As we enter a new year,we decided to do a job for old times sake. The Planning Commission will,I am sure,eventually review the Eleventh Plan. Actually mid-term reviews of policies and programmes have been more useful than the plans themselves in the past,whenever we got out of major problems. This was true of the Fifth Plan after the energy and agricultural crisis of the 70s,and the Seventh Plan after the droughts of 1987 and 1988. The Ninth Plan did not really take on the crisis of the 90s because we were slow in accepting the impact of the Asian meltdown on India,and when the economics literature was flooded with books on the tigers in trouble,losing upto 40 per cent of their GDP,our economic survey still had sagely sections on their achievements. This was remedied by the review of the 90s in the Tenth Plan on the crisis of infrastructure,agriculture and employment. Interestingly in all these reviews growth was not the big issue because India was clearly on a growth escalator from the mid-70s. The issues were food security and agricultural growth,employment,energy and social and economic infrastructure. This is still largely true but this time round we believe that while growth is still not the most important issue,championing higher growth possibilities is. Are we at a serious level giving up the nine per cent dream,and on making an impact on history,in a vain glorification of mediocrity?
The growth rate in the Tenth Plan was 7.8 per cent. In the Eleventh Plan from 07/08 to 09/10,assuming it is 7 per cent this year,it is 7.4 per cent,say 7.5 per cent at the outside. Now the howl. There were bad agricultural years and bad trade years. Ah,but we are a globalised economy and some (at least one) countr(y)ies are(is) doing better. When we globalised did we not know that there are trade cycles? Of course it is true that only people like me said then that we have not prepared for the impact of an imperfect global economy on our agriculture and we will suffer,which we did with exports collapsing,diversification and profitability and then investment and employment going down. In the Tenth Plan the UPA reversed that,which means it could have been done earlier. But now trade and manufacturing were hurt. This column wanted the stimulus earlier but until September 2008 we kept on saying things were not that bad. An August stimulus when exports were down and manufacturing was in trouble could have saved us upto a half per cent of GDP.
More generally there is an abdication of a strategic perspective on the economy. The Eleventh Plan is the first plan in the country without a perspective. Very responsible people give targets from seven to nine per cent,which is naturally seen as media noise,without serious content. Underlying this is a genuine viewpoint that strategic policy-making is inconsistent with the liberalisation. This is a mistake. The last of the strategic planners in India,reformulating the earlier mindsets from the Nehru period,was Rajiv Gandhi and the current generation of economic policy-makers have taken very critical views in print,earlier on Rajiv and increasingly so on Nehru. This is a faulty perspective. The mid-80s saw a serious debate between the late I.G. Patel and one of the most influential economic policy-makers today on a strategic policy-planning viewpoint vs project-level decision-making. IG took the position that the difficulty in India was that the Japanese and East Asian experience was neglected on account of an ideological slant that the Japanese were camp-followers of the imperialists. IGs argument was that in spite of considerable achievements in energy and agriculture India suffered since it did not have an adequate framework on an open economy. Rajiv was to remedy that.
The official Indian position,by default against strategic perspective planning and the shallow critiques of earlier strategic policy-making leadership needs to be given up in the mid-term review. We need,badly,popular debates on growth.
The writer,a former Union minister,is chairman,Institute of Rural Management,Anand
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