Our Bureau

New Delhi, April 5

THE Prime Minister, Dr Manmohan Singh, on Tuesday said that despite several positive features in the economy, there were also signs that it was not on track to achieve many of the important targets of the Tenth Five Year Plan.

Addressing a meeting of the Planning Commission here to discuss the mid-term review of the Tenth Plan, the Prime Minister said a comprehensive picture of the performance of the economy as a whole and of the state of play in each of the sectors was now available. "It appears that even with optimistic projections about the next two years, the average growth rate in the Tenth Plan period is not likely to cross the seven-per cent mark, well below the target of 8.1 per cent per annum. Employment generation is also unsatisfactory so far. The cornerstone of the Plan had been a reversal of the declining trend in the growth rate of agriculture to eventually to take it above four per cent. The actual performance of agriculture appears to have deteriorated even further and will possibly not exceed 1.5 per cent during the first three years of the Plan."

Expressing concern, especially about agriculture, he said this had wide ranging implications for other important economic variables as well. Growth of employment and reduction in poverty were both intimately linked to growth performance, especially in agriculture, he added.

Dr Singh pointed out that the mid-term appraisal had also drawn attention to the fact that meeting the many commitments of the Government would involve substantial public expenditure in social sectors, rural infrastructure and infrastructure in general. Availability of these resources was dependent on stepping up the growth rate substantially.

"As Government's priorities and expenditure patterns shift towards social and rural infrastructure, such growth will not take place without a substantial increase in private investment. This will have to be not only in commercial activities but also in physical infrastructure. To enable this to happen, the policy and procedural environment must be made considerably more welcoming towards private investment; and, the Government will have to offer more incentives to the private sector. The review document brings out possibilities that exist for public-private partnership and the required policy changes,'' the Prime Minister said.

Calling for a new focus in planning, Dr Singh said most of the priority areas of Government were in sectors which were the primary responsibility of States agriculture, irrigation, health, education, etc. Infrastructure areas traditionally seen as responsibilities of the Centre such as power, ports, airports and even national highways were gradually seeing increased private participation. "This calls for a new focus in planning. The Planning Commission should ensure that all aspects of our policies are conducive to encouraging the private sector in infrastructure development. At the same time, there is a concern that issues relating to marginalised sections may be given a lower priority at the State level."

Touching upon another point, Dr Singh said while the benefits of a five-year planning process were apparent, it was not sufficient in a world driven by rapid technological change leading to rapid changes in consumer demand patterns and production opportunities. "Is five years a sufficient time span for taking a long-term view on infrastructure development? Most of the creative discussions in a budget exercise focus on Plan expenditure. If so, is it essential to wait for five-year intervals to re-engage in a planning effort? Or can we do this on an annual basis for certain areas and on a longer basis for others? This is especially relevant as we now present medium term forecasts for the budget," he said.

The Prime Minister emphasised that "as a country, we have to learn to walk on two legs, one embracing processes of high growth and the other addressing the issue of redistribution and balanced development. The former is essential to generate the resources for the latter."

(This article was published in the Business Line print edition dated April 6, 2005)
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