FICCI Executive Meeting on Suvarna Karnataka

Address of Shri Rajeev Chandrasekhar, President FICCI, at the Executive Committee Meeting on 18th July, 2008

Honorable Chief Minister Karnataka, Shri BS Yedyurappa,

Ladies and Gentlemen:

Good Afternoon and welcome to this FICCI session on Suvarna Karnataka – a day after our Chief Minister has delivered his 3rd budget for the state, but first as head of Government and Chief Minister.

I thank the Honble Chief Minister for taking the time today to be here at this discussion and for sharing his vision for Karnataka.

As you know, I represent the state of Karnataka in Parliament and so my interest in the State’s development is more than just intellectual or theoretical. The last several years have been very unsatisfactory in terms of the State’s development and let me give you a snapshot of Karnataka

For a State that prided itself in solid growth and social indicators for the best part of 4 decades after independence, relative to its peers – our performance in recent years has been very disappointing. Growth in Karnataka has tapered off and stalled over the last 4 to 5 years.
The Economy has been allowed to and has become dangerously uni-dimensional and over dependent on IT and off shoring and is vulnerable going forward to global trends in this sector. GSDP is almost totally dependent on tertiary sector growth with the primary and secondary sectors stagflating for the last many years.
The growth and economic progress has not been inclusive with a large part of the State’s population and economy affected as a consequence of the Agricultural economy shrinking.
25% of the State still lives below poverty line and our State is lagging behind most other developed States in terms of social indicators like Primary Education and Health.
Bengaluru, our capital city and the gateway to Karnataka, has progressively and surely gone into slow spiral of decay from being an overcrowded town to one that represents full blown urban chaos, despite the fact that Bengaluru alone contributes almost Rs 15000 crores in Income tax revenues to the Centre.
The Urban poor are being almost totally left out of the governance and planning process and growth equation is being tended to a large extent, only by NGOs and other concerned organizations.

With this as a background, in April earlier this year, FICCI took the initiative to research and advocate a development agenda for the State. The State at that time was under governor’s rule and FICCI was targeting its presentation and discussions at all political parties that were preparing for the elections then. We were proposing a new economic and development agenda, the basic premise of which was and is that the pressing problems of poverty and destitution in our country and State can only be effectively solved by ensuring a full decade of uninterrupted economic and inclusive growth of 9%+.

What is the Economic agenda that we had proposed?

The agenda starts with two fundamental objectives which are achievable –

Karnataka will be a full developed State by 2015-2020 with most progress in the next 5 years – which is 7 years or 1 and half terms of governance.
Karnataka to have a 10+% growth for this duration of 7 years, which will make it a $150 Billion dollar economy (Rs 6 Lakhs Crores) by 2015.

To achieve this goal, we had suggested that the government pursue the following 5 point agenda

Diversify and broad base the Economy and focus on other areas to develop create the catalysts for investments in these new areas.
Revive the Agricultural Economy
Improve economic governance and efficiency of government spending in targeting the rural and the urban poor.
Revamp institutions that deal with Government delivery of services
Develop Bengaluru - the gateway of Karnataka and six other cities, into modern Cities with totally new governance models that will create an institutional space for its citizens and RWAs.

We had deliberately and consciously focused on and suggested these building block issues. We had also urged an urgent, aggressive approach around these issues as the only way to break out years of gridlock that was making the state fall behind.

Sir, I congratulate you for this and for your budget. The budget lays out your vision – which is important - to get a clear sense of the direction you intend to take the state in. I will make two points in this connection for your consideration

Firstly, I would submit that the problems of the State have been taken on a war or mission mode footing. In the last month and half you have already set into motion many initiatives and are showing that you are a man in a hurry. However this sense of urgency and tempo that only you can create has to permeate into the entire administration not just for today or for one month but that urgent, unrelenting tempo must be sustained through the entire term of the government if things are to happen. The demographics of our State as in our country is pointing to a younger and more impatient population –– People want solutions today, to today’s problems, and are not prepared to be silent and wait.

Secondly, an area about which I have spoken and written about a lot including in Parliament. I would urge him to look at one missing link from the Suvarna Karnataka Agenda - the critical issue of improving efficiency and effectiveness of government spending. We all know that government spending – subsidy or otherwise is notoriously leaky. Bangalore is the technology capital of the country, and his Government can become the first government to make progress in this vexed problem by using databases and service cards to make government spending and programs more targeted, less leaky and therefore more effective. There is ample evidence that just by ensuring efficient government spending, one can easily expand the government program by 30-40% - think of the difference that could make and the numbers of people it could impact.

On a slightly different note, I want to thank the Chief Minister for making Karnataka the first State in India to build a war veterans memorial. He responded almost immediately to my request and for this I thank him. This is a long overdue act of gratitude by the state to the lakhs of veterans and their family who have served the nation. I hope other States and indeed the Country follows the Hon’ble Chief Minister’s and Karnataka’s example.

Sir, as for FICCI, we believe in action as well. We are true stakeholders in the communities and States that we work in. Beyond helping shape the broad agenda, we are prepared to do a lot more for the development of the State and to this we can pledge the support of FICCI and its infrastructure to help you and your government in your efforts in taking Karnataka to its goals of a fully developed State.

Thank you

Jai Hind ! Jai Karnataka !