Soundings on the Tenth Plan

MARKETS MIGHT BE the growing reality of the Indian economy but the process of planning will endure. This is not only the dictate of a development paradigm which seeks to come to grips with pervasive poverty and deprivation but an imperative flowing from a decade of liberalisation which has shown that public investment continues to be a critical variable in the nation's economic health.

In setting its sights on the Tenth Five Year Plan, the Planning Commission has inevitably to draw upon the heterogeneous experience with the Ninth Plan which would officially terminate on March 31, 2002. Broadly, the economy has been put over the years on a fairly high growth trajectory with an annual GDP growth rate of 6.5 per cent becoming a viable average. Whether the dividends of higher economic growth have made for a marked decline in poverty, particularly in the rural areas, would continue to be debated. While being willing to go along with the finding of the National Sample Survey Organisation (NSSO) that the poverty level has declined to 26.1 per cent in 1999-2000, from 36.0 per cent in 1993-94, the Planning Commission has now conceded that in addition to the officially recognised population below the poverty line, there is at least another 25 per cent of the population ``who consider themselves poor and deserving of Government help''. Which brings to the fore the continuing need to put the focus of planning on the alleviation of poverty not as a trickle-down benefit but as a central plank of public policy.

At the threshold level, what seems to dominate attention as regards the Tenth Plan, is the growth rate which it should pitch for. The Planning Commission, in its Approach Paper, has indicated that the Plan should aim at an 8 per cent growth for 2002-07 as being technically feasible even if it would call for ``radical departure from present practices'' - a vague allusion to the many unfulfilled items on the reforms agenda.

It is a truism that acceleration of GDP growth rate from an average 6.5 per cent to 8.0 per cent a year would call for a combination of increased investment and enhanced efficiency (through the reduction of Incremental Capital-Output Ratio). That, apart from domestic savings which will finance the new investments, reliance will have to be placed on foreign investments to cover less than 5 per cent of the total new investments would indicate that, with all the reforms which have already been put through, FDI is least likely to emerge as a key factor unlike as in China.

In formulating the Tenth Plan, the Planning Commission would need to address the disconcerting reality that economic liberalisation has set in motion new forces which have aggravated disparities among different States. But the question is how the process of planning itself (instead of governance) can supply the corrective for an emerging, more sharply-divided development scenario.

If the economic trends in recent years have accentuated the low employment-intensity of new investments, the country is today confronted with a new challenge of matching the emerging cadres of skilled labour with opportunities for gainful employment. The ascent of the New Economy along with the rapid expansion of an IT-enabled services sector could well be the answer subject only to the caveat that global standards of efficiency would be the bottomline.

Surprising though it would seem, the Tenth Plan should be strongly agriculture-oriented. Not only would farming and allied activities constitute the livelihood for around 65 per cent of the population, but India's true economic potential would be harnessed only through increasing diversification and commercialisation of agriculture. Which again would mean that the strategy for the Tenth Plan must be derived from a process of nation-wide consultation rather than from the top echelons of an urban-minded bureaucracy.

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