Prime Minister of India - Dr. Manmohan Singh

PM's opening remarks at the Planning Commission meeting

Ladies and Gentlemen,

Let me begin by welcoming you to the second meeting of the Full Planning Commission. The Mid-Term Appraisal of the Tenth Five Year Plan provides a comprehensive review of the performance of the economy as a whole and of the state of play in each of the sectors. There are several positive features which are noted but, there are also signs that the economy is not on track to achieve many of the important targets of the Plan and corrective policies are therefore urgently needed. I am looking forward to a focused discussion on the challenges ahead.

It appears that even with optimistic projections about the next two years the average growth rate in the Tenth Plan period is not likely to cross the 7% mark, will below the X Plan growth target of 8.1% p.a.. Employment generation is also unsatisfactory so far.

The corner-stone of the X Plan had been a reversal of the declining trend in the growth rate of agriculture to eventually to take it above 4%. The actual performance of agriculture appears to have deteriorated even further and will possibly not exceed 1.5% during the first three years of the Plan.

The slippages that have been recorded in the growth rate of the economy, and especially in agriculture, have wide ranging implications for other important economic variables as well. As we all know, growth of employment and reduction in poverty are both intimately linked to growth performance, specially in agriculture.

National Common Minimum Programme

Many of these problems were recognised in the National Common Minimum Programme and the Government has already initiated corrective steps in some of the critical areas. The Food for Work Programme - which is to evolve into an Employment Guarantee when the Bill is passed - is a major initiative in providing income security in rural areas. I am happy to note that the Sarva Shiksha Abhiyan and the Mid-Day Meals scheme have received substantial additional funding.

However, as stated in the budget speech that outcomes are as important as outlays, the focus should be on universal enrolment and reducing dropouts in primary schools. On the health front, the pace of progress in improving health indicators is painfully slow, and the rural - urban divide and the gender gap do not appear to be reducing in any significant manner. The new National Rural Health Mission seeks to address this problem.

Priority Areas for our Government

Our Government has underlined seven priority areas for action, namely agriculture, water, education, health, employment, urban renewal and infrastructure. These Seven Sectors, each of which has been emphasized in the MTA, are the foundations on which we hope to build the superstructure of a modern, fast growing, equitable economy. In each area we have outlined programmes that require both financial and administrative support.

Our special emphasis on rural development has now been articulated through an umbrella programme, Bharat Nirman. Bharat Nirman will be a time-bound business plan for action in rural infrastructure for the next four years.

Under Bharat Nirman, action is proposed in the areas of irrigation, roads, rural housing, rural water supply, rural electrification and rural telecommunication connectivity.

The Mid-Term Review

The Mid Term Review indicates specific corrective steps needed in each of these areas, consistent with the strategy outlined in the NCMP. The corrective steps proposed are extensive and will inevitably spill over into the Eleventh Plan period. Some of the priority areas which could be effectively addressed in the rest of the Tenth Plan period are summarised in the last Chapter. I would invite Members to comment on the priority areas.

The Mid Term Appraisal also draws attention to the fact that meeting our many commitments will involve substantial public expenditure in social sectors, in rural infrastructure and in infrastructure generally. Availability of these resources is dependent on stepping up the growth rate substantially. As Government's priorities and expenditure patterns shift towards social and rural infrastructure, such growth will not take place without a substantial increase in private investment.

This will have to be not only in commercial activities but also in physical infrastructure, where its involvement has been limited in the past. To enable this to happen, the policy and procedural environment must be made considerably more welcoming towards private investment; and, the government will have to incentivise the private sector to enter unfamiliar areas through well designed public-private partnership models. The MTA document brings out possibilities that exist for such involvement and the required policy changes.

Ladies and Gentlemen,

At this point, I would like to raise a few issues which concern the overall approach to planning as a process. It is important that as a country, we learn to walk on two legs, one embracing processes of high growth and the other addressing the issue of redistribution and balanced development. The former is essential to generate the resources for the latter. In order to accelerate growth, we need to put in place a set of policies that tap into the vast reservoir of talent that exists in our country, policies that will create an environment which reward creativity and enterprise.

At the same time, while growth generates wealth, we also need to invest in equitable social and physical infrastructure, catering to the needs of marginalized sections of our society, to the regions which still need to catch up with the more advanced regions.

The Planning Commission must ensure that our policies address both elements. The MTA deals with both aspects and we must continue to think innovatively on both fronts. I would also like to point to a few questions that are relevant in the years ahead as we move towards the Eleventh Plan.

� While the benefits of a five year planning process are apparent, It is not sufficient in a world driven by rapid technological change leading to rapid changes in consumer demand patterns and production opportunities Is 5 year s a sufficient time span for taking a long term view on infrastructure development? Most of the creative discussions in a budget exercise focus on Plan expenditure. If so, is it essential to wait for five year intervals to re-engage in a planning effort or can we do this on an annual basis for certain areas and on a longer basis for others? This is especially relevant as we now present medium term forecasts for the budget.

. Most of the priority areas of government are in sectors which are the primary responsibility of states - agriculture, irrigation, health, education, etc. Infrastructure areas, traditionally seen as responsibilities of the Centre, e.g. power, ports, airports and even national highways are gradually seeing increased private participation. This calls for a new focus in planning. The Planning Commission should ensure that all aspects of our policies are conducive to encouraging the private sector to play its role in infrastructure development. At the same time, there is a concern that issues relating to marginalized sections may be given a lower priority at the state level. The Planning Commission should think of ways whereby the responsibility for sectoral interventions is increasingly transferred to states while the Centre retains the flexibility to support targeted programmes aimed at certain focus groups like SCs, STs, BCs, Minorities and Women.

� There seems to be increasing disquiet and discontent among many groups - tribal communities in particular are unhappy about their lot, whether it be land rights, access to education and health or access to economic opportunities. So is the case with SCs, minorities and women. The Planning Commission should consider ways whereby our policies can be restructured to give a stake in economic development to the marginalized so that we can deal with the challenge of lawlessness and insurgency in tribal and backward areas.

� With the growth of Panchayati Raj Institutions, there needs to be a cohesive plan to integrate them into developmental processes. So is the case with civil society. Involvement of the local community, particularly on issues of land and soil management, natural resource management, etc. are critical to the success of any developmental initiative. The Chapter on Governance in the MTA has made extensive suggestions in this regard and the Commission must work further on these issues work towards evolving a consensus among the Central Ministries and the State Governments.

� Uneven regional development is causing increasing concern. Regional imbalances - not only in economic indicators but in social indicators, need to be bridged. The MTA has made specific suggestions regarding the Backward Regions Grant Fund. We need to operationalise this initiative and as quickly as possible see what further initiatives can be taken in future.

The challenges I have posed have no easy answers. The Planning Commission, has played a historic role in our development and is a corner-stone of our federal structure it has to be a think-tank and reservoir of research for government. I would like the Commission to take a leading role in ensuring that the policy debate in government is subject to critical professional schemes and remains open to lateral input. It should also be responsive to the changing world and to the winds of intellectual enquiry and debate. The role of the Commission is not limited to shaping the debate in the Centre. It also needs to play a pro-active role in shaping policy at the State level where many of the most important issues have to be resolved.

Such are the questions that you must grapple with I hope you will do so in the days to come.

Thank you.