Focus on reforms: PM to Plancom

Prime Minister Manmohan Singh today asked the Planning Commission to focus on policy reforms, while aiming for an average annual growth of 9-9.5 per cent in the 12th Plan, which starts from the next financial year.

The prime minister’s statements assume significance in the wake of a debate triggered by civil society members over ways to deal with corruption.

“There was general agreement that the Planning Commission should focus on policy and governance reforms, while working towards a growth target of 9-9.5 per cent for the 12th Five-Year Plan,” Singh said at a full Planning Commission meet, called to discuss challenges for the 12th Five-Year Plan.

At a press conference held later, Planning Commission Deputy Chairman Montek Singh Ahluwalia said, “Corruption is a big issue. We think the government systems of procurement and choosing and giving projects have to be streamlined so that corruption is controlled.”

All these issues assume significance, especially in the wake of an open letter by prominent personalities, including former Reserve Bank of India Governor Bimal Jalan and Wipro Chairman Azim Premji, expressing concern over a series of scams that they said pointed towards governance deficit. The letter was written following charges of scams in 2G spectrum allocation and the Commonwealth Games.

At the Plan panel meeting, Finance Minister Pranab Mukherjee suggested that the legal system and methods of dispute resolution also need to be improved. Ahluwalia said the meeting did not discuss any specific proposal in this regard. “But, there were concerns from the finance ministry and they are definitely not related to foreign direct investment,” he said in reply to a query.

As one third of the population was below the poverty line during 2009-10, Singh admitted the progress in inclusive growth left much to be desired. He asked the Planning Commission to aim for higher targets on inclusive growth in the 12th Five-Year Plan, but also acknowledged that resources are a critical constraint for any plan. The prime minister thus asked the Plan panel to work in collaboration with the finance ministry and devise ways to supplement public resources with private funds in such a way that fiscal consolidation targets are not compromised.

The Planning Commission, in a presentation, emphasised the importance of working within the overall target of fiscal consolidation. “This is an important constraint that we must recognise. The Planning Commission and the finance ministry must come up together with a realistic assessment of the Plan size for the Centre and the states,” Singh said.

The Centre aims to bring down fiscal deficit to 4.6 per cent of the gross domestic product this financial year from 5.1 per cent, according to revised estimates for 2010-11.

According to initial estimates by Planning Commission member Abhijeet Sen, the percentage of the population living below the poverty line declined by 5 percentage points to 32 per cent in 2009-10 from 37.20 per cent in 2004-05. This shows 3.11 crore people moved above the poverty line between 2004-05 and 2009-10, as inclusive agenda is yielding results, albeit slowly. In absolute terms, this means the number of people below the poverty line declined from 405.5 million during 2004-05 to 374.4 million people during 2009-10.

“We have made important progress towards our goal of greater inclusiveness...It is true that progress in this area has been less than we had targeted. We must ensure that we do much better in the future,” he said.

The Prime Minister also said the Plan panel must identify critical areas in which existing policies and programmes were not delivering results. These programmes should be strengthened, or if required, restructured, he said. “We should also set monitorable targets related to different dimensions of inclusiveness, and then work to achieve these targets by appropriate designs of policy and funding of Plan schemes,” the prime minister said.

He said the expected average annual growth of 8.2 per cent during the 11th Five-Year Plan was short of the original target of nine per cent. However, it was quite commendable, given the fact that the period saw a severe drought and the global financial slowdown.

The Plan Panel will come out with draft approach paper, which will be discussed with the states. After consultations, the approach paper would then be prepared to be tabled in the Cabinet.