Memorandum Submitted to the Thirteenth Finance Commission

MEMORANDUM SUBMITTED TO THE THIRTEENTH FINANCE COMMISSION

I. Socio-economic backgrounds of the State:

1.1: Mizoram, the 23 rd state of the Union, is sandwiched between Myanmar in the east and the south and Bangladesh in the west. In the north, it is bordered by Cachar and Hailakandi districts of Assam. Manipur and Tripura also bordered it in the north-eastern and north western side respectively. Rugged hills and steep mountains characterize this remote state. The forest is rich with wide varieties of different species of trees, bamboos and shrubs. However, the wealth of forest has been wantonly destroyed through the traditional practice of shifting cultivation, the practice that has remarkable resilience inspite of many attempts at its stoppage. The region covers a geographical area of 21,081 square kilometers. The total population in 2001 Census is 888,573 persons with an average density of 42 persons per sq.km.

1.2: The British annexed the region in 1890, its northern region then called the Lushai Hills was put under Assam while the southern region was put under Bengal. The two regions were amalgamated into one district and put under Assam in 1898, and it remained a district till 1972 when it became a Union Territory. When the district was found face to face with a severe famine due to bamboo flowering and its resultant drastic increased in the population of rodents that devastated crops in the late 1950s, there was wide spread discontentment amongst the people towards the performance of the then Government of Assam. That discontentment resulted into a rebellion led by the Mizo National Front in 1966. The insurgency haunted the region for twenty long years till the Government of India and the Mizo National Front signed a Memorandum of Settlement in 1986, and consequent upon that historic settlement, Mizoram was granted statehood on 20 th February 1987.

1.3: The whole state is rather backward economically. This has been attributed to various factors. According to one scholar, the whole planning process in the context of Mizoram has been a failure and has not registered any significant growth because planning in the state has not taken into consideration local needs and resource potentials (Lianzela, Economic Development of Mizoram, Guwahati, Spectrum Publications, 1994. p. 49.)

1.4: On the other hand, the failure of economic planning in the state might have been connected with the insurgency in the state. Among various consequential impacts of insurgency on the economy of the state, grouping of villages has lasting effects on the people. The introduction of grouping of villages in the state as a counter measure to the activities of the then banned- Mizo National Front has adverse and lasting effects on the society. Grouping of small villages into a larger unit under the supervision of the Military as a counter-insurgency measure as done in Mizoram during 1967-1970 was similar to the scheme launched by the British in Malaya against the Chinese in 1958. The United States of America also launched it in 1962 to counter the Vietcong in South Vietnam. In all these cases, the powers authorizing these measures were foreign powers against their foreign adversaries. The application of the same scheme in India was a deviation as it was against its own people in its own territory. The process of grouping of villages was started in 1967 and was completed in 1970 by grouping 516 villages into 110 grouping centers called Progressive & Protected Villages (PPV). In other words, the total of 654 villages in 1967 were reduced to 248 villages involving about 188,923 persons or about 95 percent of the then population of Mizoram. Increased un- productivity of swidden cultivation due to shortages of virgin land and forced labour under the Armed Forces and constant curfew which limited working time in the field for people in the grouping centers led to destruction of self sufficient village economy. The people could not yet fully recover from various impacts of that blow. Under this unfortunate incident, it will not be out of place to expect special package from the Government of India for the reconstruction of the destroyed self-sufficient village economy .

2. General observations and comments:

For Mizoram, which was elevated to a full-fledged state in 1987, three years after the Eight Finance Commission submitted its recommendations; the Ninth Finance Commission could be said as its first Finance Commission even though the State has received some amount of funds under the Eight Finance Commission. The State is young, and is lagging behind other States in almost everything. Under these circumstances, we have high expectation from the Finance Commission.

2.1: At para 4 (i) and (ii) of the Presidential Order, The Thirteenth Finance Commission has been mandated to recommend the share of net proceeds of the central taxes to the States vertically as well as horizontally. In addition the Commission is also required to recommend the principles based on which the grants-in-aid of the revenue will flow out from the consolidated fund of India and the sums to be paid to the states to cover their non-plan revenue deficit normatively to be assessed by the Commission.

2.1.1: A distressing development in the Centre-State fiscal relations, especially in the post reform period, is marked by the growing horizontal disparities and also by undue centralization of resources in the hands of Government of India, and its resultant gross inadequacy of resources in the States in relation to their varied administrative and developmental responsibilities. Among these, the horizontal inequalities have become a subject of serious concern for a small and newly created state like Mizoram. The major challenges before the Finance Commission, in our view, is how best the laggard States can be enabled to invest more in infrastructure and bridge the growing inequalities. Towards this end-objective, more advanced and bigger states seem to stress progressive and larger tax devolution. However, our assumption is that a mere increased in the amount of tax devolution will not bring fiscal stability and sustainability or justice to a small state like Mizoram, which is in a serious disadvantageous position in relation to criteria adopted so far by the past Finance Commissions for determining shares of States from shareable pool of taxes. During the

Twelfth Finance Commission period, the share in tax allocated to Mizoram is just 0.239 percent of total of tax set aside for the purpose, and it is 0.242 percent for share in Service Tax. A bigger vertical transfer does not necessarily ensure justice to small states like Mizoram. Whatever amount is devolved, the main concern for us is equitable inter se distributions. In other words, there should be a floor level to protect the interest of small States. At least, share in taxes and service tax should not be less than 0.50 percent, and this is in exclusion to various grants awarded. Over and above this floor level, there must be equalization mechanism to ensure narrowing down of horizontal disparities and to protect the interest of small and laggard States. To realize this objective, higher grant-in-aid seems to be the only answer. Notwithstanding the fact that we are not in agreement with the Commission‘s normative assessment in measuring requirements for these grants, we are happy that the Twelfth Finance Commission paved the way by recommending grants as mechanism for equalization objective. This is our request to the Thirteenth Finance Commission to expand the scope for such similar transfers by substantially increasing the percentage of tax set aside for such grants. The Twelfth Finance Commission reserved 18.87 percent of shareable tax for grant-in-aid, and that was insufficient to do justice. We do hope the present Commission in its wisdom increases the percentage share of grant to bring about equitable transfers of fund, of course, in favour of those small and laggard states. Further, following the Gadgil-Mukherjee formula, it will be desirable if a certain percentage of grants, at least 30 percent, is set aside specifically for Special Category States to rectify horizontal disparities.

2.2: Grants-in-Aids: A few observations on grants-in-aid and the Centrally Sponsored Schemes in general may not be out of place in this context. There has been considerable flow of funds from the Central Government to the States through various grants. The grants are mainly in three ways. Firstly, it is given under the recommendations of the Finance Commission. Second types are plan grants as decided by the Planning Commission to cover state plans as well as plan grants given by the Ministries of the Central Government for implementation of plan schemes. The third type of grants is discretionary 4 grants given by the Central Ministries to States on the non-plan side. While grants-in-aid given under the recommendations of the Finance Commissions are welcome, we felt that grants given by various Ministries of the Union Government in the form of Centrally Sponsored Schemes need restructuring. While Centrally Sponsored Schemes (CSS) have emerged as an important instrument of the planning process, we view that the CSS and the State‘s own plans do not only necessarily supplementing to one another but are also sometimes confronting to one another, and the rigid guidelines of these CSS do not necessarily conform to all situations. For instance, while the Government of Mizoram has the policy of privatization of vehicles to reduce non-plan revenue expenditure, a particular CSS requires purchase of new vehicles, the maintenance cost of which has to be burdened by the State Government. Another area of concern is the inability of the State Government to meet the requirement of counterpart funding (State‘s share) to these CSS. Therefore, if the Centre Government has priority areas within which it formulated CSS, the Centre funding should be on cent percent basis so that the State Government shall not be burdened with additional financial obligation like State‘s matching share, etc that will also leave the State Government to use its own meager fund for financing State‘s own priorities. The rigid guidelines should also be done away so long as the objectives of the CSS are not compromised. Further, fund transfer through CSS should not be regarded as part of devolution of tax to States from shareable pool of Central taxes.

2.2.1: Within these backdrops and in consideration of additional financial burden carried by the various CSS, it is our submission to the Commission to have regards the followings while considering grants. The practice followed by the Twelfth Finance Commission in considering grants was normative assessment of the requirements in relations to services provided by the States. The standards of services provided were assessed in comparison with average of the group or desirable level of norms, which might be met by own revenues. In order to follow this method, the Commission adopted normative approach. Due to its normative approach, Mizoram did not receive grants under Education and Health sectors from the Twelfth Finance Commission. The 5 seemingly justification held by the Commission for this is the rather high per capita expenditure of the State in these two sectors, the figures for which were normatively worked out by the Commission itself.

2.2.2: Its remoteness and its geography that is characterizes by hilly terrains make the cost of living and of service high in comparison to other States. The Twelfth Finance Commission recommended equalization grant for the laggard States on the basis of some normative assessments. The major indicator which plays a pivotal role in determining the assessment had been per capita expenditure of the State on the health and education sectors and its derivatives. Though for such purposes, the per capita expenditure is often regarded as an acceptable indicator under normal situation, more often than not it fails to capture the expenditure scenario of the State, particularly when a State has a relatively low population settled scattering over wide area in a difficult terrain and unfavourable topography. In other words, in an extremely hilly and an uneven topographic situation more particularly in case of very low density of population per square kilometer, the cost of providing services simply on the basis of per person expenditure of a State cannot be captured or fully assessed in relative to other States. The per capita services delivered for each rupee in case of former is always much lower compared to the latter. We, therefore, feel that the normative approach followed by the Twelfth Finance Commission in assessing the equalization grant for the State is highly discriminatory to a State like Mizoram which has got a very low population scattered over relatively high geographical area in a difficult terrain condition. We feel that the Thirteenth Finance Commission should take into cognizance the discrimination as well as limitation of the normative approach of the Twelfth Finance Commission and adopt a suitable norm to bring justice to the small State like Mizoram in recommending the grants for equalization. Towards this end, we suggest that the per capita normative expenditure relative to its group average should at least inter alia be multiplied with the population density of the State together with the degree of difficulty in terms of other geographical disadvantages before estimating the relative distance from the group average. 6

2.2.3: It is, therefore, our request to the Commission to take into account various problems of the State as expressed above and also the requirement of the State to meet the salary component of plan expenditure in sectors like education and health while it considers the principles governing these grants.

