People's
Democracy
(Weekly Organ of the Communist Party of
India (Marxist) No. 01
January 05, 2003
(Weekly Organ of the Communist Party of
India (Marxist) |
Vol.
XXVII No. 01 January 05, 2003 |
Nirupam
Sen,
Minister
for
Development
and
Planning,
Government
of
West
Bengal
attended
the
50th
meeting
of
National
Development
Council
held
on
December
21,
2002
in
New
Delhi.
His
speech
making
critical
observations
on
the
Tenth
Plan
is
being
reproduced
below:
I
take
this
opportunity
to
convey
my
sincere
thanks
to
the
Planning
Commission
of
India
for
organising
this
meeting
of
the
National
Development
Council
for
a
comprehensive
discussion
on
the
Tenth
Plan
at
a
time
when
our
country
has
been
passing
through
a
very
critical
phase
of
its
economic
development.
It
is
well
known
to
us
that
the
beginning
of
Tenth
Plan
has
been
marked
by
unprecedented
fiscal
crisis
of
the
states
as
well
as
of
the
centre.
Fact,
however,
remains
that
the
financial
problems
of
the
states
stem
basically
from
the
high
debt
and
interest
burden,
and
rising
salary
and
wage
bills.
Although
the
high
debt
burden
of
the
states
has
been
a
persistent
problem
for
the
last
several
years,
the
successive
Finance
Commissions
have
not
appropriately
addressed
the
issue.
Nor
have
they
suggested
concrete
measures
to
overcome
it.
We
have
impressed
upon
the
government
of
India
to
provide
adequate
relief
to
the
states
to
mitigate
this
acute
problem
but
the
initiatives
of
the
government
of
India
leave
much
to
be
desired.
In
this
august
forum
we
would
like
to
once
again
emphatically
state
that
the
government
of
India
should
take
new
initiatives
for
providing
effective
debt
relief
to
the
states.
It
also
needs
to
be
considered
if,
given
the
declining
trend
in
the
interest
rates,
prevailing
interest
rates
could
be
made
applicable
in
respect
of
the
outstanding
debt
of
the
states.
In
this
context,
it
will
not
perhaps
be
out
of
place
to
mention
that
it
is
ultimately
the
firm
political
will
that
is
of
crucial
importance
in
resolving
the
fiscal
crisis
of
the
states
for
strengthening
the
federal
polity
of
the
nation.
The
country
cannot
be
stronger
if
the
states
are
weakened.
Time
is
ripe
when
we
must
strive
for
collective
good
for
a
stronger
national
economy,
and
it
is
possible
only
when
the
collective
interests
of
the
states
are
adequately
protected.
We had cautioned during the Ninth Plan that the effect of the 5th Pay Commission of the central government would be to force the states to emulate the recommended pay structure leading to unsustainable revenue expenditure. We had put forward our stand in the NDC meeting that the centre should bear at least 50 per cent of the additional expenditure for the resultant enhanced salary bill. But, our request did not receive favourable response from the centre. Consequently, though West Bengal has achieved the targets of the Ninth Plan, many other states, I understand, have been unable to do so. We are at the end of the first year of the Tenth Plan. The achievement of the targets as fixed for the states in the Tenth Plan obviously lies in the effective redressal of the fiscal problem the states have been passing through. Else, the entire Tenth Plan projections might be upset.
We
believe
in
planning
in
a
pragmatic
way.
It
must
be
realistic
and
targets
should
be
so
fixed
as
to
reach
them
comfortably.
Although
the
NDC
had
approved
a
8
per
cent
growth
rate
it
appears
from
the
Tenth
Plan
Document
that
the
demonstrated
annual
growth
potential
of
Gross
Domestic
Product
of
the
country
is
only
about
6.5
per
cent.
This
implies
that
the
8
per
cent
growth
target
set
for
the
Tenth
Plan
is
well
above
the
country’s
demonstrated
potential
and,
therefore,
could
be
far
from
realistic.
Before
we
go
on
to
the
details
of
the
Tenth
Plan,
I
would
like
to
dwell
on
the
overall
strategy
of
the
Tenth
Plan
as
set
out
in
the
Plan
Document.
The
Plan
Document
stipulates
that
for
the
Tenth
Plan
a
redefinition
of
strategy
that
is
needed
relates
to
the
role
of
the
government.
The
role
of
the
government
according
to
the
Plan
Document
would
be
much
less
than
what
it
was
in
the
past.
Specially
it
is
argued
that
since
India
at
present
has
a
vibrant
private
sector,
industrial
growth
in
the
Tenth
Plan
will
be
through
private
industrial
investment.
However,
even
though
the
Plan
Document
holds
that
‘strong
and
sustained
growth
of
private
investment
is
at
the
heart
of
the
Tenth
Plan
strategy’,
it
has
been
stated
elsewhere
that
the
private
sector
lacks
dynamism.
