Cabinet clears mid-term appraisal of 10th Plan
New Delhi, May 19
The MTA, which would be made public after its adoption by the NDC, was also expected to scale down the GDP growth target from 8.1 per cent as originally projected in 2002.
“The actual growth in the first three years has been less than what it was approved in the 10th plan. In the first year itself (2002-03), growth was 4 per cent”, Finance Minister P. Chidambaram told newspersons after the Cabinet meeting.
Mr Chidambaram said that “Like any other appraisal, the MTA will contain successes and slippages”.
Sources said that in the backdrop of continuous poor performance in the agriculture sector, the growth targets could be scaled down. It would be hard to push agriculture growth from the present 2 per cent to 4 per cent.
The MTA had gone into the details of whether the original 10th Plan growth target was still feasible. The current year’s GDP growth was likely to range between 6 and 7 per cent of GDP so that achievement of the Plan target was only possible if GDP growth in the last two years averaged 11 per year, which was clearly infeasible.
The MTA was also learnt to have advocated the case of offloading government stake in sick public sector undertakings.
The Tenth Plan was built around a specific set of assumptions that affected the investment strategy of the Plan. In the base year of the Tenth Plan (2001-02), the economy was in the middle of a cyclical slow-down, with the investment rate at 23.2 per cent of GDP as against the peak of 26.2 per cent achieved in 1995-96. Capacity utilisation was low in a number of sectors, especially in manufacturing. Agricultural output, and thereby rural incomes, had shown relatively low growth and high volatility through the Ninth Plan period (1997-98 - 2001-02).
It was felt that private investment demand was unlikely to revive until the capacity utilisation in industry increased to significantly higher levels. Revival of rural consumption demand was expected to contribute to investment expansion, but this would only happen over time if agricultural growth targets were met and the MTA had made recommendations in this aspect, sources said.
Infrastructure had been recognised to be a critical constraint needing large investments and it was expected that policies would be evolved which would allow a large contribution of private investment to support expanded public investment in their area. Investment in irrigation and watershed management was recognised to be critical for agriculture.
The MTA would take stock of the progress made in utilising productive capacities and the success achieved on the investment front.