PM's plainspeaking

Mid-term blues for Eleventh Five Year Plan

Prime Minister Manmohan Singh has done some much-needed plainspeaking on the problems facing the Eleventh Five Year Plan. The biggest hurdle to the Plan realising its objectives is, of course, an external one — the global economic slowdown. This has imposed a constraint on the ambitious 9 per cent growth target set for the Plan period as a whole (2007-12). The Plan’s growth target is unlikely to be realised also because of domestic inadequacies. As Dr Singh has rightly cautioned, “the restoration of high growth should not be taken for granted”. Apart from the telecommunications sector, where despite the telecom ministry’s efforts the sector has done well in terms of growth, in all other infrastructure areas performance is lagging behind Plan potential. Despite high gross savings and investment ratio, poor implementation of projects may be slowing down the growth process. The prime minister’s call for better performance on the infrastructure front could not have come a day sooner. The question is what will the government do to walk the talk. In critical areas like power, roads, railways and urban development, better project delivery is as important as finding money to finance these projects.

If economic growth in the Eleventh Plan period is likely to suffer for all these reasons, the inclusiveness of the growth process is also likely to suffer on account of weak implementation of the United Progressive Alliance government’s well-intentioned flagship programmes. The prime minister did some plainspeaking on that as well. It is not enough to ask for more funds, he said, it is even more important to see how the funds allocated have been spent. For lapses on this score, the Central government alone is not the guilty party. State governments too have to do much more to ensure proper implementation of pro-poor welfare schemes. However, if between themselves the Centre and the states are unable to properly implement programmes like Bharat Nirman, the inclusive dimension to growth will suffer. The prime minister was right to state that if these schemes were not properly implemented then the growth process would not be as inclusive as it was hoped to be. This is a challenge facing India at all levels of government. Unless local and state government institutions, especially in states with higher incidence of poverty, are made more efficient, representative and responsive, higher growth need not automatically translate into more inclusive growth.