None of these assumptions is valid in our context. During the Eighth Plan, capacity utilisation went up while in the Ninth Plan it declined in most sectors. In the three years 1994-95 to 1996-97, the average growth rate of the economy rose to about 7.5 per cent, but thereafter, it has been falling, and reached a low of 4.4 in 2002-03. With such uncertainties, doubts are expressed about the behaviour of the ICOR during the Tenth Plan.

The Plan also places excessive faith in the reform process, thereby leaning heavily on the private sector. But recent experience has shown that the reform process has a built-in tendency to become capital-intensive.

Merely pinning hopes on full utilisation of excess capacity will not do the trick. Proper investment planning is required which necessitates identification of sectors that may not receive sufficient investment from the private sector, and where the Government should fill the gap.

Second, this requires injecting larger doses of investment into low capital-intensity areas. A review of the Tenth Plan allocation pattern reveals that this has not been seriously attempted. For instance, the overall increase in investment envisaged is 62 per cent, compared with the Ninth Plan. But in small industry, the Tenth Plan allots only 21 per cent more funds, and in agriculture, rural development and irrigation, 51 per cent more allocation.

This only underlines the low priority attached to these sectors, which are less capital-intensive and more employment-generating.

Thus, the predicted sharp decline in the ICOR of the economy from 4.53 to 3.58 may not translate into reality.

Against the target of 11.8 per cent growth in exports, the achievement in the Ninth Plan period was only 5.7 per cent and yet, the planners have fixed a target of 12.4 per cent for the Tenth Plan.

Similarly, as against the import target of 10.3 per cent, the achievement during the Ninth Plan was only 3.3 per cent, but the Tenth Plan target has been jacked it up to 16.3 per cent.

This ignoring of the ground reality in fixing targets underscores the mindset of the planners — and that, in order to achieve 8 per cent growth, whatever the mathematical calculations show as the export and import requirement should be fixed as a target. Such an approach can be good model-building, but will be of little use in tackling the problems on the ground.

There are two components of the employment target of the Tenth Plan — the growth component, based on achieving 8 per cent GDP growth and consequently generating 30 million jobs; and the Special Programme component, generating 20 million jobs. Since serious doubts are being expressed about the GDP growth target, it is obvious that the 30 million target will get reduced to the extent of shortfall in GDP growth.

Second, the Tenth Plan document reveals that no specific allotments have been made to deliberately boost the employment generation component. It is a `business-as-usual' approach. With such an attitude and excessive emphasis on GDP growth, the employment growth target is merely seen as a derivative of growth. The critics' doubts about achieving the employment target seem fairly justified.

Although the Tenth Plan document categorically mentions that a fall in the GDP growth rate during the Ninth Plan is primarily due to a decline in growth of agriculture and the manufacturing sector, the allocation pattern follows the beaten track.

It has apportioned 20 per cent of total public sector outlay to agriculture, rural development and irrigation, against 21.4 per cent during the Ninth Plan. In irrigation, the relative share of allocation has been reduced from 7.4 per cent in the Ninth Plan to 6.8 per cent in the Tenth and, in rural development, a still smaller share of 8 per cent in the Tenth Plan, against 9.5 per cent in the Ninth Plan.

In the small-scale sector, no segregated data has been provided but the chapter on industry reveals that the Central Plan allocation to the SSI sector has been enhanced from Rs 2,855 crore during the Ninth Plan to Rs 3,499 crore during the Tenth. In relative terms, however, it has meant a reduction in allocation from 0.30 per cent to 0.22 per cent in the Tenth Plan.

Whereas the Tenth Plan recognises agriculture (including irrigation) and small industry as the two major employment-generating sectors, ironically, it downplays them in the allocation pattern — a case of deviation between rhetoric and reality.

The Ninth Plan emphasised the role of the private sector in promoting investment in agriculture and infrastructure. But the Tenth Plan admits that the private sector invested in irrigation technologies that were mainly extractive, such as tube-wells.

These investments are not sustainable unless appropriate investments are made in rainwater harvesting and recharging of groundwater resources. This requires stepping-up of public investment in major and medium irrigation.

Regarding investment in physical infrastructure in the form of roads and electricity generation, the private sector performance has been disappointing.

It is, therefore, crucial that the public sector undertakings earlier engaged in these areas be revitalised. Excessive faith in the super-efficiency of private sector is not always justified.

The Tenth Plan financing pattern draws no lessons from actual realisations during the Ninth Plan. A close scrutiny of the financial pattern reveals that:

Against the original projection of Rs 8,59,200 crore for the Ninth Plan (at 1996-97 prices), actual realisation was only Rs 7,05,818 crore — 82 per cent of the original projection. This implies that the size of the public sector Plan, in real terms, was slashed downwards by 18 per cent.

Balance from current revenues (Centre and States/UTs taken together) amounted to a colossal negative figure of Rs 2,63,752 crore, or 37.4 per cent of the total realisations.

The contribution of the much-maligned public sector enterprises to Plan funds aggregated to Rs 2,80,902 crore. Despite this massive contribution of the PSEs, this only helped wipe out the shortfall in balance from current revenues.

Consequently, the resource gap has to be filled by massive market borrowings of Rs 6,71216 crore, or 95 per cent of the total Plan outlay.

Add to this net the inflow from abroad of Rs 17,452 crore, or 2.5 per cent of total, and it can be concluded that 98 per cent of the total Plan outlay is financed by borrowing, the major part of that borrowing being from the domestic market.

It is surprising that with such clear and devastating evidence of the non-viability of the Ninth Plan's allocation system, the planners have still adopted a similarly faulty financial pattern.

They have assumed that the balance from current revenues would turn positive to the extent of 1.3 per cent of the total financial outlay, resources of public enterprises would account for Rs 5,98,240 crore, or 37.6 per cent of total outlay, and market borrowings could be restricted to about 60 per cent.

Such a planning exercise undertaken in the Planning Commission in Plan after Plan has been ending in a fiasco at the time of implementation.

There is, no doubt, in the minds of serious students of economics that the Tenth Plan arithmetic will also go haywire. It is unlikely that the gears and controls needed for the purpose will be applied, either at the State or the Central levels.

To sum up, the Tenth Plan seems to have set for itself heavy tasks that may be difficult to accomplish. Its chances of achieving the GDP growth objective of 8 per cent, however laudable, seem practically impossible to achieve.

The ICOR may not experience the planned objective of reduction to 3.58 per cent from 4.53 per cent in the Tenth Plan, because of the absence of clear vision in investment planning. If the GDP growth objective gets modified downwards, it will not be possible to generate 50 million additional job opportunities.

It is really distressing that the Tenth Plan, while accepting the major contribution of agriculture and SSI sector to employment has accorded it a low priority. Its faith in the private sector to fund infrastructure is really misplaced.

To cap it all, it has placed its faith on a highly optimistic financial pattern, learning practically nothing from the experience of the Ninth Plan.

(The author is President, Indian Economic Association, New Delhi.)

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