Rosy sights of the future have often blinded us to the accumulated experience of past plans. Rising outlays and depressing outcomes have been an unfailing pattern. Yet, the Planning Commission never loses its ardour to do more of the same with every plan. Thus, one hardly sees any radical re-thinking in the way successive plans have been formulated, let alone their ineffective implementation, targets left behind and allocations going through “leaky buckets”, as one eminent economist put it.

In its projections for the 12th plan (2012-17), the Commission has no doubt come up with some correctives in several sectors but essentially what are listed are a whole host of challenges and reforms which, in the main, would enable private sector to make a major contribution to development – not only in infrastructure and manufacturing for creation of two million additional jobs every year but also in social development, especially education and health.

Greater reliance on private sector and foreign direct investment to be attracted through reforms to open larger space seems to underlie the assumptions for a “faster, more inclusive and sustainable growth”, which is projected at 9 to 9.5 per cent. Evidently, the Prime Minister Dr Manmohan Singh has concurred that his preferred 10 per cent growth is not feasible, given the planners’ view that even a 9 per cent growth would need strong policy actions. There remains the magnitude of resources for the plan and ways of financing it, to be thought out..

A welcome departure this time is the Commission’s consultative process before doing its Approach Paper for the National Development Council over the next two months. Citizens and ‘think tanks’ have been involved and regional consultations with States are planned in the coming weeks. The refrain is for effective implementation, service delivery and accountability for performance at all levels, along with greater devolution of resources and empowerment of local authorities.

The eleventh plan (2007-12-), ostensibly for “inclusive growth” is expected to close this year with an average growth of 8.2per cent. Our record is held up internationally as no mean achievement, though short of the target of 9 per cent, reflecting economy’s resilience and our able management of the impact of global crisis and drought. However, UPA-II failures of governance are writ large in several areas, let alone scams, and so palpable as to draw the ire of the apex court of the land over starvation deaths when the granaries are full. The Supreme Court’s telling comment, “You cannot have two Indias’, sums up where we stand even after 11 five-year plans.

In the full Planning Commission’s deliberations on April 21, the Prime Minister referred to “important progress” towards “greater inclusiveness” (like an increase in enrolment rates, fall in drop-out rates and reduction in gender gaps etc) and said, ”we must do better in future”. He noted the emerging challenges in regard to energy, water and urbanization, to be gone into detail in the Approach paper.

Usually we get into more basics at the time of a plan formulation but in its course, GDP growth being the over-riding objective for an incremental approach to all social problems, it is the corporate sector and the services that have come to be looked upon as the main drivers of growth. All their concerns occupy the centre-stage of our planners, policy-makers and the budget. A strong lobby for reforms for business and investment finds a receptive Government which in its march may, however, be hobbled by “coalition compulsions”. Far less attention is on agriculture, on which more than 60 per cent of population depend, and which continues to be largely a rain-fed economy and left to fend for itself.

The Prime Minister apparently did not dwell on macro-economic issues of immediate concern, especially inflation remaining at an elevated level defying all official expectations of being lowered to 6 per cent by March 2011. Projections from international institutions are for inflation to remain high during 2011 and beyond, given the current trends in international food and oil prices which recently hit the 120 dollar mark for a gallon.

Demand-supply imbalance, in the context of uprisings in oil producing regions of the Middle East and North Africa, would tend to keep oil prices fairly high and, coupled with the entrenched food price inflation, growth in emerging economies could moderate for the near future, according to IMF and other global institutions. India’s growth is projected at 8.2 per cent this year and 7.8 per cent in 2012.

UPA-II has been notoriously indifferent to the burdens imposed on hundreds of millions in the country by high food prices since 2008, which has now become generalized inflation. It would only worsen with the ongoing surge in oil prices to an extent that it could well become a threat to social stability. Inexplicably, price stability has been missing as a dominant concern for Government’s macro-economic management, which only underlines its weakness to tackle and overcome supply side constraints in foodgrains or other food products.

Manufactured product prices are being revised without let or hindrance, and pronouncedly in the case of essential drugs. Already, the national mood is one of anger against the extent of corruption on a mass scale, and the Prime Minister himself noted “there is little tolerance now for the prevailing state of affairs”. Business leaders are no less apprehensive of social unrest in areas steeped in poverty and lacking economic opportunities.

Conversely, complacency pervades among policy-makers who keep hoping that inflation would decline in the coming months to within the comfort zone of 5 to 6 per cent. The Agriculture Ministry has begun talking of wheat and cotton exports in view of the bumper rabi harvest in a year of record output of foodgrains at over 233 million tonnes. Yet, there is a debate on how much grain to be given to the people and at what price for the promised food security through legislation.

All that the current thinking in the Planning Commission is, is to hope for “better performance” in agriculture and stepped-up efforts in education, health and social development and the like. There is recognition of the challenges in regard to land and water and energy needs with a target proposed of adding 100,000 MW of power capacity.

At the global level, for the next few years, advanced economies would be on a fiscal stabilization path and managing debts at sustainable levels. Financial stability is not restored as the global banking system is not fully repaired after the meltdown of 2008. Eurozone’s peripheral economies in sovereign debt crisis is another source of instability, apart from oil and commodity prices.

A rebalancing of global growth whereby emerging economies and other developing countries are required to rely more on domestic consumption – a G-20 commitment – may call for adjustments for all economies, more for hitherto overly export-dependent ones. Medium-term growth plans of all economies would have to confront global challenges of food and energy security and climate change. (IPA Service)