Plan panel lists steps to combat 'crony capitalism' | delhi | Hindustan Times
Today in New Delhi, India
Jan 17, 2017-Tuesday
New Delhi
  • Humidity
  • Wind

Plan panel lists steps to combat 'crony capitalism'

delhi Updated: Sep 13, 2012 23:45 IST
Chetan Chauhan
Chetan Chauhan
Hindustan Times
Highlight Story

Admitting that discretionally allocation of natural resources such as coal and spectrum has led to "crony capitalism," the 12th plan document argues for strong measures to combat this. The document is likely to be approved by a meeting to be headed by Prime Minister Manmohan Singh on Saturday.

The Planning Commission's forthcoming document has a section on 'combating crony capitalism,' where it discusses the recent controversies surrounding allocation of natural resources.

"The most important area where a re-thinking of policy was necessary related to allocation of natural resources to private companies for commercial exploitation," the section on combating crony capitalism says.

The Comptroller and Auditor General had estimated a loss of Rs. 1,76,00 crore because of non-applicability of auction mechanism for allocation of coal mines.

Justice (retd) MB Shah panel had estimated a loss of Rs. 35,000 to exchequer because of illegal mining of ores in Goa between 2006-2009.

Justice (retd) Santosh Hedge, former Lokayukta of Karnataka had estimated a loss of Rs. 16,085 crore because of illegal mining between 2006 and 2010.

Referring to recent controversies of allocation of resources such as land, mines, and spectrum, the country's top most plan panel said any such allocation for profit-making commercial activity involves some "implicit rent" if the price at which the transfer takes place in not market determined.

"This feeds the suspicion that "crony capitalism" is at work," the document says.

To change the perception, the panel also said the "weak spot" of discretionary allocation of natural resources has been recognized and the government will shift to "transparent auction".

Auction of 3G telecom spectrum has already happened and the panel expects the coal blocks to be allocated through auction in future with the legislative process to bring the change being over.

"It can be said that the policy environment for the 12th plan will be much more transparent," the plan document says.

This is one of the several reform measures the plan panel has suggested in the 12th plan to achieve the average economic growth target of 8.2% between 2012-17, the plan period.

"We have to take lot of quick corrective steps, not only in short-term but also in the medium term," Ahluwalia said, when asked about the growth prospects in the 12th plan.

"It can happen and we have set up a reasonable target of growth of 8.2 % for the period".

Key concerns
Opening of foreign direct investment in multi-brand retail should be allowed soon
Tax-changes introduced in the budget are anti-investor and need to be allayed quickly
Reduce subsidies as percentage of the GDP
Reduce number of Central government scheme and focus on outcome than expenditure.