This,
the
Plan
Document
argues,
could
be
because
of
the
huge
excess
capacities
that
exist
in
a
number
of
industries.
It,
therefore,
asserts
that
in
the
first
two
years,
public
investment
would
have
to
take
up
the
slack
in
the
economy
and
only
then
private
investment
would
become
decisive.
This
insistence
on
the
necessity
of
public
sector
investment
throughout
the
Plan
Document
demonstrately
contradicts
the
Tenth
plan
strategy
of
relying
mainly
on
the
private
sector.
This
would
seem
to
confirm
our
comment
on
the
revised
Approach
Paper
to
the
Tenth
Plan,
that
limitation
of
the
market
system
should
be
recognised
and
the
role
of
the
State
in
overcoming
these
limitations
is
acknowledged.
We
shall
come
back
to
this
a
little
later.
In
order
to
achieve
the
8
per
cent
growth
rate,
public
sector
savings
has
to
be
increased
significantly.
The
governments
at
the
centre
and
the
states
will
thus
have
to
severely
compress
their
revenue
deficit
to
achieve
the
required
savings
rate.
Even
if
this
savings
rate
is
achieved,
which
seems
largely
improbable,
the
government
has
to
borrow
around
6.8
per
cent
of
GDP
during
the
Tenth
Plan
to
finance
the
public
sector
investments.
Severe
shortfall
in
public
sector
savings
could
thus
play
havoc
with
the
fiscal
system.
In
this
context,
we
have
grave
reservations
about
the
policy
of
indiscriminate
disinvestments
to
raise
resources.
This
would,
by
divesting
profitable
units,
considerably
erode
the
centre’s
capacity
for
mobilising
resources
over
the
medium
to
long
term.
Besides,
the
policy
of
dismantling
of
the
public
sector
would
eventually
affect
the
vast
majority
of
our
working
people
and
will
have
ruinous
effect
on
the
ancillary
industries
directly
or
indirectly
dependent
on
them.
It
is
a
paradoxical
situation.
The
economic
system
can
only
thrive
through
increasing
public
investments.
However,
as
the
system
does
not
generate
enough
resources
to
the
public
sector,
it
is
forced
to
borrow.
However,
borrowing
puts
more
pressure
on
the
fragile
fiscal
system.
Drastic
curtailment
of
government
expenditure
thus
becomes
inevitable.
This
leads
to
lack
of
demand
in
the
economy,
requiring
additional
borrowings
for
public
sector
investments.
Another
important
issue
that
the
Plan
Document
has
brought
out
is
that
the
central
government
lacks
the
institutional
capability
for
carrying
out
large-scale
investments.
The
Plan
Document
argues
that
the
institutional
capacity
of
state
governments
to
undertake
public
investments
is
better
than
that
of
the
centre.
According
to
the
Plan
Document,
the
centre
is
likely
to
have
sufficiency
of
resources
and
a
lack
of
institutions,
whereas
the
position
of
the
states
could
be
exactly
the
opposite.
It
is
suggested
that
as
a
result
the
centre
should
play
an
important
role
in
funding
state
level
public
investments.
We
have
been
consistently
highlighting
this
issue
and
putting
forward
our
arguments
for
years
together
but
have
not
received
encouraging
response.
Even
the
much
heralded
transfer
of
Centrally
Sponsored
Schemes
to
the
states
has
not
yet
materialised.
This
is
an
important
issue
and
needs
to
be
formalised
without
any
further
delay.
The
Plan
Document
adduces
a
significant
decline
in
Incremental
Capital
Output
Ratio
(ICOR)
in
the
Tenth
Plan
as
the
principal
reason
why
the
8
per
cent
growth
could
be
feasible.
This
improvement
in
ICOR
through
higher
capacity
utilisation
and
efficiency
enhancing
policies
is
argued
to
be
achievable.
However,
unless
large
public
investments
in
the
first
two
years
of
the
Plan
takes
up
the
slack
in
the
economy,
possibility
of
realisation
of
the
projected
ICOR
will
remain
a
far
cry.
Thus, adequate public sector investment is crucial not only for increasing private sector demand but also for declining ICOR and thus for achieving 8 per cent growth target.
The
Plan
Document
places
special
emphasis
on
rising
agricultural
income
for
generating
growth
in
the
non-agricultural
sector.
The
Tenth
Plan
target
for
agricultural
growth
is
set
at
4
per
cent.
The
Plan
Document,
as
in
the
Approach
Paper,
continues
to
advocate
the
elimination
of
subsidies
in
the
agricultural
sector.
This,
as
was
argued
in
our
comments
on
the
Approach
Paper,
will
affect
adversely
the
small
and
marginal
farmers.
