The Hindu : National : Plan panel meet to take up crucial issues

Online edition of India's National Newspaper
Wednesday, Oct 18, 2006
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National

Plan panel meet to take up crucial issues

Special Correspondent

NEW DELHI: The full meeting of the Planning Commission chaired by Prime Minister Manmohan Singh on Wednesday is expected to take up crucial issues such as debt restructuring of States and fiscal management in the wake of the Plan panel favouring a "flexible" approach in this regard so as to achieve a growth rate of nine per cent and reach the social sector goals set for the Eleventh Plan.

As the full meeting is slated to discuss, among other things, the basic approach to the plan, the Commission, it is understood, has already circulated a paper among the members to drive home the view that limiting the States' fiscal deficit to three per cent of their Gross Domestic Product (GDP) would be "too inflexible."

In its paper, the Commission has said: "Ideally, the tolerable level of borrowing for each State should depend upon the existing ratio of debt to GDP and the desired level towards which this ratio should move, the period over which the adjustment to the desired ratio is to take place and the growth rate."

Fiscal discipline

In the event, the thorny issue of fiscal discipline coupled with the massive demand for resources for social infrastructure and other welfare schemes, as outlined in the National Common Minimum Programme (NCMP), could render the meeting stormy, particularly when differences have been reported between the Commission and the Finance Ministry on the Fiscal Responsibility Budget Management (FRBM) target.

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