Financial Daily from THE HINDU group of publications
Sunday, Jul 14, 2002
Government - Policy
Industry & Economy - Economy
PM announces 8-point agenda for 8% growth
The Cabinet Secretary, Mr T.R. Prasad, the Revenue Secretary, Dr S. Narayan, and the Expenditure Secretary, Mr C.S. Rao, at the Prime Minister's Economic Advisory Council meeting in the Capital on Saturday.
NEW DELHI, July 13
THE Prime Minister, Mr Atal Bihari Vajpayee, has outlined an eight-point economic agenda to achieve "an ambitious GDP growth target of eight per cent during the Tenth Five-Year Plan."
In his opening remarks at the meeting of his Economic Advisory Council, Mr Vajpayee noted that enhanced implementation of policies, speedier economic reforms, employment-oriented growth and re-targeting of subsidies, among others, would help in accelerating the GDP growth to eight per cent and beyond.
"The first and foremost challenge, is that of implementation. Policies and programmes are only as good as their implementation. The priority should therefore be to improve implementation capabilities across the board in the Government," he said.
In this context, Mr Vajpayee noted that a comprehensive review of the current regulatory procedures, which impose significant transaction costs and delays on implementation of projects, is under way. Often these are traceable to poor project preparation, appraisal and absence of a system of evaluation of the experience of completed projects to draw lessons for the future. These issues are common to both physical and social infrastructure.
The second challenge, he said, is to further speed up economic reforms so that the country becomes a clear-cut market economy, with the Government withdrawing from production barring a few clearly specified strategic sectors.
"However, the Government must retain and further strengthen its role in policy-making, regulation and facilitation. We need to ensure that regulation of markets is by competent and independent regulatory agencies. These should follow transparent procedures, guided by the Government's clearly articulated policy-objectives," he said.
Thirdly, the Government would have to continue to shoulder dominant, though not exclusive responsibility for physical and social infrastructure. However, the goals of a welfare state will now have to be pursued within a new framework of broadening public-private partnership, he said.
The fourth item on the agenda, he pointed out was that even as we try to speed up growth, it will have to be employment-oriented. In this context, he noted that the Government would endeavour to target 10 million employment opportunities per year.
Mr Vajpayee also noted that higher growth demands higher rate of savings and channelling the savings into productive investments. The fifth agenda would therefore be to remove the imperfections that are plaguing our financial markets. It should be a special endeavour to ensure that the poor and the unorganised sector have access to savings, credit and insurance services.
Another essential element of the poverty alleviation strategy, he said, will have to be reduction and re-targeting of subsidies so that the essential consumption of the poor, including social services is protected, but the overall fiscal deficit is reduced. Barring those who deserve subsidy, a culture should be developed of making all others pay for what they use, he said.
The Prime Minister stated that in the last four years, much attention has been paid to expanding and modernising various aspects of connectivity - both physical and digital. To further widen its commitment to connectivity, the Government will soon launch an initiative for accelerated completion of Railway projects that are both critical and remunerative. If necessary non-budgetary resources for this purpose will be raised, he said.
Lastly, Mr Vajpayee said that the long-term growth strategy should be closely aligned to the strategy on population. The encouraging demographic transition, which has been revealed in the 2001 census, needs to be further accelerated, he said.
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