per cent within the tenth plan period ( 2002 - 03 to 2006 - 07 ) ; • reduction of infant mortality rate ( imr ) to 45 per 1000 live births by 2007 and to 28 by 2012 ; • reduction of maternal mortality ratio ( mmr ) to 2 per 1000 live births by 2007 and to 1 by 2012 ; • all villages to have sustained access to potable drinking water within the plan period ; i am sure that these goals, on implementation, are going to make significant difference to the lives of millions in india. as you are aware, government of india has launched major efforts to realise these goals. health is paramount to good living. the national rural health mission ( nrhm ) with focus on grass root level public health interventions based on community ownership has been announced for roll out in 2005 - 06. the budget for the department of health and the department of family welfare has been increased by 22 % to rs. 10, 280 crore in 2005 - 06. in the all important sector of education the government has responded to the needs by allocating rs. 4, 754 crore for the sarva shiksha abhiyan programme which is the cornerstone of the government ’ s intervention in basic education for all children. this constitute an increase of 55 % over 2004 - 05. a non - lapsable fund called “ prarambhik shiksha kosh ” has been created for funding this programme with increased allocation of rs. 7, 156 crore in 2005 - 06. the national food for work programme which was launched in november 2004, is being supported with an overall allocation of rs. 11, 000 crore. the government has proposed to convert this programme into the national rural employment guarantee scheme which, when fully rolled out, will provide livelihood security to crores of poor families. state finance and human development the above enumeration of the goals of human development clearly points out to the necessity of funds for achieving higher quality of life. interestingly, many of the constituents of such a package, are in the domain of the state governments. it is here that that state finance and human development develops a strong bondage. what has been the state of the states ’ finances in recent years? the economic survey, 2004 - 05 pointed out that the deterioration in the finances of state governments has been sharper than that of the central government. all the major fiscal indicators reveal a worsening of the fiscal situation as compared with the position obtaining in 1990 - 91. fiscal deficit of states as a proportion

shyamala gopinath : human development and state finances - some thoughts speech by ms shyamala gopinath, deputy governor of the reserve bank of india, at the programme on human development and state finances ( jointly organised by the reserve bank of india and the undp ) at the college of agricultural banking, pune, 4 april 2005. the assistance of h r khan, c p mohan and partha ray in preparation of the speech is gratefully acknowledged. * * * it gives me great pleasure to be here on the occasion of the first programme on " human development and state finances " being jointly organised by the undp and the rbi with the support of the planning commission. the undp, ever since its inception in 1965, and the other un organisations before that, have been actively involved in the development priorities of developing countries like ours over the last five decades. they have gained insights and understanding of our economy and polity which will substantially help in achieving our goals of growth with equity, dignified life for all our people and in our pursuit of reforms with a human face. as all of us are well aware, the government of india is irrevocably and unequivocally committed to the attainment of the millennium development goals ( mdg ). in fact, the progress that will be achieved by india, home to about one sixth of the world's population, will take the entire mankind much nearer to the mdg. this is because india accounts for significant proportions of the under privileged and marginised sections of the world with almost one third of the global rural poor living in india. yet, our economy is poised at a point of take off, where our achievements can be accelerated. i believe that we have reached a stage in our development process, wherein we have gathered critical momentum to achieve far more in the next 10 - 15 years than we have done in the last 55 years. what have been the contours of human development? what have been our achievements in india? how is state finance related to it? let me in the present address look into some of these questions. contours of human development let me begin with a brief look at the concept of human development. while doing so, i have a confession to make. i am no expert of the vast discipline concerning human development. nevertheless, as a common citizen i believe that issues relating to human development concern us all. hence, with some trepidation i approach the issue. how