After shelving the 9th five year plan and dismal performance
during the 8th plan, the government has now finalised a new "three year
development programme 2000-2003" envisaging a 6 per cent GDP growth rate as
against an average of 4 per cent during the 8th plan 92-98 and the subsequent 2
years supposed to be covered under the 9th plan.
The 9th five year plan which was to start in July 1998 could
not be finalised due to various reasons including inter provincial differences
and centre/provinces divergent views on many issues. The newly appointed
minister for state and Deputy Chairman Planning Commission, Dr. Shahid Amjad
Choudhry had revealed to the newsmen last month that instead of perusing the
draft of 9th five rear plan, the commission was working on a 3 year crash
programme with new priorities in view of the changed circumstances to cover the
remaining 3 years of 9th plan. The plan has now been finalised with almost a
consensus of federating units and will be submitted to the Cabinet Division in
about a weeks time for approval. In the new plan special attention has been
focused on three sectors namely the development of oil and gas, information
technology and software development and agriculture sector.
According to the new "Three Year Development Programme
2000-2003", 43.1% increase in the gas production has been planned from 2236
MMCFD in "1999-2000 to 3200 MMCFD in 2002-2003.
Electricity generation has been planned to increase by 14%
increasing the installed capacity from 16958 MW in 99-00 to 19091 MW in 02-03 an
average annual increase of 4.4% reaching 74.867 Gwh bye 02-03. As a result, the
electricity and gas sector will grow by 5.8%.
Services sectors as a whole are planned to grow at an average
rate of 5.0% per annum. The main contributors of value addition in this sector
are transport, communications and trade. The transport and communications sector
accounts for 10.0% of GDP and is forecast to grew at the rate of 6.1% Value
addition in this sector will come from road transport and air services,
telecommunication, postal service, broadcasting and telecasting services. The
growth in this sector depends on improvement in railways operational structure.
Trade
The trade sector, having a 15.8% of share in GDP, depends on
the level of activity in agriculture and manufacturing sectors and import of
goods. Based on the annual growth of 5.0% in agricultural sector, 6.3% in the
manufacturing sector and 5.0% in imports, the trade sector is projected to grow
by 5.4%.
To support output targets and other objectives, gross fixed
capital formation works out to be Rs.1612.6bn at 1999-2000 prices. The total
investment is estimated at Rs. 1793.2bn. Thus, the investment will increase from
15.0% of GDP in 1999-2000 to 18.0% of GDP in 2002-2003. To support higher levels
of investment, the ratio of fixed investment to GDP will be raised from 13.4% in
1999-2000 to 16.2% in 2002-2003. For this purpose, the level of private and
public sector investment will be raised from 8.1 and 5.3% of GDP in 02-03,
respectively. Hence, public and private investment will grow on average at 14.0%
and 9.1% per annum over the programme period. Total resources are protected to
grow by 3.2% annually. Since total investment will grow by 7.3% annually, the
consumption will grow at the rate of 2.4%.
Since the overriding concern of the economic programme in the
coming years will be to move towards self reliance, as large as 97.2% investment
has been envisaged to be financed from national savings, leaving only 2.8% for
foreign savings. The overall savings target implies marginal rate of national
savings of 43.5% over the period. This will imply reduction in dependency ratio
from 27.2% during the eight Five Year Plan to 5.9% during the 3 year programme.
To improve savings, a wide ranging strategy has been
suggested. Firstly, budgetary discipline should lead to revenue surplus, which
will be used for partly financing the public investment. Secondly, structural
and policy reforms will enable public corporations to generate savings to meet a
part of their investment outlay. Thirdly, local government will generate
additional resources not only for meeting current expenditure but also for the
development expenditure on such items as the purchase of durable goods, major
repairs and maintenance and construction works. Fourthly, the reforms and policy
changes initiated by the government will encourage corporate sector to
channelize a larger proportion of its savings to new investments. Fifthly, the
policy of ensuring positive returns on national savings schemes, introduction of
attractive investment instruments by public and private sector and lower rate of
inflation will encourage the household sector to enhance its savings and
channelize them for investment in the formal sector.
Investment
Private investment will rise from 8.1% of GDP to 9.8%. As
such, the policy to deregulate and liberalize investment processes will be
vigorously pursued. Without disturbing market friendly environment, concerns of
equity will also be addressed through poverty reduction programmes. Another area
of intervention will be long gestation work relating to physical and social
infrastructure, where the private sector is reluctant to invest e.g. programme
for balances social development (Social action programme, special education and
social welfare, women development, etc) and programmes for rural infrastructure
and less developed regions. These areas have to be developed at accelerated pace
in order to cope with the requirements to the development of other sectors of
the economy and to overcome the bottlenecks to growth. These include: (a)areas
where private sector is willing to invest would be open to them on the basis of
a level playing field. No special incentives will be given to public sector in
these areas: (b) where private sector investment can be invoked through public
participation, it should be seriously attempted. The general principle will be a
residual and vacuum filling role for public investment. Public sector should
concentrate on improving the enabling environment; (c) policies will be put in
place to attract private foreign investment in areas yielding tangible output
and having maximum backward and forward linkages, especially in export-led
industries. Board of Investment (BOI) will formulate a policy package to
facilitate the broadening of these areas. and (d) the rights of the consumers
have to be protected adequately by appropriate regulatory framework. The process
of creation of Regulatory Authorities has already started. The regulatory
authorities, therefore, will be created on modern lines with adequate and
appropriate expertise.
The Planning Commission in its three-year Rolling Plan, has
calculated $9.36 billion exports and $10.586 billion imports during the current
fiscal year with the exchange rate to reach at maximum Rs. 56 per dollar. The
trade deficit will be $1.22 billion, $492 million and a surplus $657 million
during 2000-01, 2001-02 ad 2001-03 respectively.
The plan also envisages exports target of $10.624 billion and
$11.115 billion imports during 2001-02. The third year of the plan 2002-03
envisages exports of $12.217 billion and imports of 11.56 billion. During these
two years the exchange rate is expected to reach Rs. 61.50 per dollar and Rs.
67.80 per dollar respectively.
Almost half of the period of the 9th 5 year plan
implementation was washed out due to a series of postponements and so all the
efforts that had gone into its preparations has ended up in an exercise of
futility. About six months of 3 years plan would have already expired before it
was finally approved for implementation.
And this ultimately proves irrelevance of our planning to the
real need of the economy. Right from the First Plan, which had to be punctuated
with a two-year Priority Plan, the entire run of planned development, with the
lone exception of the Second Plan, will be seen to have run into difficulties,
thus marring its effectiveness. Now that the new government's economic agenda
happens to mark a bold departure from the objectives and methodology of
planning, it will be in the fitness of things also to restructure the entire
planning machinery, not through by "rightsizing" alone. Since the
experts will undoubtedly be needed to fulfil the nation's new economic agenda,
it may not be advisable to dispense with the services of the deserving and
talented men already engaged in the work as assigned to them. As a matter of
fact their services can best be utilised to strengthen the monitoring and
evaluation wing of the Planning Commission which is now existent at the moment.
The new Deputy Chairman of the Commission should focus his
attention on this aspect and improve the working of the commission.
