The Hindu Business Line : Full meeting of Plan panel today

A full meeting of the Planning Commission to approve the revised draft approach paper of the Eleventh Five-Year Plan (2007-12) is scheduled to be held under the chairmanship of the Prime Minister, Dr Manmohan Singh, here on Wednesday.

Sources in the Government told Business Line here that for the first time in the country's planning process, the draft approach paper of the 11th Plan was circulated to the State Chief Ministers, Central Ministries and departments and economists to get the views of the different stakeholders of the economy, even before the draft could be approved by the full meeting of the Plan panel.

The sources said that while the draft approach paper plan referred to the possibility of the economy growing between 8 and 9 per cent per annum on a sustained basis, the latest thinking in the Yojana Bhawan is that it could even grow beyond this. "The 11th Plan will aim at putting the economy at a sustained growth trajectory with a growth rate approaching 10 per cent by the end of its term," sources contend.

The Plan panel maintains that the 11th Plan provides an opportunity to restructure policies to achieve a new vision based on faster, more broad-based and inclusive growth. The sources said that it is designed to reduce poverty and focus on bridging the various divides that continue to disrupt the all-round development of the country.

Stung by rural discontent and agrarian distress and the tepid performance of the agricultural sector, which grew less than two per cent per annum, during the Tenth Plan (2002-07) on an average, the 11th Plan aims at a target of four per cent agriculture growth per annum. The Plan panel concedes that it is not an easy task but it must be accomplished if the inclusive growth strategy is to be meaningful, the sources added.

The sources said that the Plan panel has already raised several points with the Finance Ministry in the run-up to the full meeting of the Plan panel. These considerations are associated with the objective of inclusiveness and others with growth acceleration, which suggests that the size of the 11th Plan taking the Centre, States and public sector undertakings should be significantly larger, as a percentage of GDP, than the realised level in the Tenth Plan, the sources added.

The FRBM issue

Even as the controversy raised in the wake of the Plan panel suggestion for shifting the goalposts under the Fiscal Responsibility and Budget Management (FRBM) Act is still raging with the Finance Ministry's refusal to budge on this score, the Plan panel has told the Finance Ministry that a more serious problem with the FRBM target arose from the requirement that the revenue deficit must be eliminated by 2008-09.

The sources said that most of the Centre's Plan expenditure under various centrally sponsored schemes, especially the new initiatives or the flagship programme of the UPA Government covering rural health mission, education, Jawaharlal Nehru Urban Renewal Mission, is transferred as a grant to the States and therefore shows up as revenue expenditure.

The Plan panel said persisting with this pattern of Plan expenditure might not be consistent with achieving a zero revenue deficit. Hence, it argues that "the imposition of a revenue deficit constraint may create a situation where Plan resources are available to be used for capital expenditure through Central agencies but not for transfer as grants to the State governments or panchayati raj institutions as this would be revenue expenditure."