Eleventh Plan paper stays, despite scowls of economists

New Delhi: Will the three-hour brainstorming between economists and Planning Commission officials on the approach paper to the Eleventh Plan yield anything more than a sense of satisfaction?

Deputy chairman Montek Singh Ahluwalia told journalists after the meeting that there will be no major overhauling of the document, which would be finalised and sent to the Prime Minister by August 15.

So go figure.

The 15-odd economists didn’t hold back on their criticism and the prevailing tone at the “frank and candid” discussions was one of disappointment that the document was not taking an unambiguous position on reforms.

Left-leaning economist Jayati Ghosh, incidentally, kept away.

A special invitee was Avinash Dixit, Princeton University professor, at whose lecture on “Governance and Economic Reforms” the previous day Ahluwalia had been a rapt listener.

Bibek Debroy, secretary general Phdcci, reportedly went as far as to say that the approach paper lacked coherence.

“This reads like the NCMP,” he is supposed to have admonished the Planning Commission. Though the paper talks about faster growth, he said, it did not detail how to get there. Perhaps the most interesting (and some say strongest) critique came from Ahluwalia’s better half – Isher Judge Ahluwalia.  

The chairperson of the Indian Council for Research in International Economic Relations (Icrier)  threw back Montek’s favourite “business as usual approach won’t work” line at him.

The document, she said, takes 8.5% growth for granted, except in agriculture. B B Bhattacharya, vice-chancellor of Jawaharlal Nehru University lamented the fact that the paper did not have a strategy to deal with rising oil prices.

The issue of finding resources came up repeatedly and there was little support for the paper’s case to loosen the Fiscal Responsibility and Budget Management (FRBM) Rules straitjacket.

“The FRBM is like a chastity belt; it shouldn’t be loosened without a better alternative,” Isher Ahluwalia very colourfully put what others at the meeting felt.

On the point made that merely focusing on cutting the revenue deficit to zero was problematic since a lot of capital expenditure got classified under this head, Icrier director Rajiv Kumar suggested that such expenditure should be suitably redefined to address this problem but zero revenue deficit was still something to work towards.

Debroy suggested that the government must first assess the resources at its command and then prioritise programmes accordingly.

The social sector and inclusive growth were not ignored. Shubashish Gangopadhyay of the India Development Foundation and C H Hanumantha Rao, chairman of the Centre for Economic and Social Studies, raised the issue of lack of skills, with Gangopadhyay noting that this would hamper efforts to pull people out of poverty.

The Employment Guarantee Scheme can only be a temporary poverty alleviating measure. Rao sought more focused attention on the textiles and agro-processing sectors.

The issue of service delivery also came up several times. To Ahluwalia’s promise that 2.5% of GDP would be spent on health services, economists pointed out that it was not enough to throw money at the social sector; delivery systems will have to be toned up.

Icrier’s Kumar made the point that the approach paper should not list just aggregate growth figures and that targets should be set for the backward states as well, while Rao made a strong pitch for increasing funding to the Backward Region Grant Fund.

At the end of the interaction, Commission member Kirit Parekh ruefully noted, “We have put the paper before our peers. They have said we should have done a better job.” Perhaps. But clearly, nothing much can be done about it now.