2.3: The recent acceptance of the recommendations of the Central Sixth Pay Commission has become another serious concern. This will have resultant consequences on the cost of living, especially in Mizoram where Centre pay has been followed since the Third Central Pay Commission period. It will be inevitable for the State Government to drastically review pay structure of its employees in line with this new development, and it is apprehended that revenue expenditure of the State would be severely affected by this and might off-set the fruits of various initiatives of the State Government towards fiscal consolidation. However, recognizing the compulsion and the need of the State Government on this issue, and as already expressed by the Chairman of the Empowered Committee of State Finance Ministers in their meeting with the Commission in New Delhi on 16 th September 2008, 100 % of the consequential burden due to implementation of the Pay Commission recommendations should be provided by the Government of India to the Special Category State as a separate grant-in-aid. The employees of both the Central and State Governments share the same market that is subjected to the pressure of the same inflationary trends, and the two classes of employees face the same cost of living. Besides, the higher capacity of the Central Government to pay more to its employees is also realized at the cost of the exchequers of the States. This is a result of undue concentration of financial resources in the hands of Central Government. Therefore, the Commission is requested to make arrangement so that the Centre should give cent percent of the liability of the special category States in connection with Sixth Pay Recommendations in the form of separate grant-in-aid. Requirement of fund for implementation of the Sixth Central Pay Commission at the State level has already been reflected in the Revenue Expenditure for 2009-2010 onwards in the Statement No. 1, which was already submitted to the Commission.

2.4: On the criteria adopted for determining share of States . Notwithstanding our contention that the share in taxes and service of a State shall not be less than 0.50 percent, it will not be out of place to render our views on the subject on the justification that a small state like Mizoram, which also lacks tax base, is in a serious disadvantages position vis-à-vis criteria adopted so far. Criteria adopted by the successive Finance Commissions were as below:

Table showing criteria adopted Criteria Eight Ninth Tenth Eleventh Twelfth FC FC FC FC FC 1 2 3 Population 25 29.94 20 10 % 25 % Income 50 40.12 60 62.5 % 50 % (Distance method) Area - - 5 7.5 % 10 % Index of - - 5 7.5 % - infrastructure Tax Effort - - 10 5.0 % 7.5 % Fiscal discipline - - - 7.5 % 7.5 % Inverse Income 25 14.97 - - - Poverty/ - 14.97 - - - Backwardness Applicability of 90 % of 37.575 % 100 % of the criteria shareable IT of UED shareable IT and 40% of UED Note: In respect of the first Report of the Ninth Finance Commission, population carried 25 %, distance 50%, inverse of income 12.5%, poverty ratio 12.5%; these criteria made applicable for 40% of shareable IT. Its second report gave population 25%, distance 50%, inverse of income 12.5% and backwardness 12.5%, these criteria made applicable for 90% of shareable IT.

Source: Table 6.1 of the Report of the Eleventh Finance Commission and also Table 7.2 of the Report of the Twelfth Finance Commission.

2.4.1: Population: Even though a small state like Mizoram is in a disadvantage position in respect to this criterion, we understand the burden and requirement of states having large population on the basis of which these large states claimed higher weightage on population. However, it is to be noted that higher number of population naturally implies wider tax base. 8

Therefore, our assumption is that small states are in double disadvantages position in relation to this criterion as it leads to- firstly, lower amount on share in tax due to smallness in population; and secondly, smaller tax base which naturally leads to smaller collection of tax, which does not in any way imply less requirements. We are, therefore, of the opinion that the Thirteenth Finance Commission may evolve suitable arrangement to protect the interest of smaller states by providing floor level as adopted in determining the area of the states.

2.4.2: Per capita Income distance: Per capita income can be misleading. For example, the per capita income of Mizoram (Rs 27,437 in 2007-08) and other Special Category States are the result of large amount of flow of funds, grant-in-aid, loans, etc from various Ministries of the Government of India, all of which have significant contributions to the size of GSDP while the actual situation is far from statistical data have created. If the calculation were to be based on the production, etc by labour and capital of Mizoram acting on its own natural resources, the income would be much lower. It may be noted that a major portion of the state income is formed by grants and assistance received from the Central Government. Besides, due to its remoteness and lack of surface communication including railways, cost of living is rather high in Mizoram. This is a very well known fact to everyone who has visited the state. It has to be assumed that cost of commodities in general, including essential commodities in open market is about 10 per cent to 40 per cent higher in Aizawl city than it is in Silchar, the nearest city of the plain in Assam which is merely 180 kilometers from Aizawl, and it will be as high as about 30 to 50 per cent or more in Lawngtlai or Saiha, the southern most districts of Mizoram. In other words, if one in Silchar could buy a kilogram of potato with Rs.10.00 at Silchar, a resident of Aizawl has to pay at least Rs.14.00 for the same quantity of potato, also a lot older than that was purchased at Silchar. Therefore, the Thirteenth Finance Commission is requested to provide for certain minimum weightage to be subtracted to per capita income of states like Mizoram to protect the interest of remote state like Mizoram.

2.4.3: Area: As noted by the Twelfth Finance Commission, we understand that a state with a larger area has to incur additional administrative and other cost to deliver a comparable standard of services to its citizen, it is important to see that a smaller state has to establish the framework of governmental machinery in as much as in detail as those of larger state. As such, the Tenth, Eleventh and Twelfth Finance Commission provided for a floor level of 2 per cent in the measurement of the area. To protect the interest of smaller states, the practice of the past three Commissions may be continued.

2.4.4: Tax effort: As observed by the Twelfth Finance Commission, this is not a straightforward exercise because it must be related to some notion of tax potential and the potential and composition of tax bases among states varied greatly. The Twelfth Finance Commission measured it by the ratio of per capita own tax revenue to comparable GSDP weighted by the square root of the inverse of the per capita GSDP. As this formula was designed with the intention of protecting states with poorer tax bases, the Thirteenth Finance Commission may continue it.

2.4.5: Fiscal discipline: It is our considered opinion that every responsible government, whether at the national or state level has to strive for fiscal discipline all the time. The system of rewards or incentives has to be discontinued, as these measurements become disincentives because not of lack of efforts on our part but because of constraints those of which are beyond our immediate control such as limited tax base that could not be further exploited without having adverse effects. The disadvantage of a state like Mizoram under this system of incentives may best be illustrated with our note at Topic No.39 (d) which was reproduced below:

The share of Government of Mizoram in the Incentive Fund as recommended by the Eleventh Finance Commission was Rs. 254.70 crore for the five years period of 2000- 2001 to 2004-2005 of which Part A (15 % withheld amount of the revenue deficit grant as recommended by the Eleventh Finance Commission) had been Rs.251.45 Crore and Part B (Incentive component) was Rs.3.25 Crore. As stipulated in the scheme of the State`s Fiscal Reforms Facility, the Government of Mizoram had drawn up a Medium Term Fiscal Reforms Programme 10

(2000-2005) and signed a Memorandum of Understanding with the Government of India. As the state was newly created and the post- insurgency peace was needed to be sustained, the requirement of public expenditure was relatively enormous. In spite of its best effort and the true spirit, the state Government, thus, could not achieve the stipulated target of reduction in revenue deficit as percentage of revenue receipt consistently from the beginning of the award period of the EFC. However, the release from the Incentive Fund was available to the state for the year 2003-2004 amounting to Rs.53.43 Crore of which the released from Part A was Rs.52.66 Crore (out of Rs.251.70 Crore) and that of Part B was Rs.0.77 Crore (out of Rs.3.25 Crore).

Due to this incentives measure, the Government of Mizoram, therefore, lost Rs.199.04 Crore under Incentive Fund Part A during the Eleventh Finance Commission period. At the end of the award period of the Eleventh Finance Commission, the residual un-disbursed amount of the incentive fund should have been distributed on pro rata basis among the performing States if the recommendation of the EFC would be followed. However, the Government of India did not do so on the ground that the Twelfth Finance Commission did not recommend to continue the Scheme, hence, the same ceased to exist w.e.f 1 st April, 2005. It is our submission to the Thirteenth Finance Commission that the above decision of the Government of India was contrary to the governing principles of the distribution of grant-in aid to the States recommended by the Finance Commission under Article 275(2) of the Constitution. In case the residual amount was not distributed to the performing States, the Government of India has no suo moto power to take away any part of the grant-in aid to the States recommended by the Finance Commission. Rather, in this case it would have been appropriate if the remaining unreleased amount of the Part-A (withheld part of the incentive fund) should have been given back to the States to whom it was originally recommended by the EFC. We feel this action of the Government of India has created an alarming precedence of violating constitutional provisions of cooperative federalism. It is our submission to the Thirteenth Finance Commission to re-open the issue and make suitable recommendations so that the States may get back their legitimate share of grant-in aid.

2.4.6: Following the criteria and the weight, the Twelfth Finance Commission recommended the inter se share of Mizoram as 0.239 per cent. We feel that justice has been denied to a resource constrained State like Mizoram in recommending the inter se share of taxes and duties. It is, therefore, proposed that the determination of criteria and weight needs to be revised by the Thirteenth Finance Commission keeping in view the adequate emphasis on equity and the interest of the resource crunched States which are facing hurdles in maintaining budgetary balance but has shown its zeal and endeavour in the process of peace, stability, law and order record and progress. We suggest that the degree of remoteness, lack of connectivity, geographical terrain and abysmally low tax base in absence of income opportunities together with degree of peace and maintenance of law and order should properly be represented in the criteria and weight for determining the inter se share . Inclusion of these socio-economic and governance criteria ideally suits the rationale of sharing of taxes and duties.

3: The measures needed to augment the Consolidated Fund of a State to supplement the resources of the Panchayats and Municipalities in the State : At par 4 (iii) of the Presidential Order, the Thirteenth Finance Commission is required to make recommendation on the measures needed to augment the Consolidated Fund of a State to supplement the resources of the Panchayats and Municipalities in the State on the basis of the recommendations made by the Finance Commission of the State. At the outset, we would like to propose that there should not be conditionality connected with the implementation of Constitutional amendments linked to consideration of grant to local bodies as Mizoram is exempted from the operation of the 73 rd or the 74 th Amendments to the Constitution. It does not mean that exempted States like Mizoram are not taking steps towards decentralization of powers. On the contrary, in spite of Constitutional exemption, steps are actively taken for constitution of Urban Local bodies. A municipality has been formed for Aizawl town which happens to be the capital of the State. Necessary legislation and rules have been enacted and framed while State Election Commission has also been constituted recently. In respect 12 of rural local bodies, the traditional institution called the Village Councils, which is an elected body, is satisfactorily functioning as grassroot level institution of self-Government while, at the same time, the State Government is actively exploring room for its improvement and its transformation into more representative and development oriented institution. Besides, as noted at para 1.4 above, it is our considered view that the Government of India is under obligation to provide sufficient fund, over and above grant which may be considered for Local bodies, for reconstruction of rural economy of Mizoram not only because these villages are integral part of India but also for the Government of India intentionally destroyed the hitherto self sufficient traditional village economy and its social structure through counter insurgency measure viz- inhuman grouping of villages under the direct supervision of the Military.

