NEW DELHI, February 19: The Northeastern States were slammed by the President, KR Narayanan for leakage of development funds, even as he hinted at against any truce offer for the underground outfits by calling for firm action against the militants. The President's address may come as a major embarrassment to the Northeastern States as question marks were put on their track record of utilisation of public funds. The President's critical remarks were in fact a reflection of the Centre's hardboiled attitude towards the erring states on this score. "Substantial developmental resources flow into the region. However, their impact on the ground is not commensurate. I urge the state governments to ensure that there is no mismanagement or leakage of public funds," he advised. The President further suggested that the Northeastern States should carry out effective decentralisation, strengthen democratic institutions and increase the participation of the people's organisation, in order to plug the mismanagement of development funds. Narayanan's suggestion makes it clear that he was referring to reluctance of the states including Assam in holding Panchayat elections, which have been overdue in the states. While Panchayat polls in Tripura were held last month, the Assam government deferred the polls at the eleventh hour citing Census operations and forthcoming state Assembly polls. As for the misutilisation of funds meant for rural development, the Centre's thinking is that one of the factors abetting growth of militancy in the region is the prevailing corruption in the government and misutilisation of funds. The Union Minister for Rural Development, Venkhaiah Naidu, in fact has gone on record that majority of the states in the region barring one have not been able to even utilise its funds sanctioned for rural development. Meanwhile, the President, focusing on other issues relating to the Northeast, without naming any state, suggested that the states also must protect the minorities. The President's inference, however was clear. He was referring to the killing of the linguistic minorities in Assam by the outlawed ULFA during the latter part of last year that led to the death of over 140 people belonging to non-Assamese communities. What was surprising was "President's indication of the government's policy of adopting a tough line against the militants. While there was no mention about Centre's willingness to sit for talks, he on the contrary, said development activities have to be combined with firm action against the militants and extremist outfits. "There is relative improvement in the situation in the Northeast. Peace and normalcy in this strategic region require both political stability and faster socio-economic development," he said, mentioning that the special development package devised for the Northeast is being speedily implemented. The President also added that the twenty - four-hour satellite Northeast channel has been dedicated to strengthen the bonds of emotional and cultural integration between the states and the rest of the country. Meanwhile, the President's address evoked mixed reaction among members from the region. The Assam Congress members were elated, with the state Congress chief Tarun Gogoi asserting that Narayanan's address was nothing but endorsement of their allegation. "Now that the central government has admitted that there has been mismanagement of rural development funds, we demand that the Centre should hand over the probe to the CBI," he said. The state Congress party, it may be recalled here, has been calling for a through CBI probe into the allegation of corruption and misuse of funds in the rural development ministry of the state government. Meanwhile, Jayanta Rongpi reacting to the address, said it had nothing new to offer and was rather disappointing. Rongpi, also interfered during the address demanding reorganisation of Assam and creation of an autonomous state. "Save Assam, Save India," he shouted. He was joined by Jayashree Goswami Mahanta, who raised a banner demanding solution of the problems of Assam. Referring to the insurgency problem Rongpi said there has to be a radical departure from the present stand of the Centre for a solution to emerge.