Focus on cutting unnecessary expenses, boosting income: MP CM Mohan Yadav

Madhya Pradesh Chief Minister Mohan Yadav marked the completion of his first year in office last week. In an interview at Madhya Pradesh Bhawan in New Delhi, Yadav, 59, spoke with Archis Mohan and Sanjeeb Mukherjee about his government’s initiatives to curb financial profligacy, reduce power subsidies for farmers, and promote industrial growth.

Edited excerpts:

 

What, in your view, have been the key achievements of your government during its first year in office?

  Our primary focus has been on reforming the state’s governance and administrative structures and adopting good governance practices. Moreover, if India is to become the world’s third-largest economy, Madhya Pradesh should play a significant role in achieving that goal. This is why we decided early in our current tenure to double the state budget from Rs 3.25 trillion to Rs 7 trillion over the next five years. We have fixed annual targets to achieve this objective in a phased manner. 

A key aspect of the government’s efforts has been reducing non-essential expenditure to strengthen the state’s income and facilitate holistic growth. I kick-started some of these measures within days of taking the oath, particularly in the power sector. Currently, we provide an annual subsidy of Rs 15,000 crore to farmers, which accounts for 93 per cent of their total power consumption. This subsidy burden would have continued to increase if we hadn’t intervened. Our aim is to cut it down to zero within three years by offering financial assistance to farmers to install solar pumps. This will enable them to become self-sufficient in meeting their power needs and even sell surplus power to the government. 

Our strategy has been two-pronged, addressing both urban consumers and farmers. Together, these groups account for roughly Rs 25,000-26,000 crore in annual power subsidies from the state government which we want to end.

  Will this imply raising tariffs, as well?

  No, No… 

Can the slabs be restructured, then?

  Yes, that can be part of this process but not now. Maybe some time later.

  Has the CM Ladli Behna Yojana, introduced last year, proven to be a burden?

  We have conducted an assessment of each state government department and identified the losses they incur — for instance, the Rs 25,000 crore power subsidy. There has been no opposition to reducing this, especially when we are disbursing funds under the Ladli Behna Yojana. From January 2024 until now, we have distributed Rs 19,000 crore to 12.9 million beneficiaries through this scheme. 

Our view is that by increasing the state government’s income from other sectors, we can effectively manage some of these expenses. We are not halting or ending social welfare schemes but are focusing on cutting unnecessary expenditures and boosting our income. For example, we have been inviting the private sector to establish medical colleges under the public-private partnership (PPP) model. In this setup, private entities fund the colleges through student fees and also set up a 300-bed hospital, which they will hand over to the government after 10 years. We are providing land free of cost for this purpose. 

As a result, back in 2003-04, Madhya Pradesh had just five medical colleges. Over the past two decades, this number has grown to 30, with 17 being government colleges and 13 private. The number of undergraduate medical seats has increased from 400 to 5,000. Currently, eight more medical colleges are under construction, and tenders for 14 additional colleges under the PPP model are in progress. This means that within a year, we will have around two dozen new medical colleges, requiring minimal taxpayer funds. This expansion will increase undergraduate medical seats to 10,000.  Across several departments, we are taking steps to reduce expenses and enhance income. 

The MP government has plans to organise a global investor summit. You visited the UK and Germany recently…

  We have initiated regional conclaves and are also organising a global investor summit. Our efforts aim to attract investments across the entire industrial belt, including the mining sector, which recently received a national award for being the best-performing sector in the country. Our plan is to increase the mining sector’s contribution to the state budget from Rs 13,000 crore to Rs 50,000 crore. Similarly, we are working to boost the state’s milk production by 20 per cent, which will also help increase farmers’ incomes.

  But Madhya Pradesh’s debt burden is now in excess of Rs 3 trillion…

  No, no... you need to view it from a different perspective. Madhya Pradesh’s per capita income is Rs 1,45,000 per year, which is significantly above the national average. This is a considerable leap from just Rs 7,500 in 2003, reflecting consistent growth in the state’s per capita income. Our fiscal deficit also remains well within the Centre’s Fiscal Responsibility and Budget Management (FRBM) Act norms. 

Our objective is to increase the state’s income, implement good governance practices, and encourage industrial growth. Over the past year — despite the model code of conduct being in effect for three months — we received investment proposals worth Rs 4 trillion during the remaining nine months. These proposals are expected to generate 300,000 job opportunities.  

We have declared 2025 as the Year of Industry. As part of our three-pronged strategy, we are encouraging the state’s industrialists to invest more, inviting investors from across the country, and actively engaging with international investors. We are welcoming them to set up industries, form joint ventures — where we assist in finding suitable partners — and even bring in advanced technology to set up factories. The Rs 4 trillion worth of investment proposals spans sectors such as energy, tourism, heavy industry, information technology, and medium and small enterprises (MSME), among others. 

Has there been any investment in the design and manufacture of semiconductors?

  We have framed a policy for the sector. During my visit to the UK, we received an investment proposal of Rs 25,000 crore for setting up a unit in MP. 

River linking was an initiative envisioned by former Prime Minister Atal Bihari Vajpayee...

  Madhya Pradesh is the only state in the country working on two river-linking projects: The Ken-Betwa link project with Uttar Pradesh and the Parbati-Kalisindh-Chambal link project with Rajasthan. These projects will expand the area under irrigation and also provide drinking water, particularly in water-scarce regions. 

Soybean farmers have expressed concerns about not receiving a fair procurement price for their produce…

  We are procuring the produce at a minimum support price (MSP). But farmers have not approached us after they found better prices in the open market. We are willing to purchase their produce based on the MSP.

  What is the purpose of establishing the MP Administrative Unit Reorganisation Commission?

  There have been several political demands to create new districts, tehsils, blocks, etc, some of which have been acceded to, but without considering the geographical area and population of these administrative units. As a result, we have districts with populations of four million and others with just 500,000. There are significant variations in the sizes of districts and other administrative units. While minor differences in area and population are expected, the disparities are far too large. All of this is leading to administrative inefficiency and hindering development work. The government in Madhya Pradesh is the first to recognise the need to rationalise this and has set up a commission to address the issue.

 

In the Lok Sabha polls, you emerged as the Yadav face of the BJP, extensively campaigning in Uttar Pradesh and Bihar…

  I look at this from a different perspective, and this is what I spoke about during my election meetings in UP and Bihar. What is the reason that in UP and Bihar (in the parties that Yadavs lead), only family members of a particular family will become chief ministers, ministers and members of Parliament? In the BJP, Prime Minister Narendra Modi appointed Yadavs in his council of ministers and there are Yadavs in the nine-member BJP parliamentary board. I said in my meetings that there has never been a minister or CM in my family, so please join the BJP and you will be treated just as I was. 

What will be your government’s focus areas in the next four years?

We have already started work on river-interlinking, administrative reforms, setting up medical colleges, and drafting new policies for departments. Another step is to again set up the state’s road transport corporation after 20 years to fulfil the people’s needs for affordable and quality public transport. 

As part of your new industrial policy, what will your approach to land acquisition be?

  We have come up with a private investment policy and taken a leaf out of Gujarat’s page -- where we acquire land from farmers and do land-pooling but also make farmers partners in profit.