Ranabir Ray Choudhury

The reform thrust of the Eleventh Plan Approach Paper is clear though understated. As with the UPA Government's Common Minimum Programme, agriculture, FDI and the encouragement of FIIs form critical planks of the Plan draft.

The Planning Commission's "Approach to the 11th Five Year Plan" sets out the growth agenda in the clearest possible term when it says that the entire effort should be geared "Towards faster and more inclusive growth." How much `faster' and how much `more inclusive'? The Approach Paper (AP) provides an agenda covering all this, one which is bound to rake up (if it has not already) a fair amount of controversy, part of which is ideologically motivated and part based on pure econometric considerations.

Indeed, the Planning Commission's entire effort towards drawing up the Eleventh Plan is today coloured by the view of the Left — a crucial prop of the Congress-led UPA Government — which has made no bones about its opposition to the Commission as it stands today. The latest indication of this is contained in the Note prepared by the Left on two years of the UPA governance, a discussion of which at the highest political levels is awaited.

`Against spirit of CMP'

Among other things, the Note says: "The Planning Commission has become the hub for the initiation and pursuit of neo-liberal policies which go against the spirit of the National Common Minimum Programme (NCMP).

The alacrity with which sub-committees were set up by it to follow up on the recommendations of the US-India CEO Forum, with each sub-committee dedicated to one recommendation, speaks volumes about its ideological orientation."

It continues: "There is also a concerted effort on the part of the Planning Commission to introduce privatisation under the garb of Public Private Partnerships. For example, the Commission is pushing for the floating of a company with private sector participation in order to undertake the Freight Corridor Project of the Indian Railways." The Note prescribes that the Commission "needs to reorient its approach in order to reflect the priorities set by the NCMP in the Eleventh Five-Year Plan, which is currently under preparation."

This is strong condemnation of the Planning Commission and, clearly, coming from a critical political lobby at the present time it cannot be ignored in the interests of the coalition principle which forms the basis of the Union Government.

Seen from this perspective, it would be useful to place the AP under the scanner in a quick attempt to ascertain where it has fallen foul of the NCMP.

`Faster and inclusive'

First, what are the objectives of the Eleventh Plan, according to the Planning Commission? As has already been pointed out, the basic thrust is clear in the very heading given to the AP, namely, "towards faster and more inclusive growth". How much faster? The AP says that the economy "can grow between 8 per cent and 9 per cent per year on a sustained basis provided appropriate policies are put in place."

As for the inclusivity part, it says that, given a population growth rate of 1.5 per cent per year, the real income of the average Indian would double in 10 years, adding, "It is also possible to adopt policies that will ensure that this growth is broadbased, benefiting all parts of the country, and specially the rural areas".

To drive home the point about inclusivity, the AP says that, "Even if we succeed in achieving broad based and inclusive growth, there are many groups that may still be marginalised. These include primitive tribal groups, adolescent girls, children in the age group 0 to 3, and others who do not have strong lobbies to ensure that their rights are guaranteed. The 11th Plan must pay special attention to the needs of these groups."

How does the AP go about fleshing out the effort to attain these broad targets? The NCMP, in the section on Industry, says clearly that, "Incentives to boost private investment will be introduced."

The AP says much more forcefully that since the private sector "including farming, small scale enterprises and the corporate sector, has a critical role to play in achieving the objective of faster and more inclusive growth... (the sector accounts for 70 per cent of the total investment in the economy)... our policies must aim at creating an environment in which entrepreneurship can flourish."

Public -private partnership

On the involvement of the private sector in conjunction with the public sector (public private partnership) tackling heavy infrastructural development activity, the AP says that the investments are so large that "even with reliance on PPP, the public sector support may have to increase significantly."

The AP also argues that it may not be wise to closely involve the private sector in infrastructure PPPs because "excessive deployment of private resources in infrastructure may 'crowd out' investment in the production sectors, which should be the primary focus of private investors." As far as the NCMP is concerned, it says that, "Public investment in infrastructure will be enhanced, even as the role of the private sector is expanded."

On labour laws, the NCMP says clearly that the UPA "rejects the idea of automatic hire and fire" and that while some changes in the relevant laws may be required they "must fully protect the interests of workers and families and must take place after consultation with trade unions."

On the other hand, while discussing labour-intensive mass manufacturing, the AP argues for "greater flexibility" in some of the labour laws, particularly as regards "appropriate amendments in Section V-B of the Industrial Disputes Act, 1947 to facilitate exit and the Contract Labour (Abolition and Regulation Act) to give to the industry the flexibility necessary to compete in international markets."

Other Recommendations

The AP also urges for continuation of the policy of gradual de-reservation of industries for small-scale production; a consensus on the issue of allowing FDI in modern, organised retail activity; an important role for FDI in general (for "upgrading our technological standards and building international partnerships"); and liberalisation of the financial system which should include "an increased role for foreign financial institutions in the domestic market and a carefully calibrated opening of the economy to international capital markets."

The reform thrust of the Eleventh Plan Approach Paper is, therefore, clear though understated. More important, it would appear that the perceived `gap' between it and the UPA Government's National Common Minimum Programme is quite under control with the latter stating unequivocally the importance of, among other things, agriculture, FDI and the encouragement of FIIs, all of which form critical planks of the AP.

Indeed, the latter has claimed that the growth strategy expounded by it is fully based on the NCMP itself, a claim that is going to come under the scanner increasingly in the coming months.

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