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Announcing two major policy changes
in the budget speech for 2000-2001 could make a bold beginning. First, the new
focus is on fostering growth through private sector participation. And,
second, the new policy is one of adjusting the size of the government and
improving its effectiveness. These policy announcements will send the right
signal to the people and the investor community that it is no longer ‘business
as usual’, and improve the investment climate as well as the morale of public
administration.
The State Budget
for 2000-2001 should also announce two important schemes for making a fresh
start in the promotion of horticulture and improving the quality of education in
the state. In horticulture, the scheme relates to the promotion of producers’
co-operatives to share marketing information and technical know-how in cardamom
and ginger, the two most important cash crops of Sikkim. The scheme should
be initiated on a pilot basis in a few areas with the stated aim of
evaluating the success of the scheme at the end of the year and extending it to
other areas only if the scheme is deemed successful. In education, the scheme
relates to the introduction of computer training to students in secondary
schools. Again the scheme should be introduced on a pilot basis in a
total of twenty schools appropriately selected from the four districts.
While the government will provide part of the finances for the purchase of
computers in the selected schools, matching contribution will be sought from
the students at the rate of at least Rs 25 per month to improve parent
participation. The scheme will be extended to more schools only after an
evaluation of the pilot schemes at year-end and on the basis of demands for such
an extension from students and parents. It should be clarified that the levy of
fees is essential to solicit a proper feedback from the parents and the students
about the quality of computer education being provided by the schools.
Immediate steps
involve the appointment of two committees for attracting private investment to
the state. One committee should be asked to focus exclusively on the
power sector, and should consist of distinguished experts in the field from
all over the country. This committee should advise the government on the
appropriate modalities for harnessing the hydroelectric potential of the state
in an environment-friendly way and through a public-private partnership. The
second committee should consist of senior bureaucrats and be entrusted
with adequate powers and one immediate goal, namely to promote a joint
venture or a purely private enterprise in poultry feed and cattle fodder within
the next twelve months. After the successful promotion of such a venture,
the committee may be asked to advise on how and in what areas similar joint
ventures may be attracted.
On the revenue
front, after having implemented the uniform floor rate of sales taxes
recommended by the Chief Ministers’ Committee on November 16, 1999 and putting
an end to the granting of fresh sales tax incentives to industries, the state
should try to augment revenues through better tax administration. Introduction
of computerised collection of data, including assessment, scrutiny and audit,
can bolster revenue administration significantly. The setting up of
computerised check posts at the four border crossings into the state to
register the names and addresses of the consignee and the consignor, and the
nature and value of the consignment can provide the state with an independent
source of information on its tax base.
The rate of stamp
duty in Sikkim is a low of 1 per cent of the consideration value. The
corresponding rates in Andhra Pradesh, Bihar, Madhya Pradesh, Orissa and West
Bengal vary between 4.2 per cent and 7.5 per cent. The rate of stamp duty in
Sikkim should be increased to 5 per cent.
What is needed is
a forceful statement of the goals that Sikkim has decided to achieve, followed
by immediate actions to demonstrate the resolve of the government and the
leadership to implement policies that will steer Sikkim to the stated goals. The
key to success lies in enabling and empowering people with the right skills and
information, promoting a market and private sector friendly economic, legal and
administrative environment, providing sound social and physical infrastructure,
and ensuring that the government is an efficient and cost-effective machinery
for delivering public goods. The strategy delineated above should help Sikkim
achieve its stated goals.
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