The power sector could trip the country's growth story if states do not check the losses of power utilities that totaled a staggering Rs 40,000 crore last fiscal, Prime Minister Manmohan Singh said today.

"The power sector is particularly important if we wish to achieve 9 per cent growth...Total loss in 2009-10 is estimated at Rs 40,000 crore...Unless corrected it will make the whole power sector unviable," Singh told a meeting of the National Development Council (NDC) here.

He attributed these losses to low levels of tariff for some categories of consumers and high technical and commercial losses.

India has one of highest transmission and distribution losses in the world. It lost 30 per cent of the total power produced (over 160,000 MW) in transmission and distribution, which in monetary terms is estimated at Rs 45,000 crore for the year ending March 31.

"I would therefore urge Chief Ministers to give this problem their personal attention," Singh said at the meeting, attended by most of the CMs.

The Prime Minister said since investment in generation and transmission depends upon the ability of the distribution companies to pay, these losses are simply not sustainable.

He said corrective steps needed in this area lie entirely in the domain of the states.

Against the target of 78,000 MW in the 11th five year plan period (2007-12), the mid-term appraisal of the plan suggests that the generation capacity in the 11th Plan is likely to expand only by 62,000 to 64,000 MW.

"Though short of the 11th Plan target of 78,000 MW, it will be nevertheless three times the capacity that was added in the 10th Plan," the Prime Minister said.

His economic advisory council had yesterday in fact ridiculed the shortage of expansion in power sector during the current plan period.

"We would be lucky to get 62,000 MW by March 2012. This rests on large capacities being commissioned in 2010-11 and 2011-12," says the economic outlook for 2010-11, released by the Prime Minister's Economic Advisory Council.

PM seeks CMs cooperation for GST implementation

Prime Minister Manmohan Singh today asked states to embrace the Goods and Services Tax from the next fiscal, saying replacement of most indirect taxes by this will help in greater revenue mop up.

The Centre earlier this week proposed three different rates -- 20 per cent for goods, 16 per cent for services and 12 per cent for essential items -- under GST.

"Reform of tax structure and tax administration is another important step in resource mobilisation. The GST is especially important in this context and I would urge Chief Ministers to give full support to the effort to implement GST with effect from April 1, 2011," Singh said at the National Development Council (NDC).

The GST would replace excise and service tax at the central level and VAT at the state-level.

The PM's statement comes at a time when doubts have been voiced by many NDA-ruled states over the implementation of the GST from April one, 2011. The introduction of new indirect tax regime has already been delayed by a year due to differences among the states and the Centre.

Most chief ministers were present at the NDC meeting called to review the progress of the 11th five-year Plan.

The introduction of GST would need constitutional amendments, which is required to be passed with two-thirds majority in both houses of Parliament, and ratification through a simple majority by at least half of the state assemblies.

As such, the support of chief ministers is crucial for radical reforms.

If all members of Parliament vote in the Constitutional amendments bill, 362 members of the Lok Sabha and 161 MPs of Rajya Sabha will have to vote in favour of the bill to pass it.

Therefore, the support of the main opposition BJP is required for the passage of the Bill in Parliament.

Earlier this week, Finance Minister Pranab Mukherjee had reminded the BJP that its election manifesto during last Lok Sabha elections had promised to implement GST, if the NDA comes to power.

The Centre expects to table Constitutional amendments bill in Parliament in the monsoon session that begins Monday.

However, the draft of the bill prepared by the Centre is still being studied by states and they will meet on August 4 to discuss the issue.

Mukherjee had said that introduction of the GST would help double the size of India's economy to USD 2 trillion in a short span of time.

He had also assured the states that he is willing to go beyond the 13th Finance Commission's recommendations of Rs 50,000 crore compensation to states.

PM for holistic development programme for Naxal-hit areas

Seeking the cooperation of States in dealing with Left-wing extremism, Prime Minister Manmohan Singh today asked the Planning Commission to design a holistic development programme for Naxal-affected areas.

He said the development programmes must be aligned with the special circumstances in these states.

"I have asked the Planning Commission to design a holistic development programme for these areas in consultation with states and other stakeholders," he said, addressing the National Development Council meeting here.

Singh said there should be no doubt that Left-wing extremism has to be met and it will be met with Centre and the States cooperating fully with one another.

However, he said, the action against Maoists has to be supplemented by action on two other fronts -- implementation of Forest Rights Act and Panchayati Raj and providing additional resources to these development of these areas.

"Effective implementation of Forest Rights Act and Panchayati Raj (Extension to Scheduled Areas) Act are critical. Failure to implement these laws in letter and spirit reduces the credibility of our commitment to bring development to these neglected regions," Singh said.

Admitting that development schemes have not worked well in backward and impoverished parts of the country, Singh said these areas must also be provided with additional resources for development. "The development programmes must be aligned to the special circumstances of these areas," he said.

"Our development schemes have not worked well in these backward and impoverished parts of our country, especially in the areas inhabited by the adivasi population. We must make a concerted effort to bridge the development deficit in these backward areas and reduce whatever sense of alienation that may exist among the adivasis living in these areas," he said.

He said the rights of tribals to forest must be protected.

Pointing out that the Centre's flagship programmes like MGNREGA was doing well in many states but there are "examples of poor implementation" as well, Singh said there was a need to make sustained efforts to improve performance in states where it is below average.

Singh also said that initiatives like Right to Education and NRHM need to be implemented with vigour. "This will require more resources. However, it is equally important to pay attention to improving the delivery system in order to achieve the desired outputs," he said.

The Prime Minister also laid stress on the need to protect environment which is under the threat from various sources of pollution.

"The threat of climate change looms large and requires national action plan and international action. How well we handle these problems will determine whether our growth strategy is sustainable in medium or long term," he said.