Xth Plan - Chapter 1

Background

The Ninth Five Year Plan of Kerala was approved by the Planning Commission for a five year outlay of Rs.16100 crores at constant prices and Rs. 21700 crores at current prices. Major alteration was made to the size of the Plan 2000-2001 reducing the size by 30%. Therefore the final approved outlay at current prices is 14256 crores. Out of this amount it is expected that expenditure at the end of the Plan period will be Rs. 15107 crores at current prices constituting an expenditure of 106 per cent

The plan period was marred by fiscal crisis, due to burgeoning revenue deficit caused by sharp increase in interest charges arising out of heavy borrowing and in salary and pension payments following the Fifth Pay Commission and UGC revisions accompanied by very sluggish growth in revenues and Central transfers. Non-adoption of reforms in the first four years deepened the crisis by year 2000. The white paper issued by the Government brings about the position in detail. The economy of the State was also affected during the last three years by the sharp fall in prices of cash crops on which the State is heavily dependent. Nevertheless the economy had a moderate rate of growth during the first four years of the Plan period mainly due to the Services Sector. The growth rate is given below:

1997-98	1998-99	1999-2000*	2000-01**
2.2%	6.2%	6.9%	6.9%

* Provisional
** Quick estimate.

Achievements of the Ninth Five Year Plan

The salient achievements of the Ninth Plan were :

Decentralisation of development through local governments by devolving 30.5% of the Plan as practically untied grant-in-aid for local level participatory planning and implementation of projects planned for is the high water-mark of the Ninth Plan. This has made Kerala the pioneering State in the country in the progress towards creation of genuine institutions of local governments as envisaged by the 73rd and 74th Amendments of the Constitution. Through decentralisation considerable achievement has been made in provision of minimum needs infrastructure to the poor especially houses, drinking water, sanitation and infrastructure in Schools and Hospitals.

Information Technology got a belated boost in the State. E-governance gradually came to be recognized as a thrust area of development. Various Departments started computerization. Treasury computerization has been completed in two districts and is likely to cover the entire State within one year. Introduction of e-governance in the Secretariat and in the offices of the Heads of Departments is nearing commissioning through a wide area network. The introduction of computers in schools has progressed albeit at a slow pace. The Civil Supplies and Registration Departments have advanced in computerizing their work. Public service centers where people can remit their dues to several public agencies called 'Friends' is an interesting innovation. An ambitious project to link local governments including Village Panchayats through an electronic network has progressed considerably and can be operationalized in one year.

Tourism has become the sunrise development sector of Kerala holding promise for generating employment and wealth. It is estimated that tourism industry has generated 1.5 lakh jobs directly and 5.5 lakh indirectly. Through a policy of facilitation of private investment and carefully planned marketing Kerala has been developed into a preferred tourist destination. Kerala now figures prominently in the World Tourism Map.

The State made important strides in reduction of poverty through the twin agencies of local governments and the State Poverty Eradication Mission called 'Kudumbashree'. In the last two years Kudumbashree has set up 772 group enterprises and 12,219 individual enterprises for women together providing self-employment to nearly 20,000 persons. The thrift mobilized by the women groups in the urban local governments and selected Panchayats comes to Rs.48.12 crores. The scheme, which had started in the urban local governments and in whole of Malappuram District at the beginning of the Ninth Plan, has now been extended to 563 more Village Panchayats. It has 66,340 Neighbourhood Groups of women working under it.

Allocation to SC/ST development was stepped up considerably in real terms giving up the concept of notional flows to SCP and TSP. Investible resources to the tune of 11.31 percentage of the State Plan was provided under SCP and TSP which more than doubled the share in the Eighth Plan.

Drawing lessons from the experiments of some of the Village Panchayats a massive participatory water supply project was launched to cover six districts suggesting a paradigm change in rural water supply. Piped water systems are constructed with 15% capital contribution from the beneficiaries and 10% from the Village Panchayat and the systems have been handed over to beneficiary groups for future maintenance. This is likely to become the model for rural water supply in the coming years.

