The Planning Commission will push for an aggressive strategy to slash subsidies and raise moneys through big-ticket disinvestment to make good for a resource shortfall of a humongous Rs 1,60,000 crore over the remaining two-and-a-half years of the Eleventh Five Year Plan (2007-08 to 2011-12). In an internal assessment of the economy to be presented to Prime Minister Manmohan Singh,who also chairs the Plan panel,on Tuesday,Deputy Chairman Montek Singh Ahluwalia will make a strong pitch for direct cash transfers in lieu of subsidies to targeted beneficiaries. This will help plug leakages and make savings on the governments non-Plan expenditure. Besides this,he will push for shoring up resources by stake sale in public sector undertakings. According to a Planning Commission member who did not wish to be quoted,the Plan panel has estimated the gross domestic product (GDP) to grow 6.3 per cent in 2009-10. Implicit in the low estimate is a decline in agricultural growth because of poor south west monsoons and the adverse impact of drought. The farm sector is likely to decelerate by 2.5 per cent this year,powering down the economy. The 6.3 per cent growth rate,though seen as low given the blistering 9 per cent growth rate in the recent past,will nevertheless be better than most other countries whose economies are estimated to shrink this year. Though India has weathered the global slowdown well,the drought this year has resulted in a temporary setback. A normal monsoon next year and continued recovery in the non-farm sector will most likely take the economy back to a growth rate of 8 per cent. In the last year of the Plan i.e. 2011-12,the GDP growth rate will reach the target of 9 per cent,the Plan panel has estimated. This will mean that the average growth rate during the Eleventh Plan will still be 7.8 per cent. Ahluwalia will seek a return to a fiscally sustainable path to restore confidence for higher capital inflows (both FII and FDI) into the country. Acknowledging that the pace of infrastructure investment is still short of target,he will push for prioritising funds for social and physical infrastructure and also for more public private partnerships including in sectors such as health and education. The Planning Commission reckons that despite the increase in the resources for Central sector schemes,there has been no commensurate increase in the efficiency of its usage. Much of this must come from state governments that are responsible for administering the Centrally Sponsored Schemes. The Plan panel too will undertake a thorough review of the governments 15 flagship schemes in its mid-term appraisal scheduled by December this year.
