The Hindu Business Line : Reasonable prognosis

THE MID-TERM APPRAISAL of the Tenth Five Year Plan by the Planning Commission has brought out the real picture of the Indian economy. What has emerged from the elaborate exercise is that the economy has broken out of the low-growth syndrome of the past decades and is now among the top of the list of emerging economies. Yet, there are several crucial weaknesses which, if not addressed, can hold back India from its goal of becoming a developed country by 2020.

By the Planning Commission's judgement, the gross domestic product (GDP) growth has averaged 6.5 per cent in the first three years of the Tenth Plan (2002/03-2006/07), which is below the Plan target of 8.1 per cent but commendable nonetheless. Private corporate investment appears to have revived after remaining dormant for several years and the international perceptions of India are generally positive creating a favourable climate for foreign direct investment. Industrial production's lacklustre performance in the initial years of the Tenth Plan seems to have ended in 2004-05 with a growth rate of 8.4 per cent in the first three quarters of that year. Though below the Plan target of 10 per cent, it does mark a distinct improvement over the performance in the first two years. Additionally, the Planning Commission found that a positive feature of the recent industrial performance was the evident rise in competitiveness in many sectors, particularly information technology, biotechnology, automobiles and auto-components. Asis usually the case, there are quite a few negatives to counter the positives and the main area of concern highlighted by the Planning Commission is the deceleration in agricultural growth. A buoyant agriculture is vital not only for achieving the overall growth of 8 per cent but also for bringing about an all-inclusive growth in the economy. The neglect of agriculture or such other areas as health, education, housing, and employment, for the underprivileged, will not only fragment the country but also act as a drag on India's progress into the ranks of the developed world.

The Mid-Term Appraisal has accordingly catalogued the areas that need priority attention, and also worked out the funding that would be required to back the initiatives. The figures look mind-boggling but not entirely impossible. It is in this background that the full meeting of the Planning Commission has rightly tasked the Commission and the Finance Ministry with working out systems that would ensure that the progress of the Tenth Plan is not hampered by any resource crunch. The challenge now lies with these two arms of the government working out such systems without, of course, going back to the era of high taxes and governmental controls. The resources for the neglected areas have to be found within the overall framework of a modern, competitive and growth-oriented economic model.

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