Thursday, December 27, 2012

NDC scales down annual growth rate to 8 p.c.

Taking heed of the weak global economic signals, the National Development Council (NDC) on Thursday approved the 12th Plan Document after scaling down the average annual growth target to 8 per cent for the five-year period, as suggested by the Planning Commission, even as Prime Minister Manmohan Singh pitched for a phased increase in energy prices to realistic levels to contain the burgeoning subsidy bill.
The day-long 57th meeting of the NDC, comprising Chief Ministers, Union Cabinet Ministers and top functionaries at the Centre, however, was marred by an unprecedented walkout by Tamil Nadu Chief Minister Jayalalithaa in protest against the 10-minute time cap on her address.
At the end of the day, the meeting, chaired by the Prime Minister, endorsed the Plan Document with a lower growth target at 8 per cent, against 8.2 per cent proposed earlier.
Initiating the discussions, the Prime Minister made out a strong case for a phased increase in the prices of energy — petroleum products, coal and power — as they were “underpriced” and warned the States that failure in controlling subsidies would lead to a cut in Plan expenditure, and thereby development.
Finance Minister P. Chidambaram pointed to the imperative need to contain the fiscal deficit. He said some measures may have caused “immediate pain,” but they were essential to bring down the deficit to 3 per cent of the GDP (gross domestic product) in the next three years.
Harping on need to control subsidies, Dr. Singh noted that while some of them were a “normal part of any socially just” system, they should be well-designed and effectively targeted and the total bill must be kept within the limits of fiscal sustainability. “Failure to control subsidies within these limits only means that other Plan expenditure have to be cut or the fiscal deficit target exceeded,” he said.
In his closing remarks, Dr. Singh justified the scaled-down growth target while noting that several Chief Ministers had recognised that it was only a realistic reflection of the external constraints on the growth. To address the States’ complaints on fuel shortages for power plants, he also asked the Planning Commission to make a quick review of the situation and submit a report in three weeks to resolve the urgent problem.
“Several Chief Ministers have drawn attention to the problem of fuel availability affecting power plants. This is indeed an urgent problem, which needs to be tackled…I am requesting the Planning Commission to make a quick review of the situation and submit a report to me within three weeks,” he said.
Later, briefing reporters, Planning Commission Deputy Chairman Montek Singh Ahluwalia said: “We expect with the growth rate of 5.8 per cent this fiscal and a little over 7 per cent next fiscal and with extra efforts in the remaining three years, we can reach 8 per cent.”
As for the Prime Minister drawing the attention of Chief Ministers towards aligning energy prices with global rates, Mr. Ahluwalia sought to stress that it would not happen immediately. “We cannot subsidise energy permanently. If we will give more subsidy then we will have less money for welfare schemes…It’s not a one-month issue, it’s not a six-month issue, you can delay it for one year,” he said.
The 12th Plan Document seeks to reduce poverty by 10 percentage points in the five-year period and also generate 50 million jobs in the non-farm sector. It aims to raise the farm sector growth rate to 4 per cent and achieve a growth rate of 10 per cent in the manufacturing sector.
By the end of the Plan period (2012-17), the document aims at increasing investment in infrastructure to 9 per cent of the GDP.

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