The day Planning Commission Deputy Chairperson Montek Singh Ahluwalia said the growth could be as low as seven per cent, a plan to usher more public money into key infrastructure sectors like road, real estate and irrigation was unveiled.
The commission will submit a report to Prime Minister Manmohan Singh in the first week of December recommending higher influx of public funds in infrastructure projects through public private partnership (PPP) mode.
“We have identified the sectors where public expenditure can be expanded so that lack of finance due to economic meltdown does not create development difficulties,” said Subhas Pani, planning secretary, who is a member of a high-level committee to recommend higher government finances for infrastructure sector.
It would mean putting higher government participation in PPP projects, Pani said, while refusing to divulge the amount of money the government was willing to invest in the infrastructure sector.
The commission believes that global economic meltdown leading to slowing down of private investment can adversely impact India’s infrastructure project, which are not progressing at the anticipated pace. About 80 major highway projects are running behind schedule and targets on rural housing and irrigation are unlikely to be met.
“We are heading for major expansion in infrastructure in private and public sector,” said Ahluwalia. “We have to take
measures to prevent impact of global economic meltdown on them.”
On the growth front, Ahluwalia said they were planning for 7 per cent economic growth rate in the current fiscal. He said the fall in the growth rate as interruption that may get corrected in the latter half of next year. “At this stage, we are not revising our growth target of nine per cent of the 11th plan,” he said.
He also hoped that inflation, which came down to 8.9 per cent, would decline further giving the Reserve Bank of India a leeway to go for softening interest rates to spur growth. “Inflation would come down further. This gives us greater flexibility in monetary policy. Infusion of liquidity would ease interest rates," he said.