The Hindu Business Line : ‘Raising Plan expenditure while curbing subsidies is the key’

New Delhi, Nov 7 The Planning Commission is pinning its hopes on the expansion of investment for funding its inclusive growth strategies mostly on private sector as savings and investment prospects of India’s private sector have been “extremely good”.

Talking to Business Line on the eve of the full meeting of the Planning Commission to be presided over by the Prime Minister, Dr Manmohan Singh, here on Thursday, the Plan panel Deputy Chairman, Mr Montek Singh Ahluwalia, said that as far as public sector is concerned, the growth of revenue has been excellent.

“The name of the game is how can we augment Plan expenditure and contain subsidies?” He said the numbers that have been used in the Plan projections are based on various Working Groups which give “a healthy growth in Plan resources as a percentage of gross domestic product and that is what you would expect in a rapidly growing economy”.

About investment requirements for the Plan, he said “there is a big proposed increase in infrastructure. But it is an expansion of public investment; instead of budget support which goes down, public sector enterprises in infrastructure will raise their own resources and will borrow so that public investment will increase. As for private sector, we hope that the strategy of public-private partnerships (PPP) will yield to an expansion”.

In response to a query about outlays versus outcome, Mr Ahluwalia said that “we have identified 27 national monitorable targets and there are 13 targets that are State-specific. Programmes will emphasise monitorable mandate so that the Plan is not just talking about 9 per cent growth. Inclusiveness is reflected in the details of the target”.

These State-specific targets cover agricultural growth rate, literacy rate, infant mortality rate, maternal mortality rate, total fertility rate, sex ratio and poverty ratio among others. The 27 national targets include income and poverty, education, health, women and children, infrastructure and investment.

Monetary policy impact

Asked whether the recent hike in cash reserve ratio (CRR) by the central bank in its monetary policy review would have any choking impact on industry and growth impulses, Mr Ahluwalia said that “it is wrong to interpret short-term management in any economy. We are talking about five-year horizon. I don’t think anything that is being done leads to choking of growth over the medium term.”

When his attention was drawn to the recent flare-up of crude oil prices in the global market and whether this has been factored in Plan calculations, Mr Ahluwalia conceded that this has not been factored in.

However, he hastens to add, “we are drawing attention to the fact that there are risks in the system — high oil prices. We don’t know how far they will remain high or they may come down. We have factored in crude prices hovering in the range of $70 to $80 per barrel roughly and if it goes above that, the real pressure point is whether we pass it on or not. If we don’t pass it on, there will be huge burden of hidden subsidy”. But Mr Ahluwalia said that this is a short-term phenomenon and is not of a major concern now.

He said that once the Chairman of the Plan Panel, Dr Singh, sets the broad contours of the programme at Thursday’s meeting after interacting with all members of the Planning Commission, including ex-officio members who are the key ministers in the Union Cabinet, the meeting might give its nod to the document.

Then this will go to the Union Cabinet and subsequently be placed at the National Development Council (NDC) sometime next month, he added.

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