Addressing the meet Modi, who also holds the finance portfolio, said that the rise in petrol and diesel prices has been a matter of concern as in the past six months they have been raised six times. There has been approximately a 21.6 per cent increase in the prices in this period.
While the price increase due to international price movement is, to some extent understandable, the commensurate increase in taxes which are levied ad valorem can be avoided. Crude oil has an import duty of five per cent at present which may be abolished. Similarly, excise duties on petrol may be levied at a flat rate on every litre.

He said poor are the worst sufferers of inflation and their food security is jeopardized. Time and again, we have expressed apprehension that the poor in Bihar will not be able to take full benefits of the increased allocation in major social sector programmes as well as of the proposed National Food Security Act, as the Government of India has fixed the number of households below poverty line in Bihar at a very low level as compared with the reality.

“Our stand is vindicated by the Tendulkar report, which places the poverty headcount ratio in the state at 54.4 per cent, which is closer to reality. The Government of India is now in the process of finalizing the criterion for Below Poverty Line (BPL) survey. The guidelines for the last survey were issued by the Ministry for Rural Development and the states were not consulted. As a result the poverty figures approved by the Planning Commission were widely at variance with the household survey figures undertaken by the Bihar Government. Our first request is a consultation on the process of finalization of BPL survey. We feel that it will be better if there is an independent commission to identify BPL families based on the criteria decided by Government of India,” Modi said in his speech.

He said an issue of general concern is the bypassing of the state government by the Central government while transferring funds straight to autonomous state societies and DRDAs. In 2007-08, 57 per cent of the total Central Government grants of Rs 5,834 crores and 77 per cent of the total Central plan funds were not routed through the State budget.

“All of us have decried this practice and requested for proper fund flows as per the Constitutional arrangements,” he added.

The deputy chief minister claimed Bihar has been maintaining an exemplary fiscal discipline in the last few years. However, it is a matter of serious concern that despite the high developmental deficit and the high proportion of the state in national population, the share of the state of Bihar has been reduced in the 13th Finance Commission award. From 11.028% of tax devolution in the 12th FC, the share has come down to 10.917% in the 13th FC. “If we consider the total grants and tax devolution, the amount comes to 10.08% of the total devolution. Thus the 13th Finance Commission's award has seriously undermined the concept of equity and nationally comparable public services in the state. This deficit must be compensated with special grants,” he demanded.

Modi said in the last few years “we have faced either flood or drought every year and our agriculture economy has been seriously affected. In 2008. We faced the Kosi calamity which did widespread destruction but no commensurate special grants were announced.”

Post-reorganisation Bihar was sanctioned a special grant for taking up infrastructure projects under RSVY, which is now continuing under BRGF as a special component. It is requested that the scheme be continued in the next plan period also to bridge the infrastructure deficit.

“Since 2006, when the Legislative Assembly of the State of Bihar passed a resolution asking for "Special Category State" status to be given to the state of Bihar, we have been requesting for the same, at par with Himachal Pradesh, Uttaranchal and the North-Eastern States. In this context. The chief minister of Bihar had written to the Prime Minister on 3.6.2006 and also submitted a memorandum. Although in the past few years Bihar's GSDP's growth has been encouraging, but we are still far behind in per capita income. Despite our progress in the social sector we need massive investment to reach even the national per capita income. Therefore, to attract investment especially in potential areas like agro-industries, it is essential that Bihar should be given the status of a special category state,” the state’s Finance Minister said.

In the coming few years, the state needs to increase its developmental expenditure substantially to bridge the gap with the national average. A strict adherence to fiscal deficit limit of 3% for the financially adhering states like Bihar, limits its resources the most when it needs them. States with low income, but revenue surplus, should be allowed a higher level of fiscal deficit up to 5%. The healthy rise in revenue receipts and low Debt GSDP ratio will ensure that the level of debt does not become unsustainable.

He said as per the Bihar Reorganization Act, 2000, Bihar has to receive from Jharkhand, Rs 5030.71 crores as on 31.03.2010 in pension liabilities and 285.78 crores in State Government Guaranteed bonds from the state of Jharkhand, without including the interest accrued. The matter is to be decided by the Union Home ministry, but till now the decision is pending. We request that the issue is taken up on urgent basis to support our Annual plans for the coming years.

In year 2009-10, Bihar's CD ratio has improved from 30.46 to 32.13, but it is way behind the national average. While the deposit of the banks in the State has crossed 100,000 crore, their credit profile has not kept pace. Now that the state is on a growth trajectory, a direction must be given to the banks to increase their lending, he said.

In Bihar, the reach of Scheduled Commercial Banks is low and most of the interior areas are served by RRBs. Only one out of four RRBs has achieved cent percent core banking and some assistance may be given to the rest to expeditiously complete it. All the Government payments are being channeled through banks and even in schemes like MNREGA, where the poorest of the poor are concerned it takes more than a fortnight to receive the wages. Around 700-800 bank branches are manned by a single official and hence must be strengthened for credit and banking services expansion, he added.

While interest subvention is available in short term agriculture (crop) loans up to two per cent, agriculture interest rates in general need to go down to at least five per cent for medium term loans. “Currently we have a situation where one can buy a luxury car at a lower interest rate than the rate at which one can buy a tractor. Similarly, farm mechanization tools, dairy and fisheries etc need to have the benefit of the five per cent interest rate as this would give a boost to agriculture production and also promote inclusive growth. In Kisan Credit Card, strong pressure needs to be built up on the banking channels to ensure that the targets given under the KCC are met so that it becomes an important tool for ameliorating the conditions of the farmers. Bankers should be given clear instructions to issue KCCs to dairy and fish farmers also.”

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