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Tenth Plan and a touch of realism

The private sector must be encouraged to enter unfamiliar areas through public-private models

THE PRIME Minister Manmohan Singh's assessment of GDP growth during the Tenth Plan (2002-07) is realistic but not unexpected in the least. The Indian economy would grow at an impressive rate, perhaps in the region of 7 per cent but cannot match the 8.1 per cent rate assumed by the Tenth Plan document, he said while presiding over the full Planning Commission meeting called to approve the mid-term appraisal.

During the first three years, the GDP growth has averaged 6.5 per cent. The document had visualised an average growth rate of 8.1 per cent through the Plan period. Hence to achieve the target, the economy must grow by 10.5 per cent in each of the remaining two years.

The Plan document was finalised in October 2002 and even at that time there were sceptics questioning some of its key assumptions and targets including the one relating to the growth rate.

During the Ninth Plan too the average growth rate at 5.35 per cent was below the target rate of 6.5 per cent. The past may not be a guide but the balance of evidence rules out a sharp acceleration from now on to take the economy above the 8 per cent growth rate.

Some see a political dimension in the Prime Minister's efforts to distance himself from the goals set for the Tenth Plan. After all, he was presiding over the mid-term appraisal of a document that was prepared by the previous government. That may be a narrow political view, however. There are many salutary messages from the Prime Minister's speech.

Even if an 8 per cent average growth looks unattainable during the Tenth Plan, it looks certain that the growth trajectory has moved upwards. That by itself will be a bigger achievement than the attainment of a specific target that is not sustainable.

As for the diagnosis of constraints faced by the economy, it is agriculture that holds the key. The Tenth Plan document aimed to reverse the declining trend in agriculture and eventually take the growth rate to above 4 per cent. The actual performance has actually been worse and may not be even 1.5 per cent during the first three years of the Plan. It follows that the numerous corrective measures suggested in the Plan document and its mid-year appraisal will spill over into the next Plan period.

The Prime Minister has called for a substantial step up in private investment, especially in infrastructure areas. This will to a large extent free public investment for the social sectors. This policy prescription, though not new, finds concrete expression in the Tenth Plan appraisal document. The private sector must be encouraged to enter unfamiliar areas through "well designed public-private models.''

On the planning process itself, the Prime Minister had this to say. The emphasis should be on achieving a high rate of growth coupled with redistributive justice and balanced development.

Finally, while a five-year time frame for a plan has had its benefits, it is essential to find out whether this has to be supplemented by annual plans on the one hand and long term perspective plans on the other. Infrastructure funding needs require a longer time frame than five years. On the other side, public expenditure concerns tend to dominate all discussions on planning in India. Here five years may be too long a period.

C. R. L. NARASIMHAN

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