The Hindu Business Line : Kerala differs with approach paper

The Kerala State Planning Board has expressed serious reservations on a number of specific points contained in the approach paper to Eleventh Plan put out by the Planning Commission.

A background note prepared by Dr Prabhat Patnaik, Vice-Chairman of the board, at the outset differs with the approach paper's basic emphasis on the acceleration of growth rate, which is supposed to reduce poverty and unemployment.

The note argues that "this presumption is untenable" and it is not the magnitude of the growth rate but the nature of it that is crucial for poverty and unemployment. It points out that despite the nineties having witnessed acceleration in growth rate, as much as 74.5 per cent of the rural population was poor by 1999-2000. The corresponding figure in 1973-74 was 56.4 per cent, which shows that rural poverty, as defined by the Union Government itself, has increased in spite of the significant acceleration in growth rate.

The magnitude of poverty is linked essentially to unemployment. If growth remains "jobless", then no amount of acceleration in growth would ever reduce poverty.

There is no evidence for the Planning Commission's presumption that the growth of labour demand will increase with growth of GDP, especially in the manufacturing sector.

The elasticity of employment with respect to output does not appear to remain constant.

"On the contrary, it declines as the growth rate increases", says the note.

The decline is so sharp that 12 per cent growth rate in manufacturing has been accompanied by an employment elasticity of 0.08, which implies a mere one per cent growth in employment. So, the emphasis on the magnitude of growth is misplaced.

`CONCEPTUAL LACUNA'

Also, there is a "serious conceptual lacuna" in the approach paper's presumption that an increase in the agricultural growth rate to four per cent will have a significant impact on rural unemployment and poverty. The problem with Indian economy of late should not be seen just as the stagnation of agriculture but as stagnation of "peasant agriculture".

On the approach paper's endorsement of corporate agriculture and contract farming, the note says that the problem is not merely one of increasing agricultural growth, but of protecting and promoting peasant agriculture. In that sense, promoting corporate agriculture and contract farming will have an adverse impact on peasantry.

There is no justification provided for the approach paper's case for `public-private participation' (PPP) as a strategy of development. It makes no theoretical sense to argue that PPP is needed "as the government does not have enough resources."

Also, it has to be established that privately run units are managed better and have greater efficiency. The fact is that even when public enterprises have had financial resources, they have been encouraged to take the PPP route as in the case of the freight-corridor project of the Railways, says the note.

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