Use forex reserves for infrastructure: Ahluwalia

Ahluwalia said that using forex reserves could push up imports, raise the deficit and make for changes in the Fiscal Responsibility and Budget Management (FRBM) Act. But if handled transparently, each of the outcomes were manageable and would result in improvements in infrastructure.

‘‘The government can seek Parliament’s nod for deficit financing as a means to raise funds for infrastructure projects and then monetise the deficit,’’ he said.

A fall in the rupee’s value could be prevented by exchange rate management, he said, adding that a transparent way of operationalising this process could be in place by Budget 2005-06.

Even so, higher growth rates will come only during the Eleventh Plan period, the Planning Commission deputy chairman said, adding that the mid-term appraisal of the current plan is likely to end in December.

The Commission expects future economic growth to hinge upon investments in social infrastructure areas such as health, education and farming. To grow in some of these areas, the weaker states will depend on central resources.

Economic growth will continue at 6 to 6.5 per cent until 2004-05, to take up new positions only during the latter half of the Fifth Plan. Lower than expected pick-up in growth has defered expectations of growing at 7-8 per cent until after the next fiscal, he said.