Plan panel says fiscal prudence must to post 9-10% growth

India will have cut oil,food and and fertiliser subsidies and even consider raising their prices to touch 9 per cent growth in the coming years...

Written by Priyadarshi Siddhanta | New Delhi | Published: July 19, 2010 1:15:21 am

India will have cut oil,food and and fertiliser subsidies and even consider raising their prices to touch 9 per cent growth in the coming years and put fiscal consolidation back on track. While the economy will grow 9 per cent in 2011-12,the terminal year of the Eleventh Plan (2007-08 to 2011-12),the average growth rate during the five-year period will be only 8.1 per cent.

In its mid-term appraisal of the Eleventh Plan,the Planning Commission has noted that to pare the fiscal deficit to 4.1 per cent of the GDP by 2012-13,fuel,food and fertiliser subsidies must not exceed the levels of 2009-10. Fiscal correction was crucial for macro-economic credibility and creating room for larger private investment,it said.

Plan panel Deputy Chairman Montek Singh Ahluwalia attributes the lower than targeted growth during the Eleventh Plan to the global economic downturn. “It isn’t possible to evaluate the Eleventh Plan without talking about the global downturn — 2008 and 2009 were depressed years,” he said.

Citing that schemes for promoting inclusiveness were earmarked a total of Rs 1,68,100 crore amounting to 45 per cent of the Centre’s Gross Budgetary Support,the MTA said that rural development,transport and energy received more than the projected money,while health and education received less as their expenditure was limited by the spending capacity in the previous years and was expected to be backloaded.

“I think there is scope for improvement and in the National Development Council (NDC) meeting we would make a separate document on flagship programmes,” Ahluwalia said.

Among the economy’s key sectors,agriculture continues to be of concern,with Ahluwalia stating that growth in the farm sector was below the 4 per cent target. The MTA suggests that resources from Mahatma Gandhi National Rural Employment Guarantee Scheme,watershed management and Backward Regions Grant Fund be effectively converged to achieve improved access to water in rainfed areas.

“Legislation governing tenancy should be amended to allow small and marginal farmers to lease out land without fear that tenants will acquire right of tenure of land leased from small farmers,” it reasoned and added that the Centre could increase fund allocation for Accelerated Irrigation Benefit Programme and Watershed Management. In the transport sector the Railways would have to initiate steps to arrest the decline in freight traffic,enhance capacity and execute technology modernization,it said.

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