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Act on the Plan

The country is just about hitting the 8 per cent GDP growth path, and to accelerate one percentage point in a year is not easy.

india Updated: Oct 23, 2006 12:31 IST

Prime Minister Manmohan Singh has set an annual GDP  growth target of 9 per cent for the Eleventh Five-Year Plan from 2007 to 2012 and for once, the Planning Commission seems to be on relatively realistic ground, though there is a long way to go. The country is just about hitting the 8 per cent GDP growth path, and to accelerate one percentage point in a year is not easy. Mr Singh has called for a 10 per cent rate in the last two years of the Plan, which reminds one of the slog overs of a one-day cricket match. Noble intentions these, but realism does run deeper than before in Yojana Bhavan. The planners agreed last week that budgetary support, higher by 2.5 per cent of the GDP from current levels, would be needed. For this, the government needs to boost tax collections and prune non-Plan expenditure (in effect checking subsidies and public sector wage bills). Shorn of jargon, that means dealing with politically sensitive labour and farm lobbies.

The UPA may be constrained by its Leftist allies, but we can take heart from the fact that the Planning Commission is led by the PM’s chosen man, Montek Singh Ahluwalia, whose role as deputy chairman to Mr Singh hearkens to the days in the early Nineties, when Mr Ahluwalia was economic affairs secretary and Mr Singh the finance minister. Having seen tougher days, the two may yet walk their talk. Mr Ahluwalia, a former World Bank economist, is visibly pro-change and stresses equally on infrastructure and fiscal prudence. That should be good for growth. China’s 10 per cent growth remains a wake-up call for India. Constraints like global oil prices and political pressures should not stall the government.

The Eleventh Plan’s aim to double the agricultural growth rate to 4 per cent is recognition of the sector’s importance and also politically sagacious because of the rural connection. Two decades ago, Mr Singh quit the job that Mr Ahluwalia now holds, allegedly after the then Prime Minister Rajiv Gandhi called the Planning Commission members “a bunch of jokers”. As the Eleventh Plan draws near, that should provide both humour and sobriety for the government to get down to the details of what must be done.