On
the
other
hand,
the
bigger
farmers
with
their
dominant
market
power
will
continue
to
have
access
to
the
required
resources
–
credit,
water,
power,
fertilizer-although
at
a
higher
cost.
This
will
raise
costs
and
unless
productivity
increases,
lead
to
demand
for
higher
procurement
prices
which
the
government
will
have
to
concede.
It
is
argued
that
proper
utilisation
of
inputs
can
only
be
ensured
if
a
hard
budget
constraint
is
put
on
the
cultivators.
Only
radical
land
reforms
that
can
remove
the
extra
market
power
of
rich
farmers
and
so
force
them
to
minimise
costs
through
proper
input
mix
can
make
it
happen.
But,
surprisingly
land
reform
does
not
constitute
the
focused
area
of
the
Plan
document.
On
the
contrary,
it
advocates
consolidation
of
land
holdings.
Productivity
gains
through
land
consolidation
in
the
northern
states
are
seen
as
a
step
to
be
emulated
by
other
states.
Fragmentation
of
land
holding
is
acute
in
Eastern
India,
specially
in
West
Bengal.
Consolidation
of
fragmented
holdings
of
marginal
farmers
so
as
to
allow
them
to
operate
as
small
farmers
could
be
advisable.
It
is
an
empirical
fact
that
small
and
medium
farmers
have
higher
productivity.
However,
the
policy
of
large
scale
consolidation
of
holdings
could
provide
a
pretext
for
alienation
of
land
from
the
poor
farmers.
This
would
jeopardise
the
gains
of
land
reforms
and
usher
in
a
skewed
agricultural
growth
process.
It
is,
therefore,
imperative
to
have
social
control
over
the
land-holding
consolidation
process
so
that
drastic
changes
in
the
land-ownership
pattern
could
be
thwarted.
It
is
felt
that
the
strategy
advocated
in
the
Plan
Document
would
lead
to
rich
farmer
driven
growth
process.
In
that
case
the
Plan
Document
objective
of
generating
demand
for
non-agricultural
goods
through
rising
purchasing
power
widely
dispersed
among
the
rural
masses
will
not
be
realised.
The
silver
lining
in
the
Plan
Document
lies,
however,
in
its
advocacy
for
a
significant
rise
in
cropping
intensity
during
the
Tenth
Plan
for
increasing
agricultural
production.
However,
such
rising
cropping
intensity
should
not
lead
to
environmental
degradation.
Specifically
rising
cropping
intensity
should
not
lead
to
over-utilisation
of
ground
water.
The
Plan
Document
programmes
of
large
scale
wasteland
reclamation,
rainwater
harvesting,
development
of
irrigation
and
other
rural
infrastructures,
improving
road
connectivity,
strengthening
of
markets
etc
are
important
and
essential.
Specially
relevant
for
West
Bengal
is
the
Plan
Document’s
advocacy
of
crop
diversification
from
cereals.
Using
the
Minimum
Support
Price
to
encourage
such
crop
diversification
could
be
successful.
However
such
crop
diversification
should
not
threaten
the
food
security
in
the
state.
The
policies
pursued
by
the
central
government
in
respect
of
Public
Distribution
System
do
not
provide
the
safety
net
to
the
vast
masses
of
our
people
whereby
they
may
have
easy
access
to
food
and
cereals
as
well
as
the
essential
items
for
their
livelihood.
We
emphatically
state
that
the
PDS
system
must
be
strengthened
so
that
the
requirements
of
the
common
people
could
be
adequately
met.
The
Plan
Document’s
emphasis
on
small
and
village
industries
is
a
positive
feature.
But
the
role
played
by
commercial
banks
including
RRBs
in
providing
credit
to
the
sector
has
been
extremely
distressing.
It
is
the
offshoot
of
the
recent
policy
of
the
government
of
India
in
the
banking
sector.
The
policy
must
have
to
be
changed
to
ensure
adequate
credit
to
the
sector
on
a
priority
basis.
Employment
is
the
most
important
objective
of
the
Tenth
Plan.
The
Plan
Document
has
shown
that
with
8
per
cent
growth,
growth
in
employment
will
be
1.7
per
cent
per
annum
during
the
Tenth
Plan,
whereas
labour
force
will
grow
at
the
rate
of
1.8
per
cent
per
annum.
Thus
the
Tenth
Plan
objective
of
providing
employment
to
all
additions
to
the
labour
force
during
the
Tenth
Plan
will
not
be
achieved.
It
is
obvious
that
if
the
8
per
cent
growth
rate
is
not
achieved,
and
this
is
most
probable,
the
anticipated
employment
during
the
Tenth
Plan
will
not
be
achieved
even
if
the
labour
intensive
programmes
advocated
in
the
Plan
Document
are
implemented.
Moreover,
the
systematic
attempt
in
downsizing
the
government
and
the
public
sector
would
further
lead
to
shrinkage
of
employment.
