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Recession effect: Plan panel scales down Ninth Plan GDP growth rate to 6.5 pc

The government today scaled down the projected gross domestic product growth rate for the Ninth Five-Year Plan by 0.5 per cent to 6.5 per cent.

The meeting of the full Planning Commission which was chaired by Prime Minister Atal Bihari Vajpayee reduced growth projections in view of the difficult global situation and because the economy had not performed as well as expected during the first two years of the Plan period.

Member-secretary S R Hashim and Dr Montek Singh Ahluwalia, Member, Planning Commission, said that the economy is expected to grow by six per cent in this fiscal. Therefore it is important to move to more than seven per cent GDP growth for the next three years so that an average growth rate of 6.5 per cent can be achieved during the plan period.

Planning Commission Deputy Chairman Jaswant Singh presented to Vajpayee a new draft of the Ninth Five Year Plan which was later discussed at the meeting. It was noted that the Planning Commission had prepared special action plans to reflect the priorities set by the prime minister.

The action plans cover food and agriculture, health, industry, water resources, housing, education, health and family welfare, physical infrastructure and information technology. The SAP has been incorporated into the draft.

The gross budgetary support is to be retained at Rs 3.74 trillion. The prime minister directed the commission that economic reforms initiated and the plan objectives should be spelt out in each sector.

The draft will be revised keeping in view the directions of the prime minister today, and will be submitted to the Cabinet in the first week of December. It will then go to the National Development Council.

Those who also attended the meeting at the prime minister's residence included Finance Secretary Vijay Kelkar, apart from senior officials of the commission. Planning and Programme Implementation Minister Ram Naik attended as a special invitee.

Dr Ahluwalia said the overall growth during the last two years had been very good considering the state of world economy.

There has been speculation that the fiscal deficit target for the current year would be revised upwards. Dr Ahluwalia conceded that the fiscal deficit was under pressure but said the exact figure would be worked out with the finance ministry.

The budgetary support which has been maintained was approved by the last NDC.

He denied that there was any plan holiday and said the Ninth Plan would continue as scheduled from 1997 to 2002.

Dr Hashim claimed that the growth rate for the current year had been six per cent. The growth in the industrial and agricultural sectors had been four to five per cent. Asked how this had been achieved in view of floods and other calamities, he said that the last rabi crop had been good and there had been adequate availability of water.

Dr Ahluwalia said at this stage, it would be inappropriate for him to spell out the exact number of the parameters of the economy, even though the commission had a fair idea of what these are likely to be. Even though details of the export growth rate were to be worked out, the target is likely to be revised, he said.

Exports have been performing poorly during the last two years. He said fiscal deficit was a sort of a residue and depended on what the tax revenues were.

Informed sources said the commission had been asked to take into consideration the poor revenue generation by both the Central and state governments.

The draft plan prepared by the United Front government had targetted a fiscal deficit of four per cent, investment rate of 28.3 per cent, export growth of 14.5 per cent, and import growth of 12.2 per cent. Annual GDP growth was pegged at seven per cent.

According to informed sources, public sector dissavings caused by the hike in salaries are expected to exert pressure on capital expenditure projections in the Ninth Plan.

UNI

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