3: Rural Local Bodies 3.1: Background: In the Pre-British Period, there was no overall administration of the whole territory under one authority. There were Chiefs having their own territorial jurisdictions comprising one or more villages. It was the chief who exercised all political-legal authority. The chief was the secular head of a village or cluster of villages. The chieftainship was, in the beginnings, an evolution but in course of time it became hereditary. In early days, a chief did not enjoy aristocratic privileges due to the fact that his main business was to lead raids on other clans. After the chieftainship was established as a political institution, the chiefs acquired more and more privileges and power and became like a dictator. His words were law in his own territory. All that was in the village belonged to him. He could call upon his subjects to furnish him with anything that he needed. All disputes and cases were to be decided by him. In short, he was supreme in his own village. Therefore, each village was a separate sovereign state ruled over by its own Lal or Chief. The chief was, in theory at least, a despot. The power and functions of the chief, if it was described in the modern political parlance, may be said to have constituted all the three organs of the modern state the executive, the legislative and the judiciary.

3.1.1: When India became an independent State, Mizoram became a part of the Indian Union as well as a District under Assam. The aspiration of the people was aroused to have a democratic system of administration. The people wanted a change in the administration as they were fed up with the institution of Chiefship. Consequently, the first political party named the Mizo Union was founded on 9th April, 1946 at Aizawl, which demanded an autonomy for the Lushai Hills and a special regulation which may protect the people from assimilation by plain people. But it developed itself into anti-chief movement and led the people to believe that any form of democracy is better than the old set up under chiefship that culminated into the abolition of chiefship in 1954. Sixth schedule of the Constitution of India provided for creation of District Council. In accordance with the provisions of the Sixth Schedule, an Autonomous District Council was set up with a Regional Council comprising the then Pawi and Lakher areas (which now became divided into three Autonomous District Councils of Lai, Mara and Chakma). The principles and spirits as envisaged by the Sixth Schedule are purely meant to enable the tribal communities to run local Self Government after the fashion of their own practices, customs and traditions without interference. Thus the Village Council emerged.

3.1.2: The system of Rural Local Bodies or Village Panchayat is different from the system in other States. Here, we have Village Councils in all the villages as well as in towns. The Village Councils (normally called in short form VC) are the grass-root level democratic set up in the State. Basically they are administrative units and deal with village administration in accordance with the tribal laws and customs and under the laws enacted by the State Legislature from time to time. At the same time, their services are also utilized in developmental works. 1. Number of Village Council as on 1.4.2008 - 791 2. Population of the Village Council as on 1.4.2008 - 6,58,859

3.1.3: The Village Council carried on all the village and internal administration within the powers provided to them by the Village Councils Act and other 14 legislations passed by the Mizo District Council. In the judicial administration also, the Village Council acts as a Village Court and is competent to try cases of Civil and miscellaneous nature falling within the purview of Village or tribal laws and customs, and also criminal cases and offences of petty nature such as petty theft and pilfering, mischief and trespass of petty nature, simple assault and hurt, affront and affray of whatever kind, drunken and disorderly brawling, public nuisance and simple cases of wrongful restraint. A Village Court is not competent to try offences in respect of which the punishment of imprisonment is obligatory under the Indian Penal Code.

3.1.4: The State of Mizoram has been excluded from the operation of the 73 rd Constitution Amendment. However, the State Government has now considered devolving more powers in the hands of the Village Councils by replacing the existing Village Councils Act by a new act which will introduce certain modification and change in the present functions in suitable and befitting manner. For the purpose of this, the draft bill has been prepared and is now under active consideration and examination of the Government. The draft bill is prepared to conform to the provisions of the 73 rd Constitution Amendment. The Village Councils will be assigned certain functions laid down in the Schedule 11 of the Constitution of India. It is expected to implement the new Acts by 2009. At present, there are 791 Villages having Village Councils including the villages under the 3 (three) Autonomous District Councils of Mara Autonomous District Councils, Lai Autonomous District Councils and Chakma Autonomous District Councils. There are now 2036 elected members including Presidents and Vice Presidents.

They are paid monthly remuneration as indicated below:- President - Rs.600/-p.m. Vice President - Rs.500/-p.m. Member - Rs.300/-p.m.

3.1.5: In addition to above, there is a Village Council Secretary who is paid Rs. 400/- p.m. and a Village Crier at Rs. 250/- p.m. The present requirement of

15 fund for Village Councils is indicated below:- a) for Presidents - Rs.56,95,200/- per annum b) for Vice Presidents - Rs. 47,46,000/- -do- c) for Members - Rs. 28,47,600/- -do- d) for Secretaries - Rs. 37,96,800/- -do- e) for Criers - Rs. 23,73,000/- -do- TOTAL - Rs.1,94,58,600/- per year

3.1.6: The only source of revenue collected by the Village Councils is animal tax. In the meantime, the State Government is intending to empower the Village Councils to impose and collect taxes as per the provision in the draft Mizoram Village Council Bill 2008 from the followings :-

a) firewood and all kinds of thatches and stones or sands collected from the areas of Village Councils.

b) toll on road and bridges constructed and maintained by the Village Councils. c) Fees on registration of cattle in the village. d) Fees on opening of tea stalls, hotels, sweetmeats, etc. e) Taxes on poultry in the village. f) Fees on registration of dogs.

3.1.7: However, the estimated collection has not been calculated since the Mizoram Village Council Bill is only in the draft stage. It can be noted that the State Government has taken efforts towards decentralization of power in this regards.

3.1.8: Functions of Village Councils (VC): I. General administration: i) Allotment of land for house sites. ii) Allotment of land for annual Jhumlands. iii) Control of stray animals, with fines imposed on owners. iv) Power to enforce social works for common benefits of the community 16

in which every household has to participate by obligation, with fines imposed on those who do not comply with the social work order. v) A Village Council functions as a Village Court and is competent to try cases of civil and miscellaneous nature falling within the purview of village or tribal laws and customs. vi) In criminal cases also, a Village Court can try cases falling within the purview of tribal laws and customs and offences of petty nature, such as petty theft and pilfering, mischief and trespass of petty nature, simple assault and hurt, affront and affray of whatever kind, drunken or disorderly brawling, public nuisance and simple cases of wrongful restraint, and is competent to impose fine which may extend to Rs. 500/- (Rupees five hundred) according to the nature of offence. vii) A Village Council looks after and manages burial ground.

II. Core functions: i) Street lights are fixed at the points selected by a Village Council (VC) ii) Public water points are fixed at the places selected by a VC. iii) Public water points at natural sources are under the control of a VC iv) A VC looks after Village Cleanliness and Sanitation.

III. Development functions: i) Grants received from the Twelfth Finance Commissions for the Scheme, i.e. Water Supply & Sanitation are implemented through Village Councils. ii) Works under Rural Development Department are mostly implemented through the Village Councils.

IV. Maintenance: The Village Councils are also responsible for maintenance of village assets like water point, roads, and those created especially with fund under various Rural Development schemes.

3.2: Urban Local Bodies: In spite of Constitutional exemption, steps are actively taken for constitution of Urban Local bodies at all district headquarters. A municipality (Municipal Council) has been formed for Aizawl city which happens to be the capital of the State. Necessary legislation and rules have been enacted and framed while State Election Commission has also been constituted, and the areas to be covered by the Aizawl Municipal Council have been notified (final Notification) in October 2008. The election to the Municipal Council will be held within one year from the final notification of the area, and the elected Councilors will assume their office within this time. The elected Aizawl Municipal Council shall be expected to function and carry out its civic and developmental responsibilities with its own source of revenue at the earliest.

3.2.1: The Municipalities in Mizoram have the powers, authority and responsibilities as envisaged by the Articles 243W and 243X under Part IXA of the Constitution of India. The functions of the Municipality will be in tune with the provisions of the Twelfth Schedule to the Constitution. As with the State Government, the Municipality will face the same problem of limited tax base, and will be in need of consideration for grant from the Commission. Details of functions and the sources of revenue of the Council, and the adequacy of its sources of revenue vis-à-vis its multi facets functions could not be given in a concrete form at this stage. None the less, it is our submission to the Commission to give special consideration to Aizawl Municipal Council as it is the first of its kind in the history of the State.

4. The state of the finances of the Union and the States in the context of the operation of the States` Debt Consolidation and Relief Facility (DCRF) 2005-2010: 4.1: At para 5 of the Presidential Order, the Commission is required to review the state of the finances of the Union and the States in the context of the operation of the States` Debt Consolidation and Relief Facility 2005-2010 introduced on the basis of the recommendations of the Twelfth Finance Commission, and suggest measures for maintaining a stable and sustainable 18 fiscal environment consistent with equitable growth. This Term of Reference is very much different from the last two Finance Commissions. The Eleventh and Twelfth Finance Commission were mandated to review the State of finances of the Union and the States and suggest a plan by which the governments, collectively and severally, may bring about a restructuring of the public finances restoring budgetary balance, achieving macro-economic stability and debt reduction along with equitable growth. The change in the Term of Reference of the Thirteen Finance Commission in this regard and mandate to review the State finances through the periscope of a scheme linked to debt relief may lead to overlook the real financial need of the States in totality and tend to confine the focus to the limited vision of the targets and failure of the rule based fiscal regime. Mizoram has acquired peace after a prolonged period of insurgency. It should be the priority of the State as well as the Centre to sustain the peace by rapidly developing economic opportunities and building infrastructure to show the benefit of peace and harmony. This would also create a favourable shadow effect to the present insurgency infested region at large. The target of the Fiscal Responsibility and Budget Management Act (FRBMA) of the State Government would not capture this real need of the State. It is our submission to the Thirteenth Finance Commission that the State Finances of Mizoram should not be evaluated solely from the DCRF and to take into account the expenditure assignments compared to the limited tax and non-tax base of the State.

