The Hindu Business Line : Plan panel to identify projects to raise public expenditure

The Planning Commission is working on identifying existing public work programmes that could be stepped up during the course of the current fiscal, as part of the fiscal measure to increase expenditure to revive activity and demand in the economy, the Plan panel Deputy Chairman, Mr Montek Singh Ahluwalia, said on Tuesday.

Mr Ahluwalia told Business Line that “the Prime Minister has said that we should try to have a contra-cyclical thrust and we in the Planning Commission are looking at what are the programmes which could be stepped up. I have asked the Secretary, Planning Commission, to look at what programmes could be stepped up.”

He further felt that in any system of large expenditure, there are timelines in the sense that “you can’t start expenditure if you have not provided for. We are looking at each programme to see which one could be stepped up and there is scope for such a fiscal stimulus that could involve increasing public expenditure.”

Asked to quantify what would be the outgo on additional expenditure to existing public work programmes by way of stimulus measures,

Mr Ahluwalia said that “in the Budget 2008-09, we had a promise of additional Rs 10,000 crore to Plan size. We are trying to see what would be the area where we can usefully deploy resources and can we go beyond Rs 10,000 crore? In about a week or so, we will have some idea.”

He said that the Planning Commission would come out with “our assessment and share them with the Finance Ministry and hope we can come out with an additional expenditure package” for the economy.

Mr Ahluwalia said the present position is “they (ministries and departments of the government) have enough funds. Right now, they should just spend as much as they can and hope that if they manage to spend the money, we might be able to provide supplementary resources to pep up the economy. But the important thing is they should spend.”

To a query about the economic slowdown and the Plan panel’s assessment of growth rate for the current fiscal, Mr Ahluwalia admitted that “we have not made any continuous review but we have said earlier that it will be slower than last year”.

He said different estimates have been given with the Prime Minister’s Economic Advisory Council estimating it to be 7.5 per cent, while somebody said that it could be lower than 7 per cent.

“I do not think that is important — we are not engaged in making precise forecasts. There are uncertainties about the second half of the fiscal. But there is no doubt that this year’s growth is going to be slower. But it is still going to be very good growth both as compared to others and with our own performance in the past.”

Export front

When his attention was drawn to the likely adverse effect of world economic recession on Indian exports, he said “certainly there will be some impact as part of the slowing down because there would be some impact on exports”.

He said that the various economic ministries have made a comprehensive presentation here on Monday and the Commerce Ministry too, made some proposals to relieve exporters reeling under the demand decline and costly export finance which would all be considered and decisions taken soon.

Forex reserves

On using the foreign exchange reserves for generating activity and effecting a rebound in demand, Mr Ahluwalia said, “I have, in fact, proposed that we should look at this or other ways too. I am not so much interested in the use of foreign exchange reserves. But I do feel that we should step up expenditure in infrastructure-related projects. The use of forex reserves is one mechanism and if people are willing to do through other mechanisms, it is fine.”

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