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The first half of 1947 was a critical period in India’s history. The end of colonial rule was certain and so was India’s Partition, but what was uncertain was whether there would be more than one division. Prices were rising, food shortages were common but over and above everything else, the unity of India was under severe strain.

It was in these circumstances that the States Department came into being in June 1947. Among the chief aims of this department was to give impetus and top priority to negotiations vis-à-vis India’s relationship with the over 550 princely states, which were as diverse as they could get, be it in size, population, terrain or economic situation. No wonder Mahatma Gandhi remarked, “The problem of the states is so difficult that YOU alone can solve it.”

In vintage Sardar Patel style, he went about his work with precision, firmness and administrative efficiency. Time was less and the task was herculean … but this was no ordinary person, it was Sardar Patel, who was determined not to let his nation down. One by one, he and his team negotiated with the princely states and ensured that they all became a part of free India.

Illustration: Ajit Ninan

It was due to round-the-clock effort of Sardar Patel that the map of India is what it is today!

Once freedom was won, VP Menon, it is said, wanted to retire from government service, only to be told by Sardar Patel that this was neither the time to rest nor the time to retire. Such was Sardar Patel’s firm resolve. VP Menon was made the Secretary of the States Department. In his book ‘The Story of the Integration of Indian States’, he writes about how Sardar Patel led from the front and inspired the entire team to work assiduously. He also writes that Sardar Patel was clear – first and foremost came the interests of the people of India, there would be no compromise on that.

On August 15, 1947, we celebrated the dawn of a new destiny but the work of nation building was far from complete. As independent India’s first home minister, he set the stage for an administrative framework that continues to serve the nation be it in matters of day to day governance or protecting the interests of the people, particularly the poor and marginalised.

Sardar Patel was a veteran administrator. His own experience in governance, particularly in the 1920s when he served the Ahmedabad municipality, was extremely handy when he worked towards strengthening independent India’s administrative framework. While in Ahmedabad, he did commendable work in furthering cleanliness in the city. He ensured clean and functioning drainage systems across the city. He also focussed on other aspects of urban infrastructure such as roads, electricity and education.

Today, if India is known for a vibrant cooperative sector, a large part of the credit goes to Sardar Patel. The roots of Amul can be traced back to his vision for empowering local communities, particularly women. It was Sardar Patel who also popularised the idea of cooperative housing societies, thus ensuring dignity and shelter for many.

Two traits synonymous with Sardar Patel are trust and integrity. The farmers of India had unparalleled faith in him. After all, he was a kisan putra, who led from the front during the Bardoli satyagraha. The working class saw him as a ray of hope, a leader who would speak up for them. Traders and industrialists preferred to work with Sardar Patel because they felt here was a stalwart who had a vision for India’s economic and industrial growth.

His political peers too trusted him. Acharya Kripalani remarked that whenever they faced an issue and if Bapu’s guidance was not available, they would turn to Sardar Patel. When political negotiations were at their peak in 1947, Sarojini Naidu called him “the man of decision and man of action”. Everyone trusted him, his words and his actions. Sardar Patel continues to be respected across caste, creed, faith, age!

This year’s Sardar Jayanti is even more special. With the blessings of 130 crore Indians, the Statue of Unity is being inaugurated today. Situated on the banks of the Narmada, the ‘Statue of Unity’ is the tallest in the world. ‘Dharti Putra’ Sardar Patel will stand tall in the skies, to guide us and inspire us.

I congratulate all those who have worked day and night to ensure that this grand statue in tribute of Sardar Patel becomes a reality. My mind goes back to October 31, 2013, when we laid the foundation stone for this ambitious project. In record time, a project of such scale has become ready and this should make every Indian proud. I urge you all to visit the Statue of Unity in the times to come.

The Statue of Unity is a symbol of both the unity of hearts and the geographical integrity of our motherland. It is a reminder that divided, we may not be even able to face ourselves. United, we can face the world and scale new heights of growth and glory.

Sardar Patel worked with astonishing speed to dismantle the history of imperialism and create the geography of unity with the spirit of nationalism. He saved India from Balkanisation and integrated even the weakest of limbs into the national framework. Today, we, the 130 crore Indians, are working shoulder to shoulder to build a New India that is strong, prosperous and inclusive. Every decision is being taken to ensure that the fruits of development reach the most vulnerable, without any corruption or favouritism, just as Sardar Patel would have wanted it.

‘মন কী বাত’ৰ বাবে আপোনাৰ ধাৰণা আৰু পৰামৰ্শ এতিয়াই শ্বেয়াৰ কৰক!
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Reforms by Conviction and Incentives
June 22, 2021
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The Covid-19 pandemic has come with whole new set of challenges to Governments across the world in terms of policy-making. India is no exception. Raising enough resources for public welfare while ensuring sustainability is proving to be one of the biggest challenges.

