Date:17/01/2006 URL: http://www.thehindubusinessline.com/2006/01/17/stories/2006011703150900.htm

Back `Govt must enhance Plan expenditure'

Our Bureau

Dr S. Narayan

Chennai , Jan. 16

THE Government must enhance Plan expenditure, even at the cost of higher fiscal deficit, Dr S. Narayan, Former Economic Adviser to Government of India, said here on Monday. Delivering a speech on the theme `Fiscal Prudence vs Public Expenditure' for the Palkhivala Foundation, Dr Narayan said the time had come for economists to say, "let us forget fiscal deficit for a while, let us think of expenditure".

Approving of the Government's "intrusive growth" strategy, Dr Narayan said the Government ought to be given credit because it is focusing on development despite a growing fiscal deficit.

Going in the other direction will be dangerous, he said, adding that if poor people do not get the benefits of development it could lead to political parties not believing in economic development as a means of winning elections. The implication is that the consequences would be worse than any bad effects of fiscal deficit.

In the last Budget, Dr Narayan said, one could see a desperation to find resources for higher expenditure.

Observing that the Central Government had announced several social projects such as Bharat Nirman, Sarva Sikshya Abhiyan and mid-day meals scheme, he said that one might again see similar desperation to find resources for such schemes in the forthcoming Budget.

While expressing happiness that the present Government was spending more on "intrusive growth", Dr Narayan, however, cautioned that the Government should also ensure that the monies thus spent reaches the poor. He said that here the administration must gear up — Government machinery at the village level should ensure that the benefits of higher public expenditure reach the targeted people.

"We (India) have a great story, but we are walking on the edge," he said.