The Planning Commission today pitched for a further liberalisation of the Foreign Direct Investment (FDI) policy and improvement of business regulations to step up GDP growth rate to 9-9.5 per cent a year on an average in the 12th Five-Year Plan.
In a presentation to the full Planning Commission meet, chaired by Prime Minister Manmohan Singh, it was stressed that there was a need to improve business regulatory framework, improving in ‘cost of doing business’ and transparency.
In 2011, India ranked 134th among 183 countries in the ease of doing business, according to a report of the World Bank and International Finance Corporation.
India recently revised its FDI policy, which brought changes like doing away with the requirement for a foreign partner to seek no-objection certificate from its Indian partner before starting a new business in the same field.
However, some important suggestions, like opening FDI in multi-brand retail, still hang in the balance.
Following the recent crisis at the Fukushima Daiichi nuclear plant in Japan, the presenation stressed, nuclear energy would play a pivotal role and should, therefore, be expanded while adhering to safety measures. India needs 100,000 Mw of power capacity in the 12th Plan period (2012-2017).
Given the high global crude prices, the presentation also stressed that pricing of diesel and petrol should be regularly revisited and LPG and Kerosene subsidy should be targeted only towards people below the poverty line.
The commission pegged economic growth at 9-9.5 per cent a year on an average and inflation at 5-5.2 per cent during the 12th Plan. The panel also projected the agriculture sector to grow 4 per cent in the Plan period, with a focus on non-cereal food items, including milk and fish.
Plan panel member Abhijit Sen, however, said agriculture growth could exceed 4.5-5 per cent a year in the Plan period, if drought and less-rain years were better managed.
Given resource constraint and demands from various sectors, the Planning Commission decided to constitute a panel under Chief Economic Advisor Kaushik Basu to suggest how to generate funds for the 12th Plan while giving priority to the sectors like education, health, rural infrastructure, water-shed management and irrigation.
“We have decided to constitute a working group under Basu to study how to generate resources because we feel the funds available will not be sufficient to meet the demand from various sectors,” Planning Commission Deputy Chairman Montek Singh Ahluwalia told reporters after the meeting.
On the rate of inflation exceeding the projections, of 7.5-8 per cent, of RBI and the finance ministry and settling at 8.98 per cent, Ahuluwalia said: “Inflation does remain a big concern for all of us and we are all focusing on that.”
He said deep concern over the availability of water was also discussed at the meeting with the prime minister, as it would be a big challenge in the years to come.
The Plan panel suggested incentivising states for setting up their own regulatory bodies to maintain water resources, besides seeking greater private participation in recycling of water.
“We feel the availability of water should be reassessed and there should be a mapping in each basin. By the end of the 12th Plan, we should be able to know the availability of water in each basin of this country,” Ahluwalia said. He added the country needed a National Water Commission to monitor compliance of rules related to investment in projects.
