New Delhi: The full Planning Commission headed by Prime Minister Manmohan Singh last week cleared the 12th Plan (2012-17) document that will now be taken up by the cabinet before it’s sent for approval by the National Development Council.
Ashwani Kumar , minister of state for planning, spoke in an interview about the key challenges that the economy faces in achieving the 8.2% growth target for the 12th Plan. Kumar also defended the policy changes made by the government recently and said more such measures are coming. Edited excerpts:
Given the volatile domestic and international economic scenario, don’t you think the Plan target of 8.2% growth is too ambitious?
It is true that in the current scenario of an across-the-board slowing down of the global economy, an 8.2% target over the five years of the 12th Plan, is an ambitious one. We have lowered it from 9%, but we do believe that if we remove certain bottlenecks, it is not impossible to achieve this target.
I believe the success of our economic policy initiatives will depend on two fundamentals —first, to give to the entrepreneurs ease of functioning, and second, to have a model of growth such that it leads to job creation, thereby leading to inclusive growth and distributive equity. You will see that the policy announcements of last Friday (14 September) will be followed up by a number of steps essential to bring out their full utility.
Could you tell us what specific steps are being considered?
I believe it is absolutely necessary to have a decision-making system that expedites critical decisions and removes bottlenecks. So, one of the steps is the creation of a National Investment Board. We need it to address inter-ministerial issues, so the files don’t keep going back and forth between ministries. Given the current environment, we also have to ensure officers charged with the function of taking major decisions are not unnecessarily harassed with vexatious litigation and prosecutions. Until we assure honest decision-makers, we will not be able to expedite decision-making. We need processes for quick decision-making, while ensuring transparency and absence of arbitrariness.
Don’t you think the National Investment Board will be similar to a group of ministers (GoM) mechanism?
No, this board will actually consider specific proposals. GoMs have normally considered policy issues. Let’s say for a Rs.2,000 crore power plant project in Chhattisgarh, you need to have a fuel-supply agreement, a power-purchase agreement and various environmental clearances. All the conflicting viewpoints of all members and line ministries will go before this board and decisions will be taken there and then, with no review thereafter. And, remember, this board is going to be headed by the Prime Minister.
In the past, there have been cases where even after the empowered GoM’s decision, the administrative ministry hasn’t implemented it. Here they will have no excuse, because they will be part of the decision-making process. This will help avoid huge cost overruns, huge controversies that emerge and vested interests that are created while a project is under consideration.
How will you ensure that honest officers are not harassed?
Recent controversies have succeeded in creating an atmosphere where even honest officers have this fear, and justifiable fear, that even after they have retired, something could be trumped up to hound them. We will indicate these issues in the governance chapter of the 12th Plan document for the cabinet to consider.
In law, a person is innocent until proved guilty. But we have seen in many instances that the tendency is to view people as guilty until proved innocent. Take, for example, this tendency of trial by media, which is a very real issue today.
The Supreme Court has said that trial by media offends the principle of fair trial, which is an integral component of rule of law which offends against the basic structure of the Constitution, yet we have seen trials by media almost on a daily basis. Something has to be done about it. Either it has to be an internal regulating mechanism in the media or a self-regulatory mechanism. We have to find ways to balance competing rights and aspirations.
So in this attempt to protect honest bureaucrats, the media has a role to play and has to be regulated?
No, I am not talking of government’s regulation of media. I am talking of self-corrective mechanisms. It hasn’t worked so far, so I think government, media, the judiciary will all have to work together to find ways that will not prevent fair comment and yet not tarnish reputations needlessly. In democratic societies, the parameters of different constitutional rights are laid down and the media is conscious of where it must draw the line, but we have seen that sometimes the discipline of the line is not observed.
There are so many officers who have charges of corruption against them and media blows the charges out of proportion. And there is no acquittal. Have you heard any media baron come out and express regret for wrong charges?
The opposition says that the government has reneged on its promise made in Parliament of building a consensus on multi-brand retail.