4.2: The Term of Reference of most of the previous Commissions made reference to the review of the debt position of States and suggesting corrective measures. In contrast, the present Commission is just asked to take into account the operation of the Debt Consolidation and Relief Facility recommended by the previous Commission. This emphasis on the scheme of DCRF (which already fails to provide sufficient incentive in the form of debt write-off linked to improve revenue balance of the State with an aim to create fiscal space for fresh capital investments) may divert the attention of the Thirteenth Finance Commission from some equally important debt related issues concerning weaker States. One such issue relates to the maturity 19 pattern of market loans vis-à-vis Central loan to States, which have since been dispensed with. The Central Government loans to States were given for a period of 25 years with a moratorium of 5 years. In contrast, market loan have maturity period of 10 years with bullet repayment at the end of the 10 th year. Nearly 60% of the outstanding market loans of the State at the end of 2007 will become due for repayment during the period to be covered by the Thirteenth Finance Commission i.e 2010-15 and the pattern will repeat thereafter. These needs to be factored in by the Thirteenth Finance Commission while making the recommendations. With the amendment to the Banking Regulation Act, the Statutory Liquidity Ratio (SLR) stipulation may be dispensed with soon. In such an event, the poorer States will have problems of raising loan from the market and may incur higher interest burden. There is already evidence that the weakness in the finances of some States manifested in the widening of the interest spread and under subscription of their market borrowings (RBI, 2005). We would like to impress upon to look into this factor for the sake of maintaining stable fiscal environment consistent with equitable growth. We do not feel borrowing be based on entitlement. It generates temptation among the States to bridge the resource gap through an easy option of borrowing. While the Thirteenth Finance Commission should review the present straitjacket approach of the Ministry of Finance to impose a global ceiling of the borrowings of the States, we understand that we should be cautious and careful in taking loans to ensure that the debt situation does not lead to an unsustainable level in the interest of the future generation of our citizen. However, we feel that the Commission should seriously review the present methodology of the Finance Ministry to impose annual borrowing ceiling and recommend a rational, practical and State specific approach towards this end.

5: Resources of the State Governments for five years : Also at para 6 (iii) and (iv) of the Order, the Commission, while making recommendations, is mandated to have regard, among other considerations, to the resources of the State Governments for five years commencing on 1 st April 2010, and the objective of not only balancing the receipts and expenditure on revenue 20 account but also generating surpluses for capital investment . Towards these end objectives the State Government has been taking various efforts as already noted on our notes on Topic 39 and 40. The state of finance of the Government of Mizoram has been under stress since its inception in 1987. The State Government had to resort to frequent overdrafts to tide over the financial difficulties. At the instance of the Eleventh Finance Commission (EFC), the Government of Mizoram for the first time drew up a Medium Term Fiscal Reform Programme for the period 2000-05 to restore the Fiscal imbalance of the State. Broadly, the MTFRP (2000-05) of State Government emphasized augmentation of revenue receipts by restructuring and widening of tax bases and improvement in non-tax revenues together with rationalization of Non-Plan revenue expenditure. While a series of reforms was initiated in State taxes within the limited ability of the State Government, efforts were also taken to augment non-tax revenue through Motor Vehicle parking Fees, Vehicle Fees, upward revision of room tariff for Government accommodation, revision of electric power tariff and water charges and enhancing and imposing various other fees. For rationalization of Non-Plan revenue expenditure a series of measures were contemplated in the form of abolition of vacant posts, non- filling up of post, appointment of teachers on contract basis, redeployment of work charged establishments, tapering of subvention to GIA institutions, privatization of Government vehicles, introduction of VRS for drivers, reduction of explicit subsidies and many more economy measures. The State Government initiated the power sector reforms and restructuring of public sector undertakings for better fiscal management.

5.1: The fiscal situation of the State could not be changed overnight. However, with the initiatives of the State Government the fiscal deterioration was arrested and gradually the situation turned around. The revenue deficit (RD) as percentage of total revenue receipt (TRR) (the single monitoring indicator as followed in the State‘s Fiscal Reforms Facility) which went up as high as 30 percent in 2001-02 is reduced to 10.0 per cent in 2002-03. In 2003- 04 the State Government generated a revenue surplus which was to the extent of 6.1 per cent of the revenue receipt. In 2004-05 the percentage of revenue 21

surplus to revenue receipts stood as 7.1 percent which ultimately accounted for more than 37 percentage point improvement in the ratio of RD/TRR over that of 2001-02. Position of some major fiscal parameters during MTFRP period is shown below: ( Rs Crore) 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 (RE) (BE) 1. Own Tax 19.11 27.97 33.85 39.56 55.06 67.62 68.88 74.56 Revenue 2. Non-tax 44.87 52.63 58.01 75.60 120 .09 133.38 128.94 117.27 Revenue 3.Revenue 260.42 109.35 -83.17 -160.35 -65.64 -251.65 -388.59 -185.22 Deficit 4.Fiscal 891.77 312.36 314.02 236.23 403 197.96 144.23 138.64 Deficit

5.2: The Twelfth Finance Commission (TFC), while recommending the restructuring of State finances, advised the States to enact FRBMA to institutionalize the reforms initiatives of the State Governments. The FRBMA, as recommended by TFC, would contain the following core elements: a) Eliminating revenue deficit by 2008-09 b) Reducing fiscal deficit to 3 percent of GSDP by 2008-09 c) Bringing our annual reduction targets of revenue and fiscal deficits. d) Bringing our annual Statement giving prospects for State economy and related fiscal strategy. e) Bringing out special Statements along with the budget giving in detail number of employees in Government, public sector and aided institutions and related salaries.

5.3: The above enactment has been stipulated as a pre-condition for availing the Debt Consolidation and Relief Facility (DCRF) recommended by TFC. Keeping in line with the TFC recommendations, Government of Mizoram enacted Mizoram Fiscal Responsibility and Budget management Act in the Winter Session of the Legislative Assembly in 2006 to institutionalize the reform process. The Mizoram Fiscal Responsibility and Budget Management Act that was passed in the year 2006 came into force on 15.12.2006. The Mizoram 22

Fiscal Responsibility and Budget Management Rules were also framed in the year 2007 and came into force on 1.7.2007. A Fiscal Correction Path (FCP) covering fiscal framework has been drawn. With this, it is assumed that the fiscal consolidation as per the targets set in the FRBMA could be achieved by simultaneously augmenting revenue resources and cutting down revenue expenditure. Emphasis is mainly given for reduction of Revenue Deficit and to eliminate it by 2008-2009, and containment of Fiscal Deficit at 3% of GSDP by 2008-2009. However, with the limited own revenue base available in the state, the pace of development cannot be sustained if share in devolution of fund from the Union Government is not substantially increased. It can be seen from the table given above that the Government of Mizoram has already eliminated revenue deficit in 2003-04 œ five years before the stipulation of the FRBMA. The fiscal deficit which was as high as 10 percent of GSDP in 2004-05 was sharply brought down to 3.5 percent in 2007-08(RE) and likely to be pegged at 3 percent in 2008-09. In other words, from 2003-04 onwards the surplus generated on revenue account has been utilized for creation of much needed assets and the annual borrowings of the State are solely deployed in capital investment. However, the fiscal achievements of the State in the rule based regime have given birth to two vital issues as indicated below: 1. Pegging the fiscal deficit to 3 percent of GSDP in 2008-09 onwards is likely to cast shadow on how the rising need for development expenditure as well as social sector expenditure could be mitigated; 2. Likewise, how the exogenous shock, more particularly the implementation of the recommendations of the Sixth Pay Commission could be absorbed in the State budget in the context of sustaining the fiscal deficit at 3 percent of the GSDP unless the substantial amount is shared by the Central Government.

Our submission to the Thirteenth Finance Commission is to keep in view the above situation while reassessing the State finances of Mizoram.

6: Taxation efforts: Para 6 (v) of the Presidential Order mandated the Commission to look into the taxation efforts and the potential for additional 23 resource mobilization to improve the tax-Gross Domestic Product ratio. Tax base in Mizoram is very limited due to absence of industries, and the available sources are also seriously limited by the smallness of the population. Besides, some of the available tax bases could not be further exploited within a short span of period as it can be counter-productive. The percentage of growth rate of own tax revenue from 2004-05 to 2005-06 was 39.17, while it was 22.82 percent during 2005-06 to 2006-07. The growth rate stagnated during 2006-07 to 2007-08 and it grew by 1.86 percent only during that period. In other words, available tax bases had been fully exploited by the period during 2006- 07. The only available avenue still opens to the State Government is increasing the rate of taxes. Even with these constraints, the State Government has been undertaking various efforts for augmenting State's own tax revenues. Rates of tax have been revised from time to time while further widening of tax base and effective collections have been given top priority. As a result of that, own tax revenue grew again by 8.24 percent during the period from 2007-08 to 2008-09 (BE). In spite of these limitations and other constraints, the tax GSDP ratio of the state has, therefore, substantially gone up. It is the intention of the state government to further increase the tax ratio, if possible by 0.5 percentage points during the coming years. The achievement in this respect along with projections may be seen as follows: YEAR GSDP at current prices Total of State‘s Percentage (Rupees in Crore) Own tax revenue To GSDP (Rupees in Crore) 1 2 3 4 2007-08 Rs.3305.09 (Provisional) Rs. 68.88 2.08 % 2008-09 Rs.3662.63 (Advance) Rs. 74.56 (BE) 2.25 % 2009-10 Rs.4058.85 (Projection) Rs. 93.05 2.29 % 2010-11 Rs.4497.93 (Projection) Rs. 115.53 2.56 %

7: Estimated impact of Goods and Services Tax [Para 6 (vi)]:

This is an area of serious concern for us, especially in regards to Service Tax. As it may be well known, service sector is still in its infancy in Mizoram. Due to limited base, there will be no way for Mizoram to collect amount equals to that

24 it received from the Union Government as share in devolution of Service tax. Share of the State Government in Service Tax was Rs. 27.62 Crore during 2006-07 (Actual), it was Rs.35.97 in 2007-2008 (RE) and it is Rs. 46.19 Crore in 2008-09 (BE). The most optimistic estimation points the probable total collection of Service Tax within the State at less than Rs.10.00 Crore a year had it been separately collected by the State Government within the State. Therefore, we will be in need of compensation, and such similar path was already paved by the Twelfth Finance Commission in its Report at Para 2.20 and 7.22, which thus say ”any legislation in this regard must ensure that the revenue accruing to a state through any proposed changes should not be less than the share that would accrue to it, had the entire service tax proceeds been part of the shareable pool‘ .

