SPEECHES / STATEMENTS 

PM's opening remarks at the full Planning Commission meeting

March 23, 2010, New Delhi

“I am very happy to open this meeting of the full Planning Commission to discuss the Mid Term Appraisal of the Eleventh Plan.

We have completed three years of the Eleventh Plan and the Mid Term Appraisal is a report card on our achievements in this period. It gives us an idea of how far we have been able to meet our stated objective of faster and more inclusive growth.

I have asked the Deputy Chairman to highlight some of the challenges emerging from the Appraisal in his presentation to this meeting. In my remarks, I will focus on the broad picture which should guide our discussions.

The Mid Term Appraisal brings out clearly the strengths of India’s economy and also the resilience it has shown during the global economic crisis. In the five years preceding the crisis in 2008-09, our economy grew at an average growth rate of nearly 9% per year. The rate of investment had increased nearly to 38% of GDP and was financed by a domestic saving rate of over 36 % of GDP. These high rates of investment and savings were accompanied by the growing dynamism and competitiveness of the private sector. Despite being hit by a global crisis of exceptional severity, we were able to maintain a growth rate averaging nearly 7% in the last two years.

Our strengths can help us return to the 9% growth trajectory by 2011-12. However, as the Mid Term Appraisal rightly emphasises, restoration of high growth should not be taken for granted.

The global environment is expected to remain difficult in the years that lie ahead and exports are likely to grow more slowly than they did before the crisis. We will need another source of demand to offset slower exports growth and that demand should ideally come from an expansion in investment in infrastructure, both in the rural areas and the economy in general.

Our concern for inclusiveness in the Eleventh Plan period is reflected in the fact that in addition to the 9% growth target, the Plan lists 26 other monitorable targets highlighting inclusiveness concerns. These include targets for agricultural growth, poverty reduction, employment generation, school enrolment, reduction in the gender gap, reduction in IMR and MMR, and access to clean drinking water.

We do not have all the data we need to measure progress in these dimensions during the first three years of the Eleventh Plan but the document before us presents a reasonable assessment of the overall position in these areas.

As far as agricultural growth is concerned, the severe drought we faced in 2009-10 has depressed the average performance in the first 3 years. However, the drought has been managed much better than in the past, with a much smaller negative effect on output. With a normal monsoon this year, we can expect a strong rebound in agricultural production. The Mid Term Appraisal suggests that agricultural growth will definitely be better than in the Tenth Plan. If we can ensure that the various schemes for supporting agriculture production, expanding irrigation and building rural infrastructure are implemented well in the remaining two years of the Plan, there is a good chance that agricultural growth may come close to the 4% target.

A very positive feature of developments in recent years is that the growth performance across states shows definite narrowing of dispersion. Data are only available upto 2008-09, but they do show that previously poorer performing states are also accelerating. Our policies have not helped only the advanced states; they are also helping the poorer states to improve their performance as well.

Our target for reducing poverty is to cut the percentage of the population below the poverty line by ten percentage points during the Plan period. This implies a pace of poverty reduction more than twice that experienced in the past. Our success in ensuring inclusive growth depends critically on how well we do in this dimension of perfomance.

The official estimates of poverty are based on the large sample NSS survey which was last conducted in 2004-05. The next estimate will be for 2009-10, based on the NSS survey which is currently being conducted. Estimates from this survey will be available by 2011. The question whether the high growth rate experienced in the period after 2004-05 has helped to reduce poverty can be answered confidently only after that.

Although we do not have data on poverty or even on employment after 2004-05, we do have assessments of the performance of the many schemes and programmes that are designed to achieve the objective of inclusiveness.

The most recent of these is the Mahatma Gandhi National Rural Employment Guarantee Scheme, the largest Centrally Sponsored Scheme in the system with an annual outlay of around Rs 40,000 crore. The total employment generated through the MGNREG in 2009-10 is about three times the level achieved from the wage employment programmes in operation earlier in the country. The scheme has been well targeted, with more than half the beneficiaries being from the scheduled castes and scheduled tribes. It is has also been well balanced gender-wise, with women constituting about half the beneficiaries.

There are many other central government schemes which seek to push the inclusive growth agenda. These include the Sarva Shiksa Abhiyan and the Mid Day Meal Scheme, the Rajiv Gandhi Grameen Vidyutikaran Yojana, the Indira Awas Yojana, the Pradhan Mantri Gram Sadak Yojana, the Integrated Child Development Services, the National Social Assistance Programme, the Total Sanitation Campaign, the Accelerated Rural Drinking Water Programme, and two new Eleventh Plan initiatives the National Rural Health Mission and the Rashtriya Swasthya Bima Yojana. In addition, there are a number of programmes specifically targeted to the needs of the Scheduled castes, the Scheduled Tribes and the Minorities.

The total expenditure in these schemes has increased steadily during the Eleventh Plan and has reached Rs.1,61,784 crore in 2010-11. I am happy to say that these efforts have produced progress towards the objectives intended. Rates of enrolment in primary schools have increased. Gender gaps in schooling are narrowing. Life expectancy rates of immunisation of children have increased. The percentage of population with access to safe drinking water has also gone up and so has village connectivity and electrification. But I must add that while there is progress, we have achieved less than what we need to.

The Mid Term Appraisal also brings out many deficiencies in the implementation of these schemes that need to be removed. Our focus must shift from making demands for more resources to expand schemes to undertaking a serious review of their effectiveness and improving the implementation on the ground.

Since all these service delivery oriented programmes are in areas that are the domain of the states, and indeed within the states in the domain of Panchayati Raj Institutions, the key to more efficient delivery lies in devolving power to the PRIs and also encouraging greater involvement of the people’s representatives in performing oversight functions and ensuring accountability.

The Mid Term Appraisal clearly brings out that while functions have been devolved in almost all states, there is little progress in the devolution of funds or even functionaries. In most states, functionaries at the PRI level are drawn from the Departmental cadres posted on deputation to the PRIs. The Appraisal brings out very clearly the need to build capacities at the local level both in the PRIs and the ULBs.

I would urge the Planning Commission to bring these issues to the forefront in the regular Annual Plan meetings with Chief Ministers

Let me conclude my observations by returning to the issue of infrastructure development. Deficiencies in infrastructure are a critical constraint on our ability to achieve faster growth and the Eleventh emphasises the role of expanding investment in infrastructure through a combination of expanded public investment combined with private investment wherever feasible.

The Plan has a target of increasing the investment in infrastructure from little under 6% in 2006-07 to 9% in 2011-12. The Mid Term Appraisal reports that total investment in infrastructure is likely do well because of a massive expansion beyond the original target in telecommunications, led by an investment boom in the private sector.

But, in all the other infrastructure areas investment will be short of the target. In some areas like power generation, the appraisal shows that private investment may exceed the target while the public sector may fall short of it. We must redouble our efforts to ensure that both the Centre and the states do well in the infrastructure sectors in the remaining period of the Plan.

To summarise, I think the Eleventh Plan made a good start which was interrupted by the global crisis. We have been able to weather the crisis reasonably well and should be able to return to a high growth path by the end of the Plan period.

I now request the Deputy Chairman to make his presentation of the specific challenges we face in the next two years.”