Agriculture to power 9% growth

Q & A/ Montek Singh Ahluwalia

A day after setting the country's sight firmly on double-digit economic growth during the 11th Five Year Plan period, Planning Commission Deputy Chairman Montek Singh Ahluwalia spoke to Rupesh Janve on what it will entail. Excerpts:

How will we achieve an average 9 per cent GDP growth in the 11th Plan?

As far as the growth target is concerned, we will, first of all, target agriculture - we want to double its growth rate, so that the sector makes a significant contribution to total growth.

We have to concentrate a lot on infrastructure because I think that is the key constraint holding back investment in the rest of the economy. And I think looking at the longer term ahead, health and education are both important in themselves. These are the areas that we will be concentrating on.

Where will you find the money?

Well, the money is a constraint, but we will put agriculture, health, and education as top priority. As far as infrastructure is concerned, especially rural infrastructure, the government will have to spend a lot of money on it.

But for non-rural infrastructure, there is a lot of scope for encouraging public-private partnerships. So, we can bring in private money to do a lot of things.

What kind of re-prioritisation will happen with centrally sponsored schemes?

We are doing the prioritisation right now. We are looking at power schemes, but obviously the result of that will only be known when the Plan itself is ready.

The commission seems to have dropped its stand on FRBM and there is now talk of about 2.5 percentage points of GDP increase to fund programmes for the 11th Plan?

I think there is some misunderstanding on this. Our concern is that we should have a sufficient increase in resources for the Plan. We have never said that fiscal prudence does not matter.

Now, calculations suggest that the resources that we want for the Plan as a whole can be had, consistent with the fiscal deficit target, provided we are able to mobilise a lot of resources on the tax side "" through better administration, tax reform, and also controlling non-plan expenditure.

And frankly, if that can be done, we can have the money for key schemes as well as maintain fiscal prudence. We hope that unproductive non-plan expenditure can be contained.

Do you believe that zero revenue deficit is really achievable?

Well, that is not really my area; that is for the finance ministry to make sure. As long as we get the resources we have asked for, it is up to them to try and make sure they meet their targets. It presents problems.

The difficulty is that even if you have resources for the plan, since we are shifting our strategy towards health and education, that expenditure tends to be revenue expenditure.

Our concern was that this means that this part of the revenue expenditure has to increase. So, the finance ministry will have to control other types of revenue expenditure that is for them to do.

Obviously, all interest expenditure, all subsidies are revenue expenditure; there is a lot of other wasteful expenditure. Some of that is necessary and some is not.