8. Quality of Public Expenditure [Para 6 (vii)]: While the importance of quality of public expenditure is paramount, the means by which it will be achieved is not easy to find. Techniques like zero base budgeting and performance budgeting can help to improve in this way to a great extent. The latest design termed as outcome budgeting promises further improvement. Project appraisal techniques are also the aid to the decision to ensure quality. However, the main issue foundational to the question seems to be connected with human factors, and the general socio-politico-economic milieu within which they perform. Therefore, interest at personal level and awareness on the part of the people, transparency, active and quality media, effective monitoring system involving targeted communities, effective policing, rigorous training of officials and a firm commitment on the part of the executives, not only of official but also of political executive could have played pivotal roles. Therefore, the foremost initiative towards ensuring quality of expenditure is to generate sufficient capacity within the State machinery. However, capacity building is a very relative term as perceived by the individual States as per their need. Therefore, while requesting the Commission for a separate grant-in aid for the purpose, we merely flag the issue here, but prefer to elaborate it under the State specific grant.

9. The need to manage ecology, environment and climate change consistent with sustainable development [Para 6 (viii)]:

9.1: Maintenance of Forest : In view of the alarming global climate/weather changes and large scale deforestation and destruction of bio-diversity partly due to traditional jhum cultivation in the state which resulted into partial transformation of forest (whether notified or un-notified) into shrub land and also revenue potential of forest resources, maintenance of forest has been priority agendum for the State Government in spite of its limited ability. Besides, forest plays an important role in the socio-economic life of the people. It plays role for protection and conservation of soil and water on which growth and productivity depends. Forest also provides many important day-to-day needs of the local communities most of whom depend directly upon forests for fuel, fodder, building materials, forest food in the form of wild fruits, roots, vegetables and other non-wood forest produce. The socio-economic life of the people of Mizoram revolves around the forest.

9.1.1: Based on the —State of Forest Report-2003“ published by Forest Survey of India, Ministry of Environment & Forests, forest covers 18,430 square kilometer (i.e. 87.42 percent) of the State‘s geographic area, out of which 84 square kilometers is very dense forest, 7,404 square kilometers is moderately Dense Forest and Open Forest covers 10,942 square kilometers. The State has 16,717 square kilometers of Recorded Forest Area, out of which Reserved Forest covers 7,909 square kilometers, Protected Area Forest covers 3,568 square kilometers and un-classed Forest covers 5,240 square kilometers. It must be noted that these forests are subjected to pressure of shifting cultivation, forest fire and other forms of biotic pressure. Shifting Cultivation is still widely practiced in the State which is the major cause for degradation of the forest cover affecting the ecology of the area and led to decrease in natural regeneration of tree species to a considerable extent. The productivity of forest is quite low in the State and there has been very little Silvicultural research to evolve technologies and practices suiting to local conditions to increase productivity. The forest products mainly comprise of timber, fuel-

26 wood, bamboo, sand, broom-stick, etc. The total revenue received during 2007-2008 was Rs. 2.88 Crore.

9.1.2: Regeneration, conservation and development of forest is urgently needed. However, as was often expressed in academic exercises and in-depth study like the World Bank sponsored study- ”Strategy Report: Development and Growth in Northeast India- The Natural Resources, Water, and Environment Nexus‘ has pointed out, there seems to be scope for paradigm shift in our approach to forest maintenance. While the importance and vitality of community involvement in preservation and maintenance of forest is globally accepted, almost all our approaches to forest management in Mizoram seem to be a bit too centralized which alienated the community which greatly resulted into under-achievement of objectives. It will be desirable if our approach is arranged in such a way that the people/stakeholders have more roles to play which will not only bring desired outcome but also result in transparency and accountability.

9.1.3: Forest can make an important contributor to the global carbon budget. This is both because of their potential to sequester carbon in wood and wood products and, also, to release it if forests are cleared. Much is known about the role that forests play, and how they can contribute to climate change mitigation through carbon sequestration projects and international negotiations such as United Nations Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol. Carbon sequestration refers to the removal of CO2 currently in the atmosphere, i.e. mitigation of the past emissions. Since forest occupies a major landscape of the State, the Government of Mizoram is keen to participate in the carbon credit market profitably in the interest of the State and the country at large. However, there are two major constraints that the State is facing in this regard. Firstly, there is need for capacity building in carbon budgeting and management. Secondly, there is requirement of sufficient fund to protect and upgrade the forest areas. At the same time, strengthening of Environment & Forest Department is necessary. The Department lacks sufficient infrastructure like residential quarters, conveyance,

27 manpower, etc. Therefore, it is felt necessary to have sufficient grants for maintenance of forest so that action plan can be formulated on the basis of consideration of local requirements vis-à-vis end objectives- both of conservation-oriented forestry and production forestry. Therefore, the role of Joint Forest Management (JFM) system comes into forefront. It will be desirable if future plan for management of forest or ecology stress the importance of community participation. It is our request to the Commission to assess the actual need of the fund in the context of larger dimension of Clean Development Management (CDM) while recommending forest maintenance grants to the State of Mizoram in particular.

9.1.3 Wildlife: The destruction of habitat of plants and animals by various elements has rendered many species of rare plants and animal to the extent of becoming endangered and extinct. Preservation and management of wildlife has, therefore, assumed great importance in view of the dwindling habitat of wildlife. The State Government is aware and active to the needs of conservation of wildlife. At present, the State Government has notified 9 (nine) protected areas, namely:- 1) Dampa Tiger Reserve 2) Phawngpui National Park 3) Murlen National Park 4) Ngengpui Wildlife Sanctuary 5) Khawnglung Wildlife Sanctuary 6) Lengteng Wildlife Sanctuary 7) Tawi Wildlife Sanctuary 8) Thorangtlang Wildlife Sanctuary 9) Pualreng Wildlife Sanctuary

These wildlife sanctuaries need sufficient fund to develop communities residing in the buffer areas so that the people will not require trespassing into sanctuary in pursuit of livelihoods.

10. Maintenance of capital assets and completed Plan schemes: At Para 6 (ix), the XIII Finance Commission is to have consideration to the expenditure on the non-salary component of maintenance and upkeep of capital assets and the non-wage related maintenance expenditure on plan schemes to be completed by 31 st March, 2010 and the norms on the basis of which specific amounts are recommended for the maintenance of the capital assets and the manner of monitoring such expenditure. Restricting the consideration of committed expenditure on completed plan schemes to only non-salary component is difficult to accept. With emphasis on plan expenditure on social sector, the salary component of plan expenditure has gone up considerably, especially in sectors like education and health. The specific reference to the non-salary component of maintenance expenditure gives rise to apprehension that States will not be in a position to maintain these vital completed plan schemes. We would like to request the Thirteenth Finance Commission to look into the demands for resources of States including salary and wage components in assessing maintenance expenditure and upkeep of completed plan schemes, including plan schemes likely to be completed by 31 st March, 2010.

10.1: Maintenance of Roads & Bridges: The forecasted total requirement of non-salary component for maintenance of Roads & Bridges, which was based on normative assessment, during the Twelfth Finance Commission period was Rs.120.24 Crore (Annexure 6.8 of their Report)). Out of which, only a meager sum of Rs.42.12 Crore had been provided, which was just 35.07 percent to the total requirement. Release of grants was also subjected to conditionality prescribed by the TFC in the form of projected Non-Plan Revenue Expenditure (NPRE), which greatly placed a poor State like Mizoram in a difficult position. It is always difficult for a poor state with limited tax base like Mizoram to conform to the projected NPRE. Besides, restriction of the Commission to consider only of non-salary component of maintenance grants created serious problem for the State Government. The final outcome of this arrangement was compromise of road quality. For example, while surfaced road in a tropical region like Mizoram which received abundant rainfall requires 29 resurfacing after every four years, most of the state roads could not be resurfaced even after ten years of first surfacing, and during that long period, the quality of the road deteriorated to that extent that it is no longer possible to restore it with normal rate of maintenance norms. Due to this, accessibility of villages has become a serious problem, and there has been wide spread discontentment amongst general public. This is quite understandable as the village economy is determined by its accessibility. As such, we earnestly requested the Thirteenth Finance Commission to consider grant for maintenance of roads and bridges at least to the tune of 75 percent of the total requirement as projected in our response to Statement 29, and the release of that should not be subjected to conditionality.

10.2: Maintenance of public buildings: For maintenance of buildings, the Twelfth Finance Commission recommended Rs.23.29 Crore out of the total forecasted requirement of Rs.102.90 Crore (Annexure 6.9 of their Report), which was only 22.63 percent to the requirement. It was true that detailed classifications of non-residential buildings- on the basis of age, structures, etc were not worked out, yet it is our prayer that requirement as per the calculated plinth area may please be taken for the basis for consideration of amount of grant to be provided. Maintenance of public building also faces the same problem as that of road & bridges. The Thirteenth Finance Commission is earnestly requested to provide at least 75 percent of our total requirement without conditionality, and also taking into consideration public buildings which have been handed over to Village Councils as noted under Notes on Topic 17 and 23 B and also reflected on Statement 29.

10.3: Maintenance of Urban Water Supply: The aged old tradition of the people of Mizoram is to locate their settlements on top of the hills, and this remains the practice till today not only because of tradition but also due to absence of plain. This naturally leads to high operational cost of water supply network. Water sources are usually at a very deep valley at the range between 500 metres to 1000 metres below the settlements which necessitated a high lift. Therefore, it is naturally required to adopt high head low discharge 30 pumping system which is contrary to system adopted in plain areas where the system adopted is low head high discharge. Besides, the system requires high- tension electrical mover, and the hilly terrain also required larger manpower strength in comparison to the requirement in plain areas. These resulted into high operational and maintenance cost. Out of 23 towns in Mizoram, ten towns are fully covered with water supply, another ten towns were partially provided water supply and the remaining are yet to be covered. The annual expenditure requirement for operation and maintenance of water supply in the fully covered ten towns for 54.634 MLD is Rs. 53.96 Crore, of which Rs.17.08 Crore is for electricity, Rs.34.36 Crore is for Diesel, Rs. 1.86 Crore is for chemicals, Rs. 0.26 Crore is for spares and lubricants, and Rs. 0.41 Crore is for service contract. However, the actual fund that can be made available during 2007-08 for O&M cost was Rs. 41.29 Crore only. The average annual shortage of fund is, therefore, Rs.12.67 Crore. Since it is necessary for a responsible Government to provide water at an affordable cost, it is practically impossible to realize the full amount of O&M cost from user charge alone in hilly region where O&M cost is very high. Due to this, liabilities could not be avoided on accounts of cost of spares, lubricants, etc. As such, there have been accumulated liabilities amounting to Rs. 27 Crore at present. Moreover, as the pumping machineries could not be tuned up properly due to shortages of fund, efficiency of machineries dropped considerably, even upto 50 to 55 percent at various places. Due to the same reason, steel storage tanks at Lunglei (29 numbers) and Aizawl (11 numbers) have deteriorated so much so that their replacement with RCC reservoir is immediately required, and the estimated requirement of fund for that replacement is Rs.3 Crore. Security fencing of water reservoirs is also needed which further required Rs.2 Crore. Therefore, the Thirteenth Finance Commission is requested to kindly consider grant for proper maintenance and operation of water supply.

