additional funds is becoming severely strained with the passage of time. In any case, both the Centre and States must put every available rupee where it is most needed to promote development and people’s welfare.

    Dear Chief Ministers, the present situation is simply unsustainable. It calls for a bold and decisive change. I know that any change causes difficulties initially. However, I assure you that the Centre will cooperate fully in your effort to achieve greater fiscal discipline.

    The second developmental issue that is particularly relevant to our meeting today is the need to take concrete steps to bring about decentralization of financial and administrative powers right upto the grassroots level. Next year marks the tenth anniversary of the historic 73^rd and 74^th Amendments to the Constitution. Let us objectively assess our experience of the last one decade. Let us examine whether the purpose of ushering in true Panchayati Raj through these Amendments been satisfactorily achieved and what further steps are necessary.

    The task before us is to speedily ensure that the process of true decentralization upto the grassroots level acquires substance and strength. Many States have been holding regular Panchayat and Municipal elections. This should become a normal phenomenon, immune from the pressures of competitive politics.

    The Sarkaria Commission in its report on Centre-State relations has made several recommendations, which specifically emphasise delegation of powers to the State Governments. The Council has already decided on about seventy per cent of these recommendations. Besides devolution of powers to the State Governments, the Commission has also touched upon various provisions and procedures that act as impediments in Centre-State relations. We are now trying to remove these.

    The Inter-State Council has so far concentrated on the recommendations made by the Sarkaria Commission on Centre-State relations. In order to use this institution to further strengthen the principle of cooperative federalism, the task of the Council needs to be widened. With this in view, the guidelines to conduct the business of the Inter-State Council have already been amended to the effect that, if a majority of the Council’s members propose discussion on an issue, the Council may consider taking it up on its deliberations.

    I, therefore, invite the States to increasingly use this forum for bringing up issues for discussion which have been mandated in the Presidential Order, as falling in the domain of the Inter-State Council.

    With these words, I inaugurate this Meeting of the Inter-State Council and thank you for sparing your valuable time. We can now take up the meeting’s agenda for discussion item-wise.

Thank You".