I don’t think that’s a fair charge. We never promised unanimity. Broad consensus and unanimity are two different things—only four or five states have, so far, objected. We have on the basis of our own assessment concluded that there is broad consensus in the country as a whole that anything that benefits the expansion of the economy, benefits farmers and consumers. Anything that eliminates middlemen, and ensures quality products and services at reasonable prices is in the national interest. We have tried to build consensus, but a time has come in our current state of the economy when critical economic decisions could not be postponed. We are convinced these decisions are in the best interest of the country and we will go full throttle to make these effective.
The differences on these decisions existed a year ago as well, so why the delay in announcement of these decisions?
At that point, there was the view that we needed more extensive consultations with our allies, supporting parties and the opposition parties. We thought, we had many other agendas to push through and we didn’t want these to become an unnecessary stalling ground. We remain committed to creating a broad political consensus and in the interregnum that was available to us, we went back to all the parties who had differences of opinion and we believed that we had persuaded some of them on the overarching necessity of key economic initiatives. We have succeeded somewhere in reducing at least the intensity of opposition to the measures. I am fairly confident that we will be able, sooner or later, to carry everyone together.
Are you bringing in any headline target for measuring inclusivity? Say a target on inequality?
No, but the highest outlay in the 12th Plan, 1.95% of GDP, is for health. We have a very high outlay for education, skill upgradation, infrastructure development, water, sanitation and energy. All of these lead to economic growth with empowerment, and thereby ensure inclusivity. We are not measuring inclusivity by one formula; when economies expand, those on the margins do get benefited. Without getting into the numbers debate on poverty, one thing is clear to everyone that acute poverty levels have come down. There is certainly a far greater expansion of opportunities than there were in the past.
National Sample Survey data shows that jobs created have mainly been in the construction sector. So, rural incomes may have grown through low-quality work. Does this not go against inclusive growth?
The challenge is to create blue-collar jobs, jobs in rural areas. Transition to an industrial economy will be possible only when we create significant growth in the manufacturing sector. A McKinsey study says 1% growth in manufacturing leads to 3% in services. That apart, the challenge is urbanization—do we have enough programmes for urban renewal? Do we have enough jobs, water, sanitation and so on in the urban areas? If we can’t have jobs around the cities, then we will have to have jobs created in the semi-urban areas through manufacturing zones, special economic zones and the new manufacturing policy. All these have been factored in, the issue is how to implement it. That is why the Prime Minister said that he himself will be monitoring certain areas of infrastructure. The infrastructure deficit is costing us 2% of economic growth.
On the health chapter, the ministry is reported to have asked why the Planning Commission wants to assume the nodal agency role.
This suggestion was dismissed by the deputy chairman at the full planning meeting. He stated there was no move to effectuate transition of control to the Planning Commission for health schemes. The suggestion related to restructuring of certain schemes. Should the funds be part of the devolution of central funds as assistance to the states or should it be as CSS (centrally sponsored schemes) to be monitored.
The Planning Commission’s decision to abandon the Tendulkar committee methodology of measuring poverty and set up the Rangarajan committee was viewed as unnecessary political interference in economic measurement issues.
The panel was set up under my initiative and we have at no point of time disputed the rationality of the Tendulkar committee calculations and recommendations. There was a strong perception that certain factors need to be revisited. For example, weightage given to rent for urban housing was not enough. So, we constituted the Rangarajan committee, because poverty evaluation needs to be more contemporaneous. This panel will undertake broad consultations and take all the current realities into consideration. It could be that they reiterate some of the Tendulkar recommendations.
Is the methodology given by the Rangarajan panel going to be used to link all entitlements?
No, for food subsidies and some other entitlements, there will be other criteria. But please let’s wait for the Rangarajan panel’s recommendations, which should come out next year. The point is that the Tendulkar committee yardstick had ceased to function as a credible means for targeting subsidies. There was complete confusion at various levels and between various ministries; different states were yielding different poverty lines. Also, we felt that there was a justification for the criticism of the Rs. 32 per capita per day poverty line, it had no resonance.