The Hindu Business Line : Congress vision document promises higher growth

The party commits itself to the implementation of a comprehensive rural employment guarantee scheme in a phased manner, besides launching a major national programme for urban renewal and infrastructure development to create large-scale employment opportunities.

Senior Congress party leaders Dr Manmohan Singh, Mr Pranab Mukherjee and Mr Jairam Ramesh, releasing the Congress Agenda for Economic Growth at the All-India Congress Committee headquarters in the Capital on Wednesday. — Kamal Narang

New Delhi , April 7

THE Congress party today promised to set in motion a process to step up the country's savings and investment rates, both in private and public sectors, and to impart a renewed momentum to ensure 8-10 per cent gross domestic product (GDP) growth over a sustained span, if voted to power.

Releasing its first of the three vision documents titled `Economic Growth — an expanding economy; a just society freedom from hunger and unemployment — the Congress Agenda' here, senior party leaders Dr Manmohan Singh and Mr Pranab Mukherjee said the document brought out clearly the performance of the last Congress Government and matters relating to the management of the economy, social sector and overall growth of the economy during Congress rule and how the party proposed to usher high growth in the next five years.

Dr Singh said: "Despite tall claims of an era of double-digit growth by the BJP-led Government, nobody in the world buys the argument and Moody's latest assessment is that India's trend rate was 6.5 per cent and it was not possible to maintain high growth for a long period without developing the human resources and infrastructure".

He charged the BJP-led Government of "colossal neglect" of agriculture, poverty, unemployment, illiteracy and universal coverage of public health. Dr Singh said the time had not come to dismantle the minimum support price mechanism and instead widen the horizon to include new value-added crops so as to generate adequate incentive to invest in the farm sector.

Asked about the Congress stand on dwindling interest rates on PPF and EPF and for other savings, Dr Singh said: "We believe that the BJP Government has mishandled the interest rate and the UTI fiasco has hurt millions of savers and interest rates need to be adjusted to give incentives to save".

He said the party did not believe in "hire and fire" labour policy and promised a flexible labour policy after duly instituting adequate social safety net for employees threatened with job losses.

Dr Singh said the BJP Government had not put the bulging foreign exchange reserves to productive use and said domestic companies should be extended foreign currency loans for expansion and modernisation so that their access to foreign currency loans would be minimised and investment in the economy enhanced.

Giving a gist of macroeconomic parameters during Congress rule, Dr Singh said the gross domestic savings rate reached a peak of 25.1 per cent of GDP in 1995-96 and since then this had skidded. Gross capital formation reached a peak of 26.5 per cent of GDP in 1995-96. In 2001-02, it declined to 22.4 per cent.

He said capital formation in the private corporate sector fell from the peak of 9.6 per cent of GDP in 1995-96 to 4.8 per cent in 2001-02, while that in the public sector fell from 7.7 per cent of GDP in 1995-96 to 6.3 per cent in 2001-02.

Hence, the Congress party would revive the past capacity to grow at eight per cent, not just for two quarters of a year which is touted as "the eighth wonder of the world" but for a long period, besides restoring the full growth potential to the farm and industrial sector, the two pillars for providing sustained and sustainable employment, Mr Mukherjee said in reply to a question.

The 24-page document said the Congress pledged to accord the highest priority to meeting the investment needs of sustained agricultural growth at the annual rate of 4.5 per cent and plan allocations in agriculture must be raised substantially. It said subsidies had to be targeted but hikes in user charges must be linked to improvement in delivery.

The document said for raising the rate of growth to 10 per cent a year, the rate of investment had to be raised to about 35 per cent, "not at all improbable in India with rejuvenation in the capital markets". The financial sector comprising banking, insurance, debt and equity markets would need to be greatly strengthened to foster a milieu conducive to the growth of savings in the form of financial assets.

"There will have to be well-designed regulatory mechanism, to control the growth of monopoly through mergers and acquisitions, to regulate the prices of the non-competitive markets and to ensure competition in specific markets, including banking, insurance and telecommunications", it said.

Promising a strong public-private partnership in promoting development and infrastructure activity, it assures a new form of development rebate in corporate taxes if private companies promote ancillarisation, employ more labour per unit of capital, set up business in backward regions or educational facilities or expand public health facilities or extend rural infrastructure such as roads and water supply.

The party would restore the fiscal discipline mainly by minimising the revenue deficit and by strictly disciplining capital expenditure. For this, revenue realisation would increase and the Government would aim at raising the tax GDP ratio at the Centre to at least 12 per cent consistent with its record of the early 1980s. A coordinated Centre-State effort would be made to eliminate revenue deficits by 2007-08, it said.