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Rising subsidies worry PM
S. Satyanarayanan
Tribune News Service

New Delhi, November 8
The Planning Commission today cleared the draft of the 11th Five-Year Plan, which pitches for 9 per cent economic growth, even as Prime Minister Manmohan Singh expressed concern over the mounting oil, food and fertiliser subsidies, estimated to cross Rs 1,00,000 crore this fiscal.

“Over Rs 1 lakh crore are going to be spent this year alone on three items (food, fertiliser and petroleum). I would like my Cabinet colleagues and the Planning Commission to reflect what these mean for our development options and what development options these subsidies are shutting out,” Dr Singh said , while presiding over the Full Planning Commission meeting, convened to discuss and clear the draft of the 11th Five Year Plan here.

“Do they (subsidies) mean fewer schools, fewer hospitals, fewer scholarships, slower public investment in agriculture and poorer infrastructure?” he asked and asserted that subsidies should be restructured so that the poor benefitted from them and all leakages were plugged.

The approved document, which focuses on development of the agriculture sector and more private investment in the infrastructure sector, would be placed before the National Development Council (NDC) next month for ratification.

The Full Commission approved the draft for the 11th Plan which began in April 2007 and aims at raising the average GDP rate to 9 per cent from 7.6 per cent during 2002-07, while more than doubling the outlay to Rs 36,44,718 crore.

The document seeks to make growth inclusive by increasing the outlay for priority sector programmes.

The plan aims at an average growth rate of 9 per cent, accelerating it from 8 per cent in the first year of the plan (2007) to 10 per cent by the end of the plan period (2011-12).

The average 9 per cent growth during the plan period is targeted to arrive from 4 per cent growth in the otherwise stagnating agriculture sector and 9-11 per cent in the booming industry and services each.

Aiming to improve the living standards in the country, the 11th Plan draft document has also set ambitious targets of per capita income growth of 7.6 per cent each year.

If the target for the 11th Plan is achieved, it would mean that the per capita GDP would grow at around 7.6 per cent per annum resulting in broad-based improvement in living standards, according to the Plan document.

Investment target for the 11th Plan is 6 per cent higher in terms of proportion of the GDP at 36.7 per cent against 30.8 per cent in the previous plan.

It pitches for a savings rate of 34.8 per cent of GDP against 30.8 per cent in the 10th Plan and has kept the public investment target at 8.6 per cent of GDP compared to average public investment of 6.7 per cent during the previous plan period.

In his opening remarks, Singh also warned the nation about the food security coming under stress in the next decade.

“Global trends in food production and prices and our own demand patterns of consumption are going to put increasing pressure on both the availability and prices of basic food items,” he said, adding the country needs to manage these pressures and ensure that our food planning adjusts to the emerging market realities.

Asserting that agriculture must be a central focus for the government given the importance of the rural population, he said “The Plan points out that some improvement in performance is evident. Agricultural growth averaged 4 per cent in the last two years and is likely to be 4 per cent this year as well. We must ensure that this dynamism is maintained and indeed enhanced.”

By focusing on district-level planning and emphasising on flexibility and local relevance, we hope that we will be able to sustain the desired growth rate in agriculture and also ensure that it is regionally more balanced,” he added.

In this context, he said the recently launched Rashtriya Krishi Vikas Yojana and the Food Security Mission were major initiatives which attempted to change the way in which India had approached agricultural development.

Pointing that infrastructural growth was critical for 9 per cent growth, he said given the resource constraints, large private investment through the public private partnership (PPP) mode was the only option available to substantially increase investment in the infrastructure sector.

“A look at the Plan figures may show an apparent decline in the share of this sector in the budget support. But this is because of a greater reliance on non-budgetary support.

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