In this back-drop of financial crunch seen across the world, do you know that Indian states were able to borrow significantly more in 2020-21? It would perhaps pleasantly surprise you that states were able to raise an extra Rs 1.06 lakh crores in 2020-21. This significant increase in availability of resources was made possible by an approach of Centre-State bhagidari. 

When we formulated our economic response to the Covid-19 pandemic, we wanted to ensure that our solutions do not follow a ‘one size fits all’ model. For a federal country of continental dimensions, finding policy instruments at the national level to promote reforms by State Governments is indeed challenging. But, we had faith in the robustness of our federal polity and we moved ahead in the spirit of Centre-State bhagidari. 

In May 2020, as part of the Aatmanirbhar Bharat package, the Government of India announced that State Governments would be allowed enhanced borrowing for 2020-21. An extra 2% of GSDP was allowed, of which 1% was made conditional on the implementation of certain economic reforms. This nudge for reform is rare in Indian public finance. This was a nudge, incentivising the states to adopt progressive policies to avail additional funds. The results of this exercise are not only encouraging but also run contrary to the notion that there are limited takers for sound economic policies.

The four reforms to which additional borrowings were linked (with 0.25% of GDP tied to each one) had two characteristics. Firstly, each of the reforms was linked to improving the Ease of Living to the public and particularly the poor, the vulnerable, and the middle class. Secondly, they also promoted fiscal sustainability.

The first reform under the ‘One Nation One Ration Card’ policy required State Governments to ensure that all ration cards in the State under the National Food Security Act (NFSA) were seeded with the Aadhaar number of all family members and that all Fair Price Shops had Electronic Point of Sale devices. The main benefit from this is that migrant workers can draw their food ration from anywhere in the country. Apart from these benefits to citizens, there is the financial benefit from the elimination of bogus cards & duplicate members. 17 states completed this reform and were granted additional borrowings amounting to Rs. 37,600 crores. 

The second reform, aimed at improving ease of doing business, required states to ensure that renewal of business-related licences under 7 Acts is made automatic, online and non-discretionary on mere payment of fees. Another requirement was implementation of a computerized random inspection system and prior notice of inspection to reduce harassment and corruption under a further 12 Acts. This reform (covering 19 laws) is of particular help to micro and small enterprises, who suffer the most from the burden of the ‘inspector raj'. It also promotes an improved investment climate, greater investment and faster growth. 20 states completed this reform and were allowed additional borrowing of Rs. 39,521 crores. 

The 15th Finance Commission and several academics have emphasised the crucial importance of sound property taxation. The third reform required states to notify floor rates of property tax and of water & sewerage charges, in consonance with stamp duty guideline values for property transactions and current costs respectively, in urban areas. This would enable better quality of services to the urban poor and middle class, support better infrastructure and stimulate growth. Property tax is also progressive in its incidence and thus the poor in urban areas would benefit the most. This reform also benefits municipal staff who often face delay in payment of wages. 11 states completed these reforms and were granted additional borrowing of Rs. 15,957 crores. 

The fourth reform was introduction of Direct Benefit Transfer (DBT) in lieu of free electricity supply to farmers. The requirement was for formulation of a state-wide scheme with actual implementation in one district on a pilot basis by year end. Additional borrowing of 0.15% of GSDP was linked to this. A component was also provided for reduction in technical & commercial losses and another for reducing the gap between revenues and costs (0.05% of GSDP for each). This improves the finances of distribution companies, promotes conservation of water and energy and improves service quality through better financial and technical performance. 13 states implemented at least one component, while 6 states implemented the DBT component. As a result, Rs. 13,201 crore of additional borrowings was permitted. 

Overall, 23 states availed of additional borrowings of Rs. 1.06 lakh crores out of a potential of Rs. 2.14 lakh crores. As a result, the aggregate borrowing permission granted to states for 2020-21 (conditional and unconditional) was 4.5% of the initially estimated GSDP. 

For a large nation with complex challenges as ours, this was a unique experience. We have often seen that for various reasons, schemes and reforms remain un-operational often for years. This was a pleasant departure from the past where the Centre & States came together to roll out public friendly reforms in a short span of time amidst the pandemic. This was made possible due to our approach of Sabka Saath, Sabka Vikas and Sabka Vishwas. Officials who have been working on these reforms suggest that without this incentive of additional funds, enactment of these policies would have taken years. India has seen a model of ‘reforms by stealth and compulsion’. This is a new model of ‘reforms by conviction and incentives’. I am thankful to all the states who took the lead in ushering in these policies amidst tough times for the betterment of their citizens. We shall continue working together for the rapid progress of 130 crore Indians.