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Journalism of Courage
DEC 15: An ongoing study by the Planning Commission has revealed that 8-9 per cent growth is not possible in the prevailing scenario in the economy.
quot;An ongoing study by the Commission shows that a major requirement to register a nine per cent economic growth is a savings-investment rate of 38-40 per cent which is well above the present rate of about 24 per cent,quot; S P Gupta, Member, Planning Commission, said here.
Speaking at a seminar on quot;Implications of the removal of quantitative restrictions,quot; he said in the 1994-98 period the country had registered a seven per cent growth with an investment rate of 24 per cent coupled with a rise in exports by 20 per cent.
He said the public savings had increased by 10-12 per cent in 1999-2000 after a negative growth of three per cent in the previous year.
However, this was not sufficient for a high rate of economic growth, he added. Gupta stressed on a labour intensive approach to increase employment and consequently public savings, investment and economic growth.
He said while labour supply was rising at a rate of 2.4 per cent, employment growth rate was 1.1 per cent resulting in making it imperative to adopt a labour intensive strategy.
Agriculture and small and medium enterprises SMEs which were highly labour intensive were also the most vulnerable to the removal of QRs, he added.
Gupta said with the removal of QRs, share of products from which they are lifted would rise to around 8.7 per cent of the total imports.
There would be an overall increase in imports by about three per cent.
He said an adequate duty structure should be in place to deal with the situation. The country has the right to increase its tariff rates to appropriate levels wherever the unbound or the bound rates are higher than the applied levels, he said.
Out of the 714 items on which QRs were lifted in April this year, 346 products were unbound and tariff on these could be increased to any required level.
For another 345 products applied rates were much below the bound rates, and could be increased further till the bound rates were increased.
Of the 715 products which will be freed in 2001, 440 were unbounded and another 117 products had bound rates greater than or equal to 100 per cent.
In 1211 out of the 1429 tariff lines, India had the freedom to increase the applied tariffs, he said.
He said though under the World Trade Organisation WTO regime duties too had to be brought down, this should be done as per schedule and not earlier.
Gupta felt the subsidies which were permissible under the WTO regime should be taken advantage of.
He said QRs would be lifted from 152 agro-products next year of which 24 were unbound, 116 had bound rates greater than or equal to 100 per cent giving enough leverage to the government.
