The following is
the text of the Prime Minister, Shri Atal Bihari Vajpayee’s Opening
Remarks at the 50th Meeting of the National Development
Council here today:
I welcome you all
to this 50th meeting of the National Development Council.
This is an important occasion, not only because it marks the Golden
Jubilee of NDC meetings, but also as an opportunity for us to
recall that we have been wedded to achieving India’s all-round
development through economic planning within a democratic set-up.
You will recall that
just a year ago, we had shared a common vision of the Indian economy
growing at a rate by which we would be able to double the per
capita income of our people within ten years. I felt then, and
continue to feel today, that our country has the potential, both
in terms of human and physical resources, to perform substantially
better than it has done in the past.
It was a matter of
great satisfaction that the NDC approved the Approach Paper to
the Tenth Plan unanimously. We shared and affirmed our belief
in the potential of our country to achieve an 8 per cent average
annual growth during the Tenth Plan period.
The Approach Paper
made it clear that the task would not be an easy one. It urged
all of us to realize that this task would be fulfilled only if
all of us, regardless of the political diversity reflected in
the governments at the Centre and in States, showed unity of purpose
and expanded the area of consensus.
The rate of growth
of our labour force during the coming years will be such that
unless we accelerate economic growth, there will be a worrisome
increase in the level of unemployment during the Tenth Plan period.
We cannot allow such a situation to develop.
We have also committed
ourselves to bringing about significant improvements in social
indicators, especially in