The Hindu Business Line : Aim to prune wasteful programmes: PM

Let's be prudent: The Union Finance Minister, Mr P Chidambaram, with the Economic Advisor to the Prime Minister, Dr C. Rangarajan (left), and the RBI Governor, Dr Y.V. Reddy, at the NDC meeting. - Kamal Narang

New Delhi , Dec. 9

The Prime Minister, Dr Manmohan Singh, today asserted that the ability of the economy to step up public investment would depend upon "containment of open and hidden subsidies, revenue buoyancy, pruning ongoing programmes that are not very useful and successful implementation of public-private partnership on a large scale in infrastructure."

Addressing the 52nd National Development Council (NDC) meeting to take on board the concurrence of the State Chief Ministers on the Approach Paper to the Eleventh Five-Year Plan (2007-12), the Prime Minister, as Chairman of the Plan panel, said that even as the budgetary support of the Centre and States combined would be 2.5 percentage points of GDP higher than in the Tenth Plan, this was perhaps the smallest increase that would accommodate "the ambitious agenda for public investment in agriculture, infrastructure and the social sector."

While the effort to prune wasteful programmes would be ongoing, he said the Centre's resources would be stretched in the immediate future in undertaking massive public investment. Hence "an increasing share of the responsibility will have to be shouldered by the States," Dr Singh noted.

"Higher levels of public spending are needed in many areas but they should be achieved through improvements in revenue mobilisation and greater efficiency in expenditure," Dr Singh said, adding "we must ensure that this level of budgetary support does not come at the cost of fiscal prudence and stability."

Later, the NDC gave its broad endorsement to the Approach Paper setting out an average 9 per cent GDP growth beginning from fiscal 2007.

FM's assurance

In his interventions, the Finance Minister, Mr P. Chidambaram, said that the Centre would make all possible efforts to maintain revenues as well as non-debt capital receipts. "While doing so, we should observe fiscal prudence and create enough fiscal space to meet the legitimate needs of financing the Plan," he said.

Referring to the Prime Minister's remarks about the need for a strong and innovative financial sector in mobilising resources, the Finance Minster sought the backing of Chief Ministers for the early passage of pension, banking and insurance Bills. He also voiced concern over current inflation and held out the assurance that efforts would be made to bring it down.