Thirteen Power projects were commissioned which added 964.1 MW to the installed capacity. Four long pending Irrigation projects have been completed and two are nearing completion.

In Education, the DPEP for primary schools and delinking of pre-degree courses from Colleges in line with all-India practices were significant steps.

Shortcomings

The fiscal crisis, which started in 1999, got worse during the next year resulting in substantial reduction from the originally envisaged Plan size. This created several problems in programme implementation according to schedule, in stepping up productive investment and in infrastructure development. Delayed payment of bills slowed down the development momentum and increased unit costs.

The pace of agriculture growth witnessed during the Eighth Plan at 3.8% could not be kept up even though the growth rate of 2.27% in the first three years is higher than the performance in the 80's. Steep fall in the price of cash crops like rubber, coconut, pepper, coffee and tea with prices coming down by more than half affected the agriculture sector. Widespread mono culture aggravated the problem in agriculture.

Though the power crisis in terms of availability of power was solved to some extent, the burgeoning operational costs, line losses, the high cost of power from NTPC, and poor project and programme management increased the problems of KSEB and the Board is now facing a very bad financial crisis.

Kerala Water Authority too faced acute fiscal problems prompting it to divert development funds to meet the establishment costs. This slowed down implementation of projects and consequent benefits to the people.

Public enterprise reform did not really take off even though Government set up special bodies to regulate budgetary support related to improvement in performance.

The credit deposit ratio in the economy continued to be low at 43%.

The 'big-push' decentralisation saw some wasteful and non-productive use of funds especially in the first two years. In the last two years, the financial crunch led to reduction in transfer of funds affecting the implementation of schemes and projects that had been started.

The staff, especially engineers and clerks rendered surplus in government departments, could not be transferred in practice to the local governments though a policy decision was taken. This affected the performance of local governments.

The problem of surplus teachers and staff in schools got worse. The problem got extended to Colleges because of the manner in which delinking of pre-degree courses was done.

Towards the Tenth Five Year Plan

A three-stage methodology was adopted for preparation of the Tenth Plan. In the first stage, departments had internal consultations and prepared a status paper describing their successes and failures, analyzing their strengths and weaknesses and suggesting the way ahead and the changes required. Based on the lessons of the past, the priorities were drawn up and incorporated in the guidelines issued by the State Planning Board. (Annexure-1)

Eight Plan Committees were constituted consisting of experts from within and outside Government, covering the following areas

Agriculture and allied sectors.

Infrastructure and tourism

Environment and water resources.

Local Governments and People's institutions

Resource mobilization.

The Committees constituted Working Groups and the reports of the Working Groups were made available to the departments. A large number of experts, people's representatives, local governments and their representatives were also consulted.

In the third stage, departments formulated projects according to the approved guidelines and the suggestions of the Plan Committees and the draft Plan has been finalized after detailed discussions between the State Planning Board and the departments.

While drawing up the Plan proposals the following norms have been followed.

The expenditure on staff (about Rs.350 crores a year) has been shifted to Non-plan, as required by the Planning Commission.

No staff increase is provided for. Exemption is made only in a few cases of professionals and highly skilled technical personnel and special schemes with assistance for staff.

Schemes which have outlived their utility and are not in line with policies and current programmes have been deleted.

Buildings under construction are to be completed before new ones (where absolutely essential) are taken up. Maximum use is to be made of buildings and premises that have become vacant or will become vacant (as a result of delinking of pre-degree courses from Colleges and closure of schools with few children).

Priority is given to completion and speeding up of schemes under implementation. New Schemes to be taken up in first year will be small in number.

Sub-sectoral outlays are so fixed as to ensure maximum use of external assistance (World Bank & other projects, Centrally Sponsored Schemes, NABARD and other financial institutions assistance)

The allocation for Infrastructure is much higher than in earlier plans. The release of funds will be on the basis of the adoption of a project-approach and Plan of Action based on priorities and will not be made lump-sum for use on a large number of works.

The staff cost of works is put at a maximum of 15% as per National norms.

Any amount needed for remaining pending works bills before 1-4-2002 is not included in the Plan allocation.

