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Planning the work, working the Plan

india Updated: Dec 21, 2007 21:08 IST

Hindustan Times
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The Prime Minister’s speech this week to the National Development Council (NDC) reminded one of an old saying: the more it changes, the more it remains the same. But that may be a cynic’s reading. India has come a long way from the days of the Nehruvian command economy, and the Planning Commission is more of a direction setter than a micro-planner, and its expanded version, the NDC, is increasingly a forum to sell free-market ideas. However, there is no wishing away the fact that the public sector and the government continue to be critical for the economy, even if they have been less emphasised from the days when they were said to be the ‘commanding heights’ of the economy. Manmohan Singh’s assertion that India was concerned about the US subprime loan crisis and the impact it could have on the domestic economy was testimony to the new linkages that have come into the system as a result of globalisation. But there is the other India which remains vulnerable to food prices, while a centuries-old demographic bias towards agriculture has not been corrected significantly. It is not for nothing that the pm spoke of inclusive growth and the need to make the domestic side of the growth engine solid.

Politically, that is a wise thing to say in a nation where about two-thirds of one billion people still live in rural areas. But it reflects some savvy that the same pitch can also be turned around to underline the need to ‘de-risk’ the economy from global shocks. The real challenge for the government is in trying to boost food output at home, and increase investment in rural and agricultural infrastructure for the same, while at the same time not letting its guard down on fiscal prudence or inflation management.

The speech spoke of a need to control subsidies, red tape and leakages from government-led development programmes, which all sounded as if nothing has changed in the economy since the 1980s. That, however, was accompanied by the confidence that 10 per cent economic growth is an achievable and sustainable proposition.

Where does all that leave us? In simple terms, there is a need to broadbase the domestic economy and inclusiveness in such a context so that it may be seen more as a market-enhancing exercise than a lingering legacy of socialist rhetoric. It is up to the government to ensure that this does not happen at the cost of government spending getting out of hand. It must avoid wasteful expenditure concealed under populist schemes. A 4 per cent growth every year in agriculture is not going to hurt anyone. But the government needs to improve delivery systems in the rural areas for this to become a ground reality. Increased public spending needs administrative solutions, not economic logic, to be truly justifiable. Everything from the Right to Information, enlistment of voluntary agencies and e-governance may be used to create a counter-vailing culture in the monitoring of government spending. While that is put in place, robust growth with an emphasis on geographically well-distributed infrastructure must remain the twin drivers of economic development. Affordable food prices, farm sector development and inclusive growth are not antithetical to growth, but needs effective administration in order that it is not perceived as such.