The Hindu : Scepticism over growth rate

Online edition of India's National Newspaper
Sunday, Dec 22, 2002

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Scepticism over growth rate

By Our Special Correspondent

NEW DELHI DEC. 21. Despite the confidence exuded by the Prime Minister, Atal Behari Vajpayee, about achieving an eight per cent growth during the Tenth Five-Year Plan, most of the Opposition-ruled States participating in the National Development Council (NDC) meeting here today expressed scepticism about attaining the "ambitious" target. However, Tamil Nadu, Andhra Pradesh and some other States felt that the target could be achieved provided economic reforms were carried forward and more avenues of resource mobilisation were available to the States.

Many States also repeated their earlier contention that the current Gadgil-Mukherjee formula guiding the share of resource transfer to the States was weighted against the better performing States and provided more resources to those lagging behind.

The Congress-ruled States, on the other hand, were more vocal about their apprehensions of reaching the high growth target with Karnataka saying that the target could be achieved provided "allocation of resources be based not on the dynamics of coalition politics but on the objective criteria to harness the development potential prevailing in different regions. Politicisation of the allocation decisions in an open economy will only be detrimental to healthy growth," was Karnataka's viewpoint.

West Bengal held the implementing the Fifth Pay Commission award responsible for the poor fiscal health of the States and asked the Centre to address the issue by taking new initiatives to provide debt relief.

Tamil Nadu, while supporting the eight per cent growth rate, pointed out that the second generation reforms in the manufacturing sector and higher capital formation in the agricultural sector were key areas for attaining higher target.

Some States felt that the lower growth rate in the current financial year, estimated at about 5.5 per cent, would put pressure as a nine per cent growth rate would be required in the remaining four years to achieve the Tenth Plan target.

Andhra Pradesh, which is prone to natural calamities, sought immediate financial assistance from the Centre as a relief measure to achieve the economic targets set in the Tenth Plan.

Many States also drew the Centre's attention to the problems which may confront them while implementing the value added tax (VAT) from the next financial year. They asked for 100 per cent Central compensation for the possible revenue loss due to the implementation of VAT.

Jammu and Kashmir said the Rs. 14,500-crore allocation for it was not adequate to achieve a growth rate of 6.3 per cent projected for it and pointed out that the State had to grapple with challenges of an unprecedented magnitude. The issues of security and development were closely inter-linked and inter-dependent, was its viewpoint.

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