In
addition,
the
Plan
Document’s
insistence
on
consolidation
of
land
holdings
could,
it
is
apprehended,
logically
lead
to
rich
farmer
centred
growth
process.
This
growth
strategy
cannot
bring
into
the
productive
fold
the
large
masses
of
the
rural
poor.
As
the
West
Bengal
experience
shows
land
reforms
with
accelerated
agricultural
growth
could
lead
to
high
labour
absorption
in
the
production
process,
generate
widely
dispersed
purchasing
power
and
so
encourage
considerable
off-the-farm
activities.
This
alternative
strategy
could,
if
supplemented
by
the
Plan
Document’s
special
employment
programmes,
generate
significant
employment.
The
huge
buffer
stock
available
with
the
centre,
a
clear
indication
of
low
purchasing
power
of
the
people,
would
allow
it
to
undertake
massive
food
for
work
programmes.
This
will
significantly
reduce
unemployment
problem
in
the
rural
sector
and
give
impetus
to
vibrant
growth
of
rural
economy
to
the
advantage
of
accelerated
growth
in
other
sectors.
The industry sector is expected to register an average annual growth rate of 10 per cent. The Plan Document would like to enthuse private industrial investors through deepening reforms – specifically labour reforms. However such reforms, I fear, might not lead to increasing private investments. It was advocated in the recent past that lowering of interest rates would unleash the ‘animal spirit’ of investors. But this did not happen. That is, if investment intentions are there, it is the demand condition that in the final analysis would determine the actual implementation of private investment. And unless public sector investments are jacked up and agricultural growth increases the purchasing power of the rural population, private industrial investment will not pick up. Under the circumstances, it is doubtful if 10 per cent annual growth rate can be achieved by the industry sector.
However,
the
spate
of
measures
relating
to
property
transactions
in
urban
areas
like
repeal
of
urban
land
ceiling
act,
amending
rent
control
act,
land
acquisition
act,
rationalisation
of
tax
rates
on
real
estates,
could
unleash
speculation
in
urban
properties.
While
updating
of
many
of
these
archaic
laws
is
necessary,
it
is
equally
important
to
have
adequate
safety
valves
in
the
regulatory
system
to
prevent
the
growth
of
unscrupulous
elements.
WB
TO
REGISTER
The
Plan
Document
has
set
an
average
annual
growth
rate
8.8
per
cent
for
West
Bengal
in
the
Tenth
Plan.
In
2001-2002,
the
state
is
expected
to
achieve
a
growth
rate
of
around
8
per
cent.
This
will
be
possible
mainly
because
industrial
production
reached
a
record
level
in
2001-2002
and
because
the
tertiary
sector
registered
around
7
per
cent
growth
rate.
However,
achieving
the
high
growth
rates
set
in
the
Plan
Document
will
be
a
daunting
task.
For
one,
falling
cereal
prices
could
lead
to
large
scale
diversion
of
area
from
cereals
to
other
crops.
This
structural
change
in
crop-mix
could
adversely
affect
overall
agriculture
production
in
the
initial
years
of
the
Tenth
Plan.
Growth
in
the
industry
sector
would
depend,
to
a
large
extent,
on
the
buoyancy
of
the
industrial
sector
in
the
country
as
well
as
the
global
trend.
Rising
agricultural
production
would
allow
the
small
scale
sector
to
register
impressive
growth
rate.
However,
this
will
only
be
possible
if
the
availability
of
credit
for
the
SSI
sector
becomes
easier.
The
growth
in
the
tertiary
sector
is
dependent
to
an
extent
on
growth
in
agriculture
and
industry
sectors.
However,
the
accelerated
growth
of
the
IT
sector
in
the
Tenth
Plan
would
ensure
that
the
tertiary
sector
grows
at
a
significant
rate
in
the
Tenth
Plan.
It
might
be
noted
that
the
state
has
been
able
to
achieve
significant
growth
rates
in
the
recent
past
in
spite
of
the
fiscal
constraint
and
natural
calamities.
This
gives
us
the
confidence
to
assert
that
given
our
alternative
development
strategy
and
our
ability
to
involve
the
common
people,
our
firm
resolve
to
deepening
of
democracy
through
institution
building
and
mass
participation
in
the
whole
process
of
development,
the
state
will
be
able
to
maximise
benefits
from
given
investments
and
so
register
a
high
growth
profile
in
the
Tenth
Plan.
I
thank
you
for
giving
me
this
opportunity
to
express
my
views.
I
hope
these
deliberations
will
allow
us
to
decide
on
the
right
path
for
sustainable
development
of
our
people
and
help
realise
our
dreams
for
a
strong
and
vibrant
national
economy.
(Sub
headings
and
emphasis
added
by
the
editor)