10.4: Monitoring of Maintenance Grants: In view of the increased awareness on the part of the people about their rights in a democratic country like ours, and the vitality to ensure quality of expenditure, and the need to further transparency and accountability in all public transaction, and to make 31 monitoring more effective, the High Level Monitoring Committee constituted under the Twelfth Finance Commission adopted users oriented monitoring technique. The monitoring technique has the following characters: 1. Before starting of works, the user communities/concerned benefited Department shall be informed of the followings: i. Amount of sanction for the work ii. Name and address of contractor, if there is any iii. Name and address of Officials supervising the work iv. Simplified form of technical details in the language the user communities understood. For example, if a certain road is to be maintained, the user community should be made aware the required information like rate of fund available per kilometer or each item of work, length of road to be maintained and how the road is to be maintained. If it is to be re-surfaced, the targeted length and thickness, etc, and so on.

2. The information will be given, in the context of Mizoram, to concerned Village Councils and voluntary associations like Young Mizo Association (YMA), Young Lai Association (YLA), Mara Thyutlia Py (MTP), Mizoram Upa Pawl (MUP), Mizoram Hmeichhe Insuihkhawm Pawl (MHIP), etc present in the area with a request to keep vigilance in their respective area on voluntary basis to ensure that works are executed strictly in accordance with the provided technical specification. They will be requested to contact Finance Commission Cell of Finance Department or any member of the High Level Monitoring Committee directly if they found any irregularities. Required information will be provided to the users by the Finance Commission Cell on the basis of information to be provided by concerned implementing Departments. 3. The Village Council and voluntary associations will not be given any honorarium.

4. Feedback from user communities along with report of Monitoring Team visiting the spot shall be taken into consideration by the High Level Monitoring Committee for appropriate action.

11. Commercial viability of Power Sector, Minor Irrigation and Public Sector Enterprises, etc [Para 6 (x)]:

11.1 Power Sector: In 1962, the first diesel power generated station was commissioned at Aizawl under Assam Electricity Board. Power supply continued to be under the Assam Electricity Board till 20.3.1975 when it was handed over to Mizoram P.W.D. There were 2 Divisions and 6 Sub-Divisions at that time. During the 5th Five Year Plan, Mizoram Power & Electricity Department was set up in 1979. Since then, power sector in Mizoram has been under the Power & Electricity Department of the Government of Mizoram. As of now the Department is headed by an Engineer in Chief.

11.1.2: It has often been assumed that Mizoram possesses a vast hydro- electricity potential. However, its rivers are small and all are wholly depended on seasonal rain, and the volume of water fluctuated not only from season to season but also from year to year which make it difficult to ascertain both the State`s exact potential to generate hydro-electricity and the commercial viability of power projects. What can be ascertained is that there is a huge gap between demand and supply of electricity. Achievements made so far in terms of installation and generation could not keep pace with the faster growing demand for power. Consequently, power supply situation in the State continues to remain unsatisfactory.

11.1.3: With a maiden installation of 75 KW DG Set in Aizawl in 1962 and 1000KW Serlui 'A' Micro Hydel Power Project in 1984, there are one diesel power station, one HFO based thermal power station and 11 numbers of micro/small hydel power stations at present. The installed capacity of Diesel power station and HFO based thermal station are 0.5 MW and 22.92MW respectively and that of micro/small hydel power stations is 13.75MW. Against 33 the above installed capacity, average power availability from diesel power station is 0.5 MW during peak hour and from HFO based thermal station and micro/small hydel power station are 11.46 MW and 9.6 MW respectively. The problem with the micro/small hydel power station is that they can be operated only for 8 months in a year, i.e. only during monsoon season.

11.1.4: As indicated above, the State has now no power of its own worth mentioning and in the meantime demand for power has been increasing rapidly especially since Mizoram became a State in 1987. The State, therefore, has to import power from outside the State through Northeastern Power Grid to bridge the wide gap between the growing demand and power availability in the State. The power available for import from the North Eastern Power Grid at present is about 30-50MW only.

11.1.5: As per the 17 th Electric Power Survey of India under Central Electricity Authority, Ministry of Power, Government of India, Mizoram's peak load demand of power for the year 2007-08 is 85MW. Against this, the total power availability including import is about 55MW and the short-fall being 30MW. The Capacity addition of 15MW is expected from the project under the State Sector by commissioning of Serlui "B' Small Hydel Project (l2MW) and Maicham Phase-II Small Hydel Project (3MW) by the end of 2008. Still then there would be a substantial short-fall of about l5MW.

11.1.6: The peak power demand at the end of 11 th Five Year Plan and 12 th Five Year Plan is assessed as 115MW and 162MW respectively (as per 17 th Power Survey of India). With the completion of some more projects by about 2008 namely Serlui 'B' SHP (12MW) and Maicham Phase-II Small Hydel Project (3MW), power availability in the State at the end of the 11th Five Year Plan will be about 70MW but with substantial short-fall of l5MW. Some projects are now under investigation under State Sector. The Schedule of completion of such projects cannot be projected at present.

11.1.7: Electricity is mainly used for lighting purposes and the supply is not adequate for lighting purpose even in the State headquarter. Consumption of electricity for commercial and individual activities is insignificant. The per capita power consumption of the State is about 173.26 Kwh in 2007, which is one of the lowest in the country. Rapid development of Hydro-Power and harnessing the available hydro potential becomes inevitable and the present need of the State for socio-economic progress of the people.

11.2. Minor Irrigation: Irrigation is still in its initial stage in the state. The states has no large or medium project but only a few minor irrigation projects that are not sufficient to have significant impact on the quantity of agricultural produce at present. Therefore, user charge is not yet collected from farmers. However, the vitality of irrigation for food security could not be exaggerated. The total population of Mizoram in 2001 Census is 888,573 having decadal growth rate of 29.18 percent. It was estimated that the total population of Mizoram will reach approximately 1,147,858 by the end of Eleventh Plan period. To meet the minimum food requirements @ 450gm per head per day of that projected population, at least 188,536 MT of rice has to be produced annually. As on 31.3.2006, total annual requirements of rice for Mizoram was 1,922,030 quintals, while total domestic production was 700,310 quintals. Based on 2005-06, in order to attain self sufficiency in rice production, an additional amount of 1,167,850 quintals of rice has to be produced within the State requiring an additional 87,414 hectares of land to be put under rice cultivation. To curtail the practice of devastating jhum cultivation and to develop and increase agricultural productivity, exploration and development of the available potentiality of wet rice cultivation and irrigation are essential. Yet the scope of irrigation in Mizoram is very limited due to the hilly terrain nature of the State, and as such all irrigation projects are confined to minor irrigation scheme. Percent of gross cropped area irrigated in the State is about 9, and there is scope to put more areas under irrigation. While the importance of further irrigation is paramount, an equally important aspect of the issue is maintenance of completed projects. At present, what little we have is maintained by way of engaging and placing Muster Roll (MR) labourers in the 35 proximity of irrigation projects. These MR labourers maintained the channels as much as they can with their manual labours, and only a small amount of fund can be provided for special repairs. Expenditure on maintenance, especially civil work, is therefore, determined not by norms but by amount of fund that can be set aside for the purpose, which is usually and seriously inadequate. It is, therefore, desirable to be able to follow, at least, minimum standard as per prevailing norms at all India level if the Thirteenth Finance Commission provided grants for the purpose.

11.3 Public Sector Enterprises (PSE): There are five units of public sector undertaking in Mizoram as follows:

PSUs Number of employees Areas of activities (excluding Muster roll) 1) MIFCO 89 Agriculture & Food Processing 2) ZIDCO 62 Financing institution on Industrial loans 3) ZOHANDCO 51 Handloom & Handicraft Development. 4) ZENICS 39 Electronic development and imparting training in electronics and related trades. 5) MAMCO 26 Agricultural marketing.

Note: MIFCO: Mizoram Food & Allied Industries Development Corporation Ltd. ZIDCO: Zoram Industrial Development Corporation Ltd. ZOHANDCO: Zoram Handloom & Handicraft Development Corporation Ltd. ZENICS: Zoram Electronic Industries Development Corporation Ltd. MAMCO: Mizoram Agricultural Marketing Development Corporation Ltd.

These PSEs are established with the main aim of making them the vanguard of transformation and development in their respective areas while protecting the interest of the people from exploitation in the hands of more sophisticated people of other areas. These PSEs could be assessed as success to large extent in this aspect. However, as already expressed in the topical notes, all these PSEs are lost making units till date, and always in need of support from the Government. In other words, almost all the units are sick and urgently needed either closure or downsizing or revitalization. However, Government of Mizoram does not have resources to bear this cost of reforms. Thus, part of proposed Structural Adjustment Loan proceeds from Asian Development Bank 36 may be utilized towards this end to the extent of the availability of fund. The scope and extent of the restructuring programme would be examined by a High Power Committee.

12: Heritage Conservation : It is noted with deep appreciation that the Twelfth Finance Commission provided grants for Heritage conservation. The importance of Heritage Conservation could not be exaggerated in the context of Mizo society. As it is well known, the hitherto semi-nomadic wild tribes of the Mizos suddenly found themselves within the civilized World that is dominantly characterized by rapidly changing westernized cultures. Under these circumstances, the importance of heritage conservation comes into surface not only for cultural continuity but also for integrity with other cultures of different parts of the country. With fund made available by the TFC, 96 cultural/heritage places having significant value to the Mizo society have been preserved. However, due to tropical climate, these heritage places need frequent restoration by way of repair, painting and other maintenance works. By rough estimate, Rs.5.00 Crore will be needed for maintenance of these 96 places during the period covered by the Thirteenth Finance Commission. Besides, the residence of the late chief of Hliappui village has been handed over to the Government of Mizoram, and it is highly desirable to preserve this building and transform it into heritage centre by constructing auditorium and public library in the vicinity of the building, which will play the dual roles of preserving cultural heritage and furthering the prospect of tourism in the State. This will require Rs.7.00 Crore. In addition to that, most of the existing heritage places are located at some distant from the main road or villages without proper approach road to it. Therefore, the Thirteenth Finance Commission is not only requested to continue grant for Heritage conservation but also to consider related requirements as stated above.