Repayment and other payment liabilities of Housing Board, Water Authority, KSRTC cannot form part of the Plan. Comprehensive proposals will be drawn up in such cases separately based on the studies and discussions that are going on. Performance guarantees by the organizations over the next three years will be insisted upon while finalizing the proposals.

It is expected that during 2002-2003 nearly Rs.150 crore would flow from local governments to Agriculture and allied sectors, Rs.75 crore to Minor Irrigation, Rs.300 crore for Roads, Rs.100 crore for Water supply and Rs.100 crore for Housing.

A system is proposed to be put in place for monitoring the use of assistance to local plans.

The State Government and local governments will adopt a time-bound programme to improve facilities and services in the public sphere e.g., educational institutions and hospitals

The Finance Department estimated the resources available for the Tenth Five Year Plan at current prices as follows:

Scenario I. (As per trends and guidelines of the Planning Commission)

(Rs. in crores)

	2002-03	2003-04	2004-05	2005-06	2006-07	Total
Aggregate Plan Resources	2701.30	3266.43	3759.49	4069.38	4681.63	18478.23
Power Sector Plan	570.33	641.97	729.28	832.32	954.34	3728.24
State Plan Outlay	3271.64	3908.39	4488.77	4901.70	5635.97	22206.47

Since some reforms have been initiated to reduce expenditure and to increase revenue it was decided to take a more optimistic view of the resource position than Scenario I. At the same time since all the required reforms may not materialise in the short run the Government decided to fix the size of the Five Year Plan at Rs.24,000 crores and the Annual Plan 2002-03 at Rs.3750 crores.

66.67% of SCP funds and 68.14% of the TSP funds were given to Local Governments and included in the share of the Local Governments.

For the current year with the twin objective of strengthening decentralisation and reducing poverty the resources to be earmarked have been stepped up as follows:

Local Governments : 30.52% of Plan size

SCP : 10 % "

TSP : 2.25% "

It may be noted that the allocation for SCP/TSP comes to 12.25% of the Plan size though the population share of SC/ST is only 11.02 per cent (1991 Census).

The sectoral and sub-sectoral outlays proposed for the Tenth Five Year Plan are given in Annexure-2 to this Chapter.

Highlights of the Tenth Five Year Plan

The Plan focuses on reforms. It is more about doing things differently in an efficient manner rather than mere allocation of resources and decisions on investment. Care has been taken to structure schemes in such a way that in the first year there will be detailed studies of sub-sectors and development areas so that correctives are introduced from the second year onwards.

Instead of incremental allocations, priorities have been fixed based on the importance of sectors. Thus more allocations have been proposed for Information Technology, Tourism infrastructure, Poverty reduction and Health.

The Plan gives a lot of importance to employment generation. Multiple strategies and programmes have been incorporated with a view to enhancing skills and creating job opportunities. Kudumbashree alone is expected to create micro enterprises directly giving employment to 2.5 lakh women below poverty line. Similarly IT and Tourism are expected to generate substantial employment. Through watershed management at the local government level, local production potential will be fully exploited.

In addition to Government investment directly creating jobs, much emphasis is laid to creating incentives and a favourable environment for private investment in all the sectors of the economy. Hitherto untouched areas like higher education, traditional industries and public infrastructure, are expected to attract more private participation.

Poverty reduction is given the pride of place in this Plan. Though by conventional measurements of poverty Kerala has relatively low levels of incidence, it has certain intractable problems due to low land availability to the poor and high levels of educated poor for whom employment generation is difficult. During the first year of the Plan a detailed anti-poverty sub-plan would be put in place based on planning from below with focus on women's groups who would be networked into organizations at the level of the local government. Through a participatory planning process, linkages will be effected with all departmental and local government schemes having direct implications for poverty reduction and arrangements would be put in place to bring about convergence and synergy. Within the anti-poverty sub-plan itself special priority will be given to the most vulnerable groups in the State namely the Scheduled Tribes. A Master Plan is being prepared for their development. More than 20,000 tribal families are to be assigned land and rehabilitated. Participation of the tribals and local democracy among them are the key strategies in the formulation and implementation of the Master Plan.

