Mumbai: Prime minister Manmohan Singh has called upon state governments, academia and the industry in the North to come together in a collaborative effort aimed at development of the entire region. North India accounts for 40 per cent of the country's population and is the breadbasket of the country, but the region is falling behind in economic development, he pointed out.

"It is necessary that the state governments, academia and industry come together to collaborate on developing common policy goals for the entire region," he said.

He was inaugurating the PHDCCI chief ministers' conclave for North India common economic region.

"The Constitution of India conceived all of India as a unified, common market. Large economies have advantages of scale, scope and ease in conducting transactions. However, over the years, we have managed to fragment the national common market by erecting a large number of financial and physical barriers which choke inter-state commerce", the prime minister said. The theme of the PHDCCI conclave, he observed, is the removal of barriers to inter-state trade.

Tax systems act as hindrances, tax breaks and shelters – beggar-thy-neighbour policies, physical check points and permits – all lead to an increase in the transaction cost of commerce and need to be viewed from a long term perspective, he said.

When the whole world is moving towards dismantling barriers and trade facilitation, the states need to adopt policies that strengthen the human and physical recourse capabilities of the region. Setting the tone for the conclave, Sushma Berlia, president of the PHD Chamber of Commerce, said "Business goes where business is welcome." The Northern states are being left behind, while the rest of the country has started to compare itself with the rest of the world. NICE (North India common economy), a concept promoted by the PHDCCI, is aimed at creation of a strong new region based on common laws and policies that enable the free flow of goods, services, people and knowledge, empowers the region and greatly multiplies the wealth of all its citizens. The need of the hour, Berlia observed was to refine the reform process and bring it to the next level - undertake reforms in the anarchic restrictive policies. She said the purpose of the conclave, which saw the participation of chief ministers of five states – Delhi, J&K, Himachal, Haryana and Punjab – and the administrator of the union territory of Chandigarh, is to continually build on the successes of the collective march towards a common economic reform agenda throughout North India.

PHDCCI, meanwhile, has set up task forces with representation from state governments and the centre to come out with concrete recommendations in the three areas of inter-state barriers to trade, power and water and e-governance. The northern region, in order to realise its impressive potential, has to take a leap-forward and work hard, and with creativity, to improve its human development indicators, the prime minister said. "You have to invest in your people, you need not just primary schools, but more collages, technical institutions, vocational training programmes and R&D centers. I urge the CMs to pay special attention to the human development challenge in the region". Observing that human resources need to be backed by top-class infrastructure, the prime minister called upon the northern states to create better urban infrastructure to complement productive resources.

"You must take advantage of the National Urban Renewal Mission to change your urban landscape and make your cities modern, productive and attractive", he remarked.

"In the final analysis, what will differentiate one state from another is the quality of governance and a public service which is more effective and efficient," he said, adding, "You will have to provide the leadership and vision to ensure that government institutions perform better, attitudes change and tax payers get their money's worth. E-governance can make government more citizen friendly and business friendly." The Indian economy is at the cusp of a new phase of economic growth. We have sustained a growth rate of over eight per cent for over four years. It is for the first time in the history that we have maintained eight per cent plus growth rate for four consecutive years. This growth has been broad-based, cutting across sectors. Manufacturing and services have been witnessing double-digit growth. However, northern states have been variable in their performance. Growth has been either volatile (because of dependency on rainfall) or lagging behind the national average.

"We cannot allow this to continue", the prime minister told chief ministers of the region while assuring that the central government will "be your partner in progress." Maintaining that efficient management of power and water is vital for sustaining economic growth and improving the quality of life, he said, "The northern region can cooperate in many areas to provide a superior resource and infrastructure base. The region is criss-crossed by rivers. States should establish cooperative mechanism to manage water resources, both in quantity and efficiency. The region has a power shortage of over 10 per cent. Here too states can cooperate to promote better generation and utlisation of power across the regions", he said.

"The emergence of a North India common economy will become a reality only if each state within the region pursues a policy agenda, which blends well with that of the center, as well as other states. This is a vital part of the unfinished reform agenda initiated by Manhohan Singh as finance minister 15 years ago", Berlia observed. The three task forces will submit their recommendations in the plenary session, which will also be attended by Montek Singh Ahluwalia, deputy chairman of the Planning Commission. She said, according to PHDCCI estimates, if the recommendations of the three task forces are implemented by the states, the state domestic product in the North will increase by a factor of 1.5 to 2 per cent.

The prime minister also released a set of economic profiles of 10 North Indian states, published by the PHD Chamber.