People's Democracy

EDITORIAL

Tenth Plan Farce

THE draft Tenth Plan approved by the Cabinet will be placed before the National Development Council, for adoption, on December 21.  It is a sign of the times that this document has evoked very little reaction.  There are no debates or opinions being voiced in the media about the direction of the Plan and the targets to be achieved.  This reflects the reality. The Tenth Plan has very little to do with planning as such.  It is a document permeated by the IMF-World Bank philosophy which is detrimental to the basic aim set out for the Planning Commission in 1950.  The Resolution setting up the Commission directed it to work for providing citizens adequate means of livelihood; the ownership and control of material resources of the community are so distributed as to serve common good and to see that the operation of the economic system does not result in the concentration of wealth and means of production.  The Tenth Plan, by pushing for greater privatisation and for dominance of market relations, has converted the planning exercise into a farce. 

The Plan has setout an annual target of 8 per cent growth. An impossible target, given the fact that the investment and savings rates which are currently at 24 per cent will have to be hiked up to 28.4 and 26.8 per cent respectively.  The incremental capital output ratio (ICOR), which is the output generated by each unit of fresh investment, is at present 4.5.  The draft states that this should be lowered to 3.6 which is also unrealistic. 

The total public sector allocation is Rs 15,25,639 crore, of which Rs 6,32,456 crore is for the states. The Plan will have to be financed through increased borrowings.  39 per cent of the State Plan fund is from the borrowings.  The outstanding debt of all state governments rose to about Rs 5 lakh crores in March 2002. Given the fact that most of the states are drowning in debt, it is certain that the targets for raising funds for the states will not be met.

According to the Plan document itself, there has been a steady drop in public investment in agriculture.  The gross capital formation in agriculture in the public sector fell from 33 per cent in 1993-94 to 24.2 per cent in 2000-01.  The document also admits that the current backlog of unemployment at around 9 per cent is equivalent to 35 million. It also states that the tax GDP ratio has been declining from 10.3 per cent in 1991-92 to 8.6 per cent in 2001-02.

For resource mobilisation, the Plan document cannot conceive of going against the prevailing wisdom of decreasing taxes on the affluent to raise more resources.  It continues to harp on the benefits of reducing taxes to garner more revenue.  A source of funds to finance the Plan will be disinvestment of the public sector enterprises which is expected to provide Rs 16,000 crore per year. 

The Tenth Plan aims to generate 50 million employment in the next five years. How employment will be generated by reduction of staff strength of the state governments and privatisation of the public sector units remains unexplained.  It also talks about private-public sector partnership for increasing investment in agriculture and infrastructure.  Even in education, for achieving universal elementary education, what is advocated is a "synergetic partnership with the private sector".  This is expected to bring back 40 million children in the age group of 6 to 14 not attending school.    The public distribution system is to be restructured with only rice and wheat in the targeted PDS.

The Tenth Plan document is honest in admitting that nothing much can be done in the sphere of land reforms. It admits that there is not much scope for getting any more land under the ceiling laws for distribution.   Instead, as per the World Bank prescription, it prescribes providing loans for land purchases as a means to provide land to the landless and dalits. Of course, there will be interest on the loan taken by the landless.

The BJP-led government has virtually given a hasty burial to the planning process.  The ghost of planning continues to haunt us in the shape of the Tenth Plan.