The care of the disabled would receive special attention during this period. While the Government will evolve models, the local governments are expected to be partners in replicating such models in the field with the involvement of NGOs.

Gender issues will be tackled particularly at the local level Ten percent of the plan funds set apart for local governments is earmarked for schemes benefiting women. A continuous process of refining these schemes to make them more gender sensitive is also intended.

Decentralisation will be strengthened and institutionalized during the Tenth Plan period. The focus is on improving the planning process, strengthening implementation capabilities, strengthening the role of local governments in economic development and enhancing their capacity to manage the institutions and services transferred to them. Local governments would be guided to provide adequate resources for natural resource management at the local level.

Information technology is given its due importance in the Tenth Plan. A three-fold strategy is envisaged - E-governance, IT education, and promotion of IT industries.

Tourism has received stepped up allocation in the Plan. Government will continue to play the role of a facilitator, planner and developer of infrastructure coupled with a proactive promotional role. In the development of infrastructure, an integrated project approach is envisaged with earmarked funds for all concerned departments/agencies. Niche areas like eco-tourism, health tourism and backwater tourism as well as destination based tourism have been identified and they are to be promoted.

Village and Small Industries are to be revitalized by repositioning them so as to gain an advantage in the national and international markets.

In the education sector private participation would be increased in higher education. Instead of starting more and more of the same old courses, only new courses will be started in the Plan. The Universities will also be persuaded to undertake fundamental reforms and become vibrant centers of study and research with a vision for the future and a Mission for the next five years. The institution of Autonomous Colleges is under active consideration. In schools the focus will be on upgrading the quality of education through local governments.

In the health sector standardization of facilities and fixing of standards for services would be taken up in a big way as a partnership between government and local governments. A time-bound programme will be drawn up for the first three years of the Plan. The referral system is to be streamlined and the Medical Colleges are also to be improved for tertiary care.

A number of initiatives have been taken this year to work out reforms:

A Law Reforms Committee has been constituted to suggest legislation in line of current needs to facilitate faster development.

Legislative changes to do away with unfair labour and management practices will be brought about in the first year of the Plan.

A Modernization in Government Programme is proposed for the Tenth Plan linking various initiatives at E-governance, capacity building and systems reform. The key elements of the programme include fixing of minimum standards of services to the poor, strengthening local governments, improved public expenditure management, law reforms, administrative reforms and reforms to make the State more investor friendly. For each of these elements, clear action plans are to be formulated and verifiable performance indicators identified. A detailed plan of action is under preparation to carry out this programme from a short term and medium term point of view.

At the local government level fiscal responsibility provisions are to be introduced in the legislation. Also Citizens' Charters and Social Audit are to be operationalized. Arrangements for concurrent monitoring of local government plans are being put in place.

An Enterprise Reforms Committee has been set up to go into the whole question of public sector reforms. On a case-by-case basis the Committee proposes to take up each public enterprise and suggest appropriate measures ranging from closure to expansion. Government funds would not be used to fund cash losses.

KSEB, KWA and KSRTC have been taken up for detailed study and reforms. Many measures have been initiated. A detailed programme with parameters to be fulfilled by the organization is being drawn up for the next three years.

Participation of user groups in management of assets is envisaged in irrigation and water supply. Local Water Resources development and management will be encouraged.

All autonomous institutions are required and encouraged to raise substantial resources on their own.

Funds will be released to PSUs, autonomous institutions and departments (as regards projects) only against Project Reports and time-bound Action Plans. There will be special monitoring of such projects. The Tenth Plan is drawn up on this basis

	2002-03	2003-04	2004-05	2005-06	2006-07	Total
Aggregate Plan Resources	3456.62	3894.75	4394.64	4965.98	5620.10	22332.09
Power Sector Plan	575.00	661.25	760.44	874.50	1005.68	3876.87
State Plan Outlay	4031.62	4556.00	5155.08	5840.48	6625.78	26208.96