The Hindu Business Line : `Mid-term appraisal document to be ready soon'

THE Planning Commission intends to convene a full meeting of its members presided over by the Prime Minister, who is its Chairman, during the Parliament recess early next month to consider the Mid-Term Appraisal (MTA) document, according to the Deputy Chairman, Planning Commission, Mr Montek Singh Ahluwalia.

Talking to Business Line here, Mr Ahluwalia said, "The mid-term appraisal will bring out what we think are critical policy correctives needed at this stage, even as some of these have already been identified and built into policy both in last year as also this year's Budget as far as expenditures are concerned."

However, he said, there are other policy-related issues, which should be brought to the surface, and the MTA becomes "an occasion to raise those issues and hopefully during the Governmental process, some further action can take place." Mr Ahluwalia said the MTA would provide a comprehensive listing of whatever additional policy is needed in each of the major sectors other than the expenditure part, which is already there in the Budget.

When asked about the growth projections of the Tenth Plan not materialising till now, with the average growth rate hovering around six per cent per year, he said, "Today, people take six per cent growth for granted. This is a good thing, as it puts pressure on the system to generate more growth. The Finance Minister has projected seven per cent growth next fiscal and that is achievable."

He said the 2005-06 Budget sets the groundwork. "Many other things have to happen and that is the job of policy-making and policy implementation," he said, adding that the National Common Minimum Programme talks about seven to eight per cent growth and "we can touch eight per cent growth after 2005-06."

To a query about gross budgetary support (GBS) in the next fiscal not showing any substantial increase as compared to the current fiscal, Mr Ahluwalia said that the GBS in the Plan consists of the money "we give to the ministries and what we give to the States; and what we give to the States traditionally has been a combination of loan and grant and the proportion varies depending on which window you are using." He said, "we have made the allocations on the whole system indicating the loan-grant component" for the next fiscal.

The Twelfth Finance Commission (TFC) has said that there is no need for the Central Government to borrow from the market and then on-lend it to the States and "you might as well allow the States to borrow directly." That is why the Finance Minister has given the States the option. "If the States do not want the loan component from the Government and they want permission to borrow from the bank directly, they will be free do so," he said, adding that the Finance Minister is obviously presuming that all the States would utilise this opportunity. If they do, the estimated loan component would be about Rs 29,000 crore and, to this extent, the Centre will not borrow but the State governments will do so. He said that since the TFC has said that this is better, "we are assuming that all the States will exercise this option."

In response to a query about the TFC's suggestion of terminating the Fiscal Reform Facility extended to the States, Mr Ahluwalia said, "There are many plan transfers, which have their own conditionality of performance, which the States have to observe." The Finance Minister, he said, rightly pointed out that there is too much focus on Budget discussions on outlays than on the outcome and the Planning Commission entirely agreed with him. "Having got the outlays that it sought, the Planning Commission should now do more to ensure that the outcome does materialise," Mr Ahluwalia quipped.

This would require, he said, a lot of monitoring of schemes and feedbacks so as to redesign the schemes that are not working. "We will work closely with the Finance Ministry to see that we can devise a system to weed out inefficient expenditures and to some extent, change the system to improve the efficiency of existing expenditures and that is a big task," Mr Ahluwalia said.

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