Prime Minister of India - Dr. Manmohan Singh

PM's address at the first meeting of the Planning Commission

"I welcome all of you to this meeting of the Full Planning Commission. This is the first such meeting since our government took office. In the period of nearly four months that have elapsed since then, we have taken stock of the prevailing economic scenario and the tasks that lie ahead of us. In accordance with mandate given to the UPA Government by the people of India, and our own analysis of the current national situation, I believe that the time has now come for us to begin the process of suitably reorienting the course of our economic system. This effort of course correction must reflect the vision and priorities of our government as outlined in the National Common Minimum Programme.

The process of economic reforms initiated by the Congress Government in the early 1990s has paid rich dividends in many dimensions. Yet it is also true that our economic performance has deteriorated in the second half of the 1990s. After achieving a growth rate of 6.7per cent in the Eighth Plan period, the economy decelerated to 5.4per cent in the Ninth Five Year Plan. The Tenth Plan had established an ambitious target of 8.1per cent growth, against which the actual performance attained in the first two years - at around 6per cent - has been less than satisfactory. What is even more disturbing is that agricultural growth has decelerated from the mid 1990s. In these circumstances, it is hardly surprising that a perception has grown that the benefits of economic reforms have bypassed a substantial section of our people.

Therefore I think it is incumbent on us to devise and implement a development strategy which introduces the urgently required corrective steps to achieve sustained high rates of growth in the economy, along with a significantly greater degree of inclusiveness and thereby, a lesser sense of alienation. We will need to pay much greater attention to agriculture and rural development and to reduce regional imbalances in the process of development. Basic social services such as education and health will also require a sharper focus.

The National Common Minimum Programme (NCMP) of our government clearly articulates the components of such an inclusive strategy, and I have instructed the Planning Commission to evaluate the implications of the NCMP approach and to elaborate it into specific and feasible policies and initiatives which can be built into our development plans and programmes. This meeting marks only the beginning, and we will no doubt have to meet many more times before our task is complete. Nevertheless, we have a substantial agenda before us, and I am certain that the decisions we take today will have a decisive impact in the years to come.

We are all aware of the time constraints within which the Government undertook the exercise of preparing and presenting the regular Budget for 2004-05, barely 45 days after the election results. There was no time to carry out the detailed exercises that are necessary to formulate Plan allocations in a manner, which is both non-disruptive as well as consistent with the broader policy orientations of our government. We had therefore decided to adopt the innovative measures of providing in the Budget a block allocation of Rs.10,000 crore to the Planning Commission to be reappropriated for specific projects and programmes that further the NCMP objectives, at the time of the first supplementary demand for grants. The internal Planning Commission has undertaken a detailed assessment of the needs of the key sectors in consultation with the concerned Ministries, after which it has prepared a set of funding proposals for utilization of the bulk allocation. This is the first item on our agenda, and we need to give it our careful consideration since it will be seen as the bell-weather of our commitment to operationalise the objectives of the NCMP.

The second agenda item, although not directly related to the NCMP, is nevertheless important for sending out a clear signal regarding our resolve to carry forward the reforms process. At the time of approving the Tenth Five Year Plan in December 2002, the National Development Council (NDC) identified four critical areas of reform which required to be designed and guided at the highest political level. These were:

1. Governance Reforms, with special reference to e-governance

2. Creating an Investor-friendly Climate

3. Removal of Barriers to Internal Trade

4. Financial and Administrative Empowerment of Panchayati Raj Institutions

The NDC decided to constitute Empowered Sub-Committees of the NDC for each of these four areas, which were notified in March 2003. Unfortunately, there has been little progress since then. These are no doubt important areas of concern. However, we would need to reconstitute the four Empowered Sub-Committees and to amend some of the Terms of Reference in order to better reflect the NCMP objectives. We are also committed to ensure that the deliberations of these Sub-Committees take place as expeditiously as possible so that we can incorporate their recommendations within our reforms strategy.

One of the major commitments of the NCMP is the transfer of Centrally Sponsored Schemes (CSS) to the States. This is by no means a new issue, and a number of States have been pressing for it for some time. In 1999, the NDC constituted a Committee under the Chairmanship of the then Deputy Chairman of the Planning Commission to go into this issue in detail. The draft report of this Committee has been prepared and circulated for comments. Comments of the original Members of the Committee have been received, but it is now necessary to involve the new Members before the report is finalized. This is the third item on our agenda, and we should deliberate on the draft report, given the importance of the issue. We would need to examine which of these recommendations is in consonance with our own broader policy orientations.

The final agenda item relates to the Mid-Term Appraisal (MTA) of the Tenth Five-Year Plan. As you know, the Planning Commission normally undertakes such an appraisal in order to take stock of the progress in Plan implementation, review the feasibility of the targets and to provide for corrective action, if necessary. The internal Planning Commission has started the process in right earnest, including extensive consultations with the Central Ministries, the State governments and outside experts. The preparation of the MTA provides an opportunity to ensure that the objectives of the NCMP are fully reflected in the Plan strategy and that all recent developments are taken into account. To facilitate discussion on this issue, the Planning Commission has circulated an approach paper identifying the key areas, which the MTA will address. The approach paper sets out in detail the key areas of concern for our government, and the sectors of economic activity which we need to keep in focus during the remainder of the Tenth Plan. I suggest that we deliberate on this issue in some detail, since it will form the basis of our economic agenda not only for the remaining years of the Tenth Plan, but also for the Eleventh Plan.

As you will appreciate, we have a substantial agenda before us and we will need to be focused in our deliberations if we are to do justice to it. I will, therefore, request the Deputy Chairman of the Planning Commission to briefly introduce each of the agenda items in turn so that we can give our considered views on this matter."