13: Disaster Management with reference to the National Calamity Contingency Fund and the Calamity Relief Fund and the funds envisaged in the Disaster Management Act, 2005(53 of 2005) : At para 5 of the Term of Reference, the Commission is required to review the present arrangements as regards financing of Disaster Management with reference to the National Calamity Contingency Fund and the Calamity Relief Fund and the funds envisaged in the Disaster Management Act, 2005(53 of 2005), and make appropriate recommendations thereon. Although the existing arrangement is found satisfactory, it is our considered opinion that Clause (d) of Section 2 of the Act, namely definition of the word "disaster" may be made flexible to include death as a result of lightning strike, drowning, due to sudden collapse of a tree and rock fall.

13.1: Usually but not exclusively, victims of the above calamities are villagers who met with the disaster at their working place- traditional jhum fields or on the way to and from it. Even if the number of victims is smaller, its impact to concerned village household whose sustenance is greatly dependent on the labour of the victim will have chain reaction to the lives of his/her family. Besides, the State is highly vulnerable to these misfortunes. Therefore, it is desirable that the above calamities be made eligible for assistance under CRF. In addition to this, the corpus of the National Calamity Contingency Fund may be substantially enhanced due to the high rate of inflation and abnormality of global climate. Further, the Commission is requested to take note of specific difficulties in accessing funds under CRF/NCCF as below: i) Due to its inaccessible terrain and climatic condition, existing norms applicable under CRF/NCCF are not sufficient to the state. Therefore, the Thirteenth Finance Commission may consider recommending separate norms for the entire region of North-east India in general and Mizoram in particular. ii) Since the formation of a Central Team, recommendations, decisions of the Inter Ministerial Group (IMG) and the actual release of funds are becoming time taking processes. As a result of this time taking process, the very objective of providing immediate assistance to the affected people remains a far cry. To mitigate this type of difficulty, it is proposed that the 13 th 38

Finance Commission may recommend immediate release of assistance on adhoc basis to the affected people on the basis of recommendations made by the State Level Team. The quantum of final assistance shall be decided by the IMG on the basis of assessment made by the Central Team visiting the spot. iii) It is proposed that instead of the present practice of forming Central Teams from different Ministries, Disaster Management Teams may be developed both at the Central and the states. Regular trainings for the states` officers handling disaster management may be conducted to enable them handle these issues effectively. iv) Mizoram continues to hold the view that the CRF fund should be provided by the Central as grants on 90:10 formula, at least, for the Special Category States, and not on the existing ratio of 75:25 basis.

14: Additional Term of Reference : By Notification No. SO 2107, the 25 th August, 2008, the Commission is also asked to have regard to the need to bring the liabilities of the Central Government on account of oil, food and fertilizer bonds into the fiscal accounting, and the impact of various other obligations of the Central Government on the deficit targets, and to review the roadmap for fiscal adjustment and suggest a suitably revised roadmap with a view to maintaining the gains of fiscal consolidation through 2010 to 2015. We feel that this new addition to the Term of Reference is one-sided because it does not include consideration of additional financial burden faced by the State Governments following recent hike in the price of petroleum products. The States have to reduce their Sales Tax rates on these products, which will consequently result in under-achievement of projected revenue receipts. Therefore, it is our prayer to the Commission that this addition of Term of Reference should not lead to any further crowding out of the just demands of the States for increasing their share of Central taxes and enhancement of non- discretionary grants to the States.

15. Grant for State-specific needs: Even though the term of reference of the Thirteenth Finance Commission does not include this issue, it is our prayer and hope that the Commission in its wisdom will consider grants to tackle State‘s specific needs. In this connection, it is our submission to the Commission to take into consideration our just demand for a minimum of 0.50 percent share in taxes and service tax, and substantial increase in the amount of grant as equalization mechanism. The Twelfth Finance Commission provided Rs.65.00 Crore as grant to tackle State-specific needs. While we are obliged to express our gratitude, we nevertheless have to point out that the Twelfth Finance Commission had turned down major portion of our proposals. This time, we are very optimistic that the Thirteenth Finance Commission continues this grant and considers our proposals favourably. It may be pointed out that the State Government is facing financial problem in taking up plan schemes available with the Government of India due to its inability to set aside huge amount of fund to be used as State`s matching share. Hence, development schemes made possible by the Finance Commissions have become vital for a poor state like Mizoram. A nascent and a poor state like Mizoram which is lagging behind all other states in respect of capital assets continued to require this kind of grant for a long time. Therefore, we propose the followings for favourable consideration of the Commission. The total amount proposes is Rs. 1420.505 Crore . Details of the proposals are in Annexure to this Memorandum, and the proposed projects in brief are: i. Establishment of Fiscal Affairs Centre : On page 25 of this memorandum we have mentioned that the possible step towards ensuring the quality of expenditure (as per the para 6 (vii) of the Term of Reference) would be building capacity in outcome budgeting or performance budgeting together with the project appraisal even at hand holding level at the State level. This issue of capacity building also needs to be carefully examined by the Commission since it has relevance with the fiscal consolidation process of the State. It is now an accepted phenomenon that the current fiscal improvement has been largely contributed by the on-going revenue buoyancy witnessed 40 in the country. As a natural corollary of the business cycle and present global melt-down, there has been some discussion as to how effective a rule-based fiscal regime can be in the event of down turn of the economy or slower pace of economic growth especially when the negative and unavoidable effect have adverse impacts on the ability of States to meet fiscal performance targets while maintaining development funding. Thus, the discussion is now also considering a fiscal correction path that is more than just a series of fiscal metrics, but a fiscal framework that would be based on two key factors to enable an objective ex-post facto evaluation of fiscal performance while at the same time ensuring an accountable and credible fiscal policy. These two factors would be: (1) fiscal rules to ensure sustainability while allowing short-run flexibility; (2) a multi-year spending framework that sought to increase predictability and stability by allowing the automatic stabilizer to operate in response to cyclical variation. Together, these factors would provide States with the opportunity to control expenditure in a customized fashion while doing so in a medium Term Expenditure Framework as an effective tool to control the expenditure linked to revenue expectations and exogenous shock. There has been considerable progress in Indian state fiscal reform both in terms of effort and results. At the State level many lessons have so far being learned and are being generated. There is no stand alone formula to achieve this objective. To start with, inter alia, there is considerable gap in the capacity building to pursue the goal. On expenditure side the three areas initially identified which need priority attention are medium term expenditure framework, performance based budgeting and project appraisal. However, we need sufficient skilled manpower across various departments of the State Government to accomplish these tasks on a sustainable basis. However, the overriding lesson, indeed clarion signal, has been the problem of hands-on fiscal management skill and capacity in state governments more particularly in the context of Mizoram. Thus, the problem of fiscal management capacity building at the State level 41

needs to be addressed to urgently usher in the possible improvement in the quality of the expenditure and put in place a stabilization framework through the informed decision making via the third phase of reforms. With the above backdrop, the Government of Mizoram is keen to establish a Fiscal Affairs Centre not only as a custodian of the capacity building in the State through implementable national and international best practices but also to put in place a think tank to provide inputs to the State policies for informed decision making on a sustainable basis. The proposed Fiscal Affairs Centre could be an arm of the Finance Department of the State but would not be involved in routine function of the Department. It is our submission to the Thirteenth finance Commission to provide a State specific grant of Rs.18.71 crore for setting up the proposed Fiscal Affairs Centre. (Detail proposal is at page No.1 to 13 of the Annexure to the Memorandum) ii. A Project Proposal for Re-construction of Rural Economy of Mizoram: Following our comments both at para 1.4 and para 3 in connection with the economic poverty of the people as a result of grouping of villages under the direct supervision of the military during insurgency period and also our comment on para 6 (viii) of the term of reference of the Commission on the need to manage ecology, environment and climate change consistent with sustainable development, we propose a special development package for reconstruction of rural economy of Mizoram that aims to build sustainable economic base for the rural jhummias by developing settled agricultural/horticultural farms. The project proposal for Reconstruction of Rural Economy is for Rs.1200.00 Crore. If the Commission found it practically impossible to consider the whole amount, consideration of the project to cover, at least, a few districts as a pilot project is solicited (Detail proposal is at page No. 14 - 28 of the Annexure to the Memorandum).

42 iii. Proposal submitted by the three Autonomous District Councils: The minority sub-tribes having Autonomous District Council under the provisions of the Sixth Schedule to the Constitution of India submitted schemes for creation of much needed infrastructure. The development schemes proposed by the three Autonomous District Councils (Lai, Chakma and Mara) cost Rs.87.96 Crore. (Detail proposal is at page No.29 to 32 of the Annexure to the Memorandum) iv. Project proposal for provision of Infrastructure to the thirteenth newly created Civil Sub-Divisions: While the Eleventh Finance Commission had granted Rs. 17.00 Crore for the construction of the Offices and Residential Complexes for the five new Deputy Commissioner's Establishments of Champhai, Kolasib, Lawngtlai, Mamit and Serchhip districts, no subsequent Grants have been given for the provision of infrastructure to the Civil Sub-Divisions created under these new districts as well as those newly created in Aizawl, Lunglei and Saiha districts. Since it is almost impossible for the State Government to provide fund for creation of infrastructure to these newly created Civil Sub-Divisions, these Sub-Divisions could not function properly even after ten years of their creation. Therefore, a proposal for creation of infrastructure to the thirteen newly established Civil Sub-Divisions for Rs. 25.358 Crore is submitted (Detail proposal is at page No.33 to 41 of the Annexure to the Memorandum). v. Improvement of Jails : Under the Modernization of Prisons, construction of three new District Jails and one Sub- Jail were taken up but they are not completed during the last five years due to lack of fund. The Government of Mizoram felt it necessary to urgently complete and make them functional the three new District Jails and two Sub- Jails which are under construction. Therefore, a proposal for Rs.49.40 Crore is submitted (Detail proposal is at page No.42 to 47 of the Annexure to the Memorandum).

