The Hindu Business Line : `4% farm growth is a key element of strategy for inclusive growth'

Inclusive growth is a fundamental component of our strategy. Focussing on agriculture is one aspect of inclusiveness as it will address the rural-urban divide. — MR MONTEK SINGH AHLUWALIA, DEPUTY CHAIRMAN, PLANNING COMMISSION

Mr Montek Singh Ahluwalia

The full-meeting of the Planning Commission is being convened in the Capital today (Monday) to focus on the important issue of agriculture which provides livelihood to nearly 60 per cent of the population and continues to be vital for food security. The UPA Government, headed by the Prime Minister, Dr Manmohan Singh, is fully alive to the significance of the farm sector and little wonder that the focus of the Eleventh Plan is on putting agriculture on a growth path of around 4 per cent per annum, against the less than 2 per cent averaged in the Tenth. Transcending this issue and to get a perspective on the other concerns in the economy as also the policy correctives required to ensure a high, inclusive growth, Business Line interacted with Mr Montek Singh Ahluwalia, Deputy Chairman, Planning Commission. Urbane and articulate Mr Ahluwalia responded with his characteristic brevity and clarity on such important issues as agriculture, infrastructure and sound regulatory regimes for embedding the concept of Public-Private Partnerships (PPP) in diverse activities to infuse efficiency in the economy and bring down the high cost of the economy.

Excepts from the interview:

The Eleventh EleventhPlan has begun, but when would the final Plan document be ready so that different stakeholders get their act together to supplement and complement development strategies set out for the Plan?

The Approach to the Eleventh Plan was approved last year and it sets out the broad directions we intend to follow. The Annual Plan for 2007-08, which is the first year of the Eleventh Plan, already reflects these directions. The full Plan document should be completed in a few months and approved later in the year. This will be well in time for working out the detailed Annual Plan for the next fiscal.

With inflation emerging a major concern, will the Plan panel still press for higher expenditure to consolidate the National Common Minimum Programmes or rest content with ensuring growth without the underlying inflationary expectations?

Inflation has been a problem, but we have taken corrective measures and the rate is coming down. I am confident that inflation will be back within tolerable limits well before the Eleventh Plan is submitted for approval. I would like to point out that Plan expenditure is only one part of the total expenditure, and we should not directly link Plan expenditure to inflation. I think we can finance a reasonable Plan within the constraints of responsible macro management, without accelerating inflation. Rapid growth in the economy combined with improved tax administration, as witnessed in the past few years, will give us more tax revenues to finance higher expenditure.

What is the status of infrastructure development on which the Plan panel has been focusing for long? Is the paper on regulatory agencies in different segments of infrastructure ready or is the Plan panel still preparing it?

The infrastructure programme has made a good start though I wish we were doing even more. As you know, we have ambitious plans for expansion and quality improvement in all the major infrastructure sectors — roads, ports, railways, airports, power and telecommunication.

We hope to see a big increase in total investment in these sectors as a percentage of GDP — from just less than 5 per cent to over 8 per cent during the Eleventh Plan period. Some of the increase will come from additional public investment, but much of it will have to come from PPPs. It has taken time to get the policy framework and good PPPs in place, and I hope we will see results in the next three years. The response to PPPs is very good in some sectors.

Since agriculture holds the key to the overall development of the country, what strategy is the Plan panel studying to revitalise this sector and ensure that marginal farmers do not lose out as market forces dominate the economy?

This is one of the most important aspects of the Eleventh Plan. We are targeting a doubling of the rate of growth of agriculture from less than 2 per cent per annum to around 4 per cent as a key element in the strategy for inclusive growth.

This poses many challenges: How to expand irrigation and improve irrigation management, how to deal with problems of rainfed areas, how to close the knowledge gap which prevents farmers from realising yields that are feasible with available technology, how to move to rational application of fertilisers, and so on. There are many other problems also, especially how to cater to the needs of agricultural diversification and the associated need for modern marketing, cold chains, and private sector linkages. We need a strategy that can encompass action on all these issues, in a manner that small farmers receive due attention. These issues are to be discussed at the NDC (National Development Council) meeting on May 29, and I hope that a clear direction will emerge at the end of the NDC discussion.

Please elaborate on how far the Eleventh Plan proposes to take on board the oft-repeated slogan of inclusive economic growth about which every one in the UPA Government swears by.

Inclusive growth is a fundamental component of our strategy. Focussing on agriculture is one aspect of inclusiveness as it will address the rural-urban divide. The focus on health and education — which is a major new element of the Eleventh Plan — is also critical for inclusiveness. Education, in particular, is the greatest equaliser.

I believe our focus on infrastructure will also spread competitiveness. It will enable the small and medium enterprises reduce costs and flourish in a competitive globalising world. That is how we expect to get double-digit growth in manufacturing in a manner that will accelerate the growth of employment in the organised sector.

Is it true that the Plan panel and the Ministry of Finance are rooting for some sort of parliamentary scrutiny for the Competition Commission so that the latter does not emerge a super regulator? What is your thinking on this important issue that would ensure the impartiality and dispassionate nature of such a quasi-judicial body?

This involves a larger issue, which relates to all regulatory agencies. We were asked for our views on whether there should be a Parliamentary Standing Committee overseeing the various statutory regulatory agencies and our view is that this will be a good idea. Such oversight will not reduce the independence of regulators, but only make them accountable.

At present each Ministry has a Standing Committee but the regulatory agency in that area does not interact directly with Committee. As the regulators are meant to be independent of Ministries, it is not appropriate for Parliamentary oversight to be through the Ministry. It would be better for Parliament to look at and comment on the work of the regulatory agencies, taking a cross- sectoral view, but also recognising the statutory independence of their functions.

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