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Planning Commission highlights need to revive investment, contain fiscal deficit

Prime Minister Manmohan Singh arrives to preside over the Full Planning Commission meeting. Planning Commission Deputy Chairman Montek Singh Ahluwalia, Finance Minister Pranab Mukherjee, Railways Minister Mamata Banerjee and Power Minister Sushilkumar Shinde are also seen.
Prime Minister Manmohan Singh arrives to preside over the Full Planning Commission meeting. Planning Commission Deputy Chairman Montek Singh Ahluwalia, Finance Minister Pranab Mukherjee, Railways Minister Mamata Banerjee and Power Minister Sushilkumar Shinde are also seen.
The full Planning Commission, which met here today with Prime Minister Manmohan Singh in the chair, highlighted the need to revive investment in the country, especially in infrastructure, and contain fiscal deficit within limits of prudence.

The discussions also established the challenge of resource mobilisation for the last two years of the XIth Five Year Plan (2007-12).

"We will have to give careful thought to the various suggestions made for raising additional resources and try to ensure that the momentum of planned development is maintained in the next two years and that our flagship programmes are adequately funded," Dr Singh said in his concluding remarks at the meeting.

The Prime Minister, who is the Chairman of the Commission, noted that today's discussions emphasised that, while expanding resources was important, achieving efficiency in the use of resources was equally important.

He hoped the Commission would use the Mid-Term Appraisal of the XIth Plan to give concrete suggestions for improving both the design of the system and the efficiency of implementation.

"One consequence of scarce resources is that we should fully explore the scope for Private Public Partnership (PPP). This has been attempted in the infrastructure sectors where we have had some success, although progress has been less than what we would have wanted. We are taking steps to streamline the process so that PPP projects can move faster," he said.

This was the first meeting of the full Planning Commission since the United Progressive Alliance (UPA) Government began its second five-year term in May.

The meeting had two subjects on the agenda---an assessment of the economic situation in the country and a review of the status of implementation of the Integrated Energy Policy.

"We have had a very useful discussion on the state of the economy and the pending issues in energy policy. I thank my Cabinet colleagues for their remarks. The Planning Commission will take these into account in finalising the Mid Term Appraisal," Dr Singh said in his closing remarks.

He said he was happy to note that Minister Members had broadly endorsed the assessment of the current economic situation presented by the Commission.

"The economic picture at present can be characterized by a combination of strengths built up over several years, the lingering effect of the global slowdown and the temporary effect of the drought in the current year, particularly on agricultural output and food inflation. We must build on the strengths and tackle the new challenges. We have to pay careful attention to the management of the food economy and the overall macro economy," he said.

Dr Singh said he agreed with the general approach at the meeting that while the Government must do everything necessary to tackle the drought, it should not be over-pessimistic.

"We are in a very strong position to manage the consequences of the drought. Our food stocks in particular are very high. The government is giving focussed attention to all aspects of drought management including both relief measures and efforts to protect the Kharif crop as much as possible and to ensure a normal Rabi season," he said.

According to the Prime Minister, the National Rural Employment Guarantee Scheme (NREGS) gave the Government a very important instrument for supporting incomes of those most in need.

"We must make all efforts to converge NREGS and other agricultural and rural schemes to minimise the impact of drought in 2009-10," he said.

Dr Singh said the underlying strength of the economy, which had been brought out in the paper by the Planning Commission and endorsed in the discussion, would stand the country in good stead as it sought to return to its high growth target over the next two years.

He said the integrated energy policy approved by the Union Cabinet in December last year presented a very large policy agenda.

"It is clear from the discussion that there has been some progress in important areas, but the pending policy agenda is very large. Pursuit of these issues is the responsibility of different ministries. There was a suggestion to convene a meeting of the National Development Council (NDC) to discuss issues related to climate change and energy management," he said.

Prime Minister Manmohan Singh addressing the Full Planning Commission meeting.
Prime Minister Manmohan Singh addressing the Full Planning Commission meeting.

The Prime Minister directed the Planning Commission to pursue these issues with the Ministries concerned and present a detailed assessment of progress on these areas at the time of the Mid Term Appraisal so that the record of achievement is much better.

"Difficult areas should be brought back to my attention," he said.

He said that a rational energy policy, with appropriate policies for renewable and non-conventional energy sources, was also important for climate change. "We need to dovetail our strategy for energy with our national action plan for climate change," he stressed.

Dr Singh asked Planning Commission Deputy Chairman Montek Singh Ahluwalia to arrange meetings of the full Planning Commission more frequently so that there was an opportunity to discuss various issues in a more holistic manner.

Earlier, in the morning, in his opening remarks, Dr Singh said an assessment of the economic situation was relevant, not only because the Government was at the start of its second term but also because the country was at exactly the mid-point of the XIth Plan.

"We have been through a difficult year because of the global economic downturn which is only now coming to an end with a slow return to normalcy in the months that lie ahead. The country has also seen a poor monsoon. I felt it would be useful for the Planning Commission to present its assessment of the overall economic situation to the Minister Members of the Commission," he said.

The Prime Minister said energy was vital for the country's economic growth and this was the area where India was a deficit economy.

He said India imported more than 70 per cent of its petroleum energy needs and was also moving to a deficit position in coal.

According to him, rational energy policies are also critical for rational responses to the threat of climate change.

"This is a new compulsion and we need to assess whether we are on track in critical aspects of our energy policy. In our situation each energy sub-sector is the domain of a different Ministry. This has often meant a non-symmetric policy stance – the principles being adopted to determine policy in one sector are not the same as in another.

"The Integrated Energy Policy document that was approved by the Cabinet in December 2008 contained a number of recommendations covering different sub-sectors. I thought it would be useful for the Planning Commission to present an assessment of how these recommendations have been implemented," he said.

Apart from Dr Ahluwalia and other full-time Members, the meeting was also attended by, among others, Finance Minister Pranab Mukherjee, Home Minister P Chidambaram, Human Resource Development Minister Kapil Sibal, New and Renewable Energy Minister Farooq Abdullah, Health Minister Ghulam Nabi Azad, Power Minister Sushil Kumar Shinde, Railway Minister Mamata Banerjee and Dr C Rangarajan, Chairman of the Prime Minister's Economic Advisory Council.

The full-time Members of the Commission are B K Chaturvedi, Saumitra Chaudhuri, Syeda Hameed, Narendra Jadhav, Abhijit Sen, K Kasturirangan, Arun Maira and Mihir Shah.

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