vi. Improvement in Hospital services: With the increase in population coupled by its remoteness, bad communication and lack of infrastructure, the existing health care infrastructure at the existing 7 Hospitals, 12 CHC's and 57 PHC's in the state are not adequate to meet the health care of the people. Therefore, project proposal for improvement in Hospital & Medical services for Rs. 16.54 Crore is submitted. (Detail proposal is at page No.48 to 85 of the Annexure to the Memorandum) vii. Project proposal for construction of permanent structure building for offices of the nine Treasuries: As was already reflected in our topical notes, the Government is actively taking up initiatives for computerization of Treasuries. However, most of the nine treasuries in the state are not having permanent structure buildings, and are housed in temporary structure buildings (Assam Type buildings) with thin sheets of asbestos tiles as walling, which are in most of the cases too small than required and occasionally dilapidated like the building where Aizawl South Treasury is situated. Due to tropical climate and the unsatisfactory conditions of the existing Treasury Office buildings, weather alone will be a threat to sophisticated electronics, not to speak of threat of theft, etc. It is, therefore, highly desirable if all the nine treasuries are first provided with concrete buildings before computerization is actually initiated. Therefore, the proposal for construction of permanent structure buildings for the nine Treasuries at the cost of Rs. 3.832 Crore is submitted to the Commission for their favourable consideration (Detail proposal is at page No.86 to 88 of the Annexure to the Memorandum). viii. Construction of buildings for Offices & Residential Quarters for Excise & Narcotics Department: Excise & Narcotics Department is a new born Department having no infrastructure worth mentioning. The whole budget of the Department is under Non- Plan till now and that 44

the Department is unable to avail Plan outlay formulated by the State Government. Due to this, district offices are functioning in rented buildings thereby spending huge recurring expenditures on house rent. The proposal for construction of office and residential buildings at the seven districts for Excise & Narcotics Department costs Rs. 7.805 Crore (Detail proposal is at page No.89 to 93 of the Annexure to the Memorandum). ix. Project proposal for construction of Office building for the Directorate of Institutional Finance & State Lotteries: The Directorate is occupying two separate buildings, one of which is rented while the other one is of Government`s. However, owned building is dilapidated and very small while land is available for construction of bigger building. As such, it could accommodate only a small number of Officers and staff which necessitate renting of private building. Therefore, this building is proposed to be dismantled and reconstructed. This will also reduce non-plan revenue expenditure as renting of private building will no longer be necessary. However, the Directorate is wholly under non-plan sector, and the Government of Mizoram is not in a position to make fund available for the reconstruction. Therefore, this proposal for Rs. 2.39 Crore is submitted to the Thirteenth Finance Commission for their favourable consideration (Detail proposal is at page No.94 to 96 of the Annexure to the Memorandum) .

x. Pilot Project on Rainwater Harvesting Scheme at Phuldungsei and Khawhai villages: The aged old tradition of the people of Mizoram is to locate their settlements on top of the hills, and this remains the practice till today not only because of tradition but also due to absence of plain. This naturally leads to high operation cost of water supply network. Due to this, the State Government is not in a position to provide all villages with safe drinking water supply by pumping. In view of these problems, there have been active efforts for initiating

45 alternative method of water supply. The technology choice is Rain Water Harvesting system. Mizoram has abundant rainfall with a recorded average annual rainfall of 2500 mm. Considering different aspect like operation and maintenance cost, its simple technology and ease of maintenance, acceptability of the system etc, large scale rain water harvesting is considered to be the best option for community water supply scheme at villages. Therefore, this pilot project for rainwater harvesting scheme in two locations for Rs. 8.51 Crore is submitted to the Thirteenth Finance Commission for their favourable consideration (Detail proposal is at page No.97 to ff of the Annexure to the Memorandum).

ENCLOSURE

BASIC STATISTICS ON MIZORAM

1. MIZORAM AT A GLANCE Sl. Items Unit No. 1. Geographical Area Sq. Km 21,087 Geographical Location 2. Longitude Degree 92 o.15‘E to 93 o29‘E Latitude Degree 21 o.58‘ N to 24 o.35‘ N Length 3. North to South Kms 277 East to West Kms 121 International Borders 4. With Myanmar Kms 404 With Bangladesh Kms 318 Inter State Borders With Assam Kms 123 5. With Tripura Kms 66 With Manipur Kms 95 6. Administrative Set Up 1. No. of District No 8 2. No. of Autonomous No 3 District Council 3. No. of Sub- No 23 Division 4. No. of R.D. No 26 Block 5. No. of Villages (2001 Census) Inhabited No 732 Uninhabited No 108

2. Population (As per Census 2001)

Sl. Items Unit No. 1. Total Population Persons Nos. 8,88,573 Male Nos. 4,59,109 Female Nos. 4,29,464 2. Decadal Population Growth (1991 œ 2001) Absolute Nos. 1,98,817 Percentage % 28.8% 3. Population Density Per Sq. Km 42 4. No. of females per 1000 Nos. 935 males 5. 0 œ 6 Population Persons Nos. 1,43,734 Males Nos. 73,176 Females Nos. 70,558 6. Literacy Persons Nos. 6,61,445 Males Nos. 3,50,105 Females Nos. 3,11,340 Rate % 88.8 7. Population Rural Nos. 4,44,567 Urban Nos. 4,41,006 8. Total Workers Nos. 4,67,159 Main workers Nos. 3,62,450 Marginal workers Nos. 1,04,709

3. Economic Indicators: Sl. 2006– 2007- Items Unit No. 2007(Q) 2008(A) 1. State Income a) GSDP at current price Rs. 2,98,499 3,28,789 lakhs b) Per Capita Income at Current Rs. 25,679 27,437 price c) GSDP at Constant (1999-00) Rs. 2,36,824 2,52,788 price lakhs d) Per Capita Income at Constant Rs. 20,618 21,400 Price 2. Average Monthly Per Capita (1999-2000) (2004-2005) Expenditure NSS 55 th Round NSS 61 st (Consumer Expenditure ) Round a) Rural Rs. 740.00 778.35 b) Urban Rs. 1050.00 1200.51 3. Agriculture 2005-06 2006-07 a) Gross Cropped area ”000 ha 126.451 105.575 b) Net Area Sown ”000 ha 122.000 94.187 c) Gross irrigated area ”000 ha 16.360 16.360 d)Area under Principal crops 2005-06 2006-07 i) Jhum (Rice) ha 40,100 41,465 ii) WRC (Rice) ha 14,150 9,147 iii) HYV ha 2,210 2,241 iv) Maize ha 11,742 10,775 v) Pulses ha 6,861 5,055 vi) Oilseeds ha 5,870 4,077 e) Production of Principal crops 2005-06 2006-07 i) Jhum (Rice) M. Tons 63,100 13,658 ii) WRC (Rice) M. Tons 37,940 12,131 iii) HYV M. Tons 6,700 3,675 iv) Maize M. Tons 22,703 20,969 v) Pulses M. Tons 8,663 5,833 vi) Oilseeds M. Tons 5,429 3,757 f) Agrucultural Census 2000-01 2005-06 (a) No. of operational holdings Nos. 75,576 97,223 (b) Total operated Area Ha 93,198 1,16,645 (c) Average size of holdings Ha 1.23 1.20

4. Livestock Census 2003 (a) Total Livestock ”000 280 (b) Total cattle ”000 36 (c) Total pigs ”000 217 (d) Total poultry ”000 1,125 5. Forest (FSI Report) 2001 2003 (a) Area Under Dense Forest Sq. Km 8,936 7,488 (b) Area Under Open Forest Sq. Km 8,558 10,942 6. Electricity 2005-06 2006-07 (a) Installed Capacity MW 46.59 37.17 (b) Generation MKWH 11.46 14.22 (c) Total Consumption MKWH 134.51 151.22 (d) Per capita power KWH 151.64 155.69 consumption 7. Industries (a) Registered SSI units (upto Nos 6490 Dec 2007) (b) Nos. of farmers regd in Nos 7293 Sericulture (January 2008 ) (c) No. of enterprises (as per Nos 24943 1998 economic census) (d) No. of enterprises (as per Nos 47378 2005 economic census) (e) Average annual growth rate 9.60% of enterprise (1998 to 2005)

8. Cooperation 2004-05 2005-06 (a) No. of Societies No. 1372 1354 (b) Membership No. 42,801 46,453 (c) Working Capital Rs. lakh 2936.59 3410.28 (d) No. of PACS Nos 609 618 (e) Membership Nos 25,685 24,928 9. Banking 2006 2007 (a) No. of Banking Offices Nos 95 96 (b) Total Deposits Rs. in 1114.04 1345.12 crores (c) Total Advance Rs. in 590.13 760.24 crores (d) Credit Deposit ratio % 52.97 56.52

10. Education As on 30 th September 2005 2006 (a) No. of Primary School Nos 1,688 1700 (b) Enrolment in Primary School Nos 1,32,046 1,30,342 (c) No. of Middle Schools Nos 1,121 1,081 (d) Enrolment in Middle School Nos 88,044 58,533 (e) No. of High Schools Nos 484 502 (f) Enrolment in High Schools Nos 41,610 44,322 (g) No. of Higher Sec. Schools Nos 76 80 (h) Enrolment in Higher Sec. Nos 10,555 11,762 Schools (i) No. of Colleges (2006-07) Nos 26 (j) Enrolment in Colleges (2006- Nos 6,137 07) 11. Health 2007 (a) No. of Hospitals Nos 10 (b) Community Health Centres Nos 10 (c) Primary Health Centres Nos 56 (d) Sub-Centres Nos 366 (e) Birth rate Per ”000 22.34 (f) Death rate Per ”000 5.10 (g) Infant mortality rate Per ”000 12.70 12. Transport 2007 (a) Total road length Kms 5948.15 (b) National Highway Kms 886.00 (c) State Highway Kms 698.94 (d) Surfaced Road Kms 3938.95 (e) Unsurfaced Road Kms 1844.56 (f) Total Motor Vehicles (Oct. Nos. 58,613 2007) 13. Communication 2005-06 2006-07 (a) No. of Post Offices 405 405 Rural Nos 347 347 Urban Nos 58 58 (b) No. of telephone Nos. 55,370 connection(Landline) (January 2008) (c) No. of Mobile Nos 1,71,296 - Connection(January 2008) 51

14. Water Supply 2007 (a) No. of villages 649 fully/partially covered (b) No. of villages Non 128 covered 15. Public Finance Rs. crore 2006-07 2007-08 (BE) (Acct.) Revenue Deficit (-) /Surplus (+) Rs. crore (+) 251.65 (+) 162.85 Fiscal Deficit Rs. crore (-) 191.03 (-) 113.65 Interest Payments Rs. crore 228.75 214.09 Primary Deficit(-) /Surplus (+) Rs. crore (+) 37.72 (+) 100.44 Repayment of Loans Rs. crore 110.95 179.97 Outstanding Liabilities Rs. crore 2812.82 3011.70 16. Plan Outlay (a) 11 th Five Year Plan Outlay Rs. 5,534.00 crore (b) Annual Plan 2008-09 Rs. 1,000.00 crore proposed outlay (c) Annual Plan 2007-08 Rs. 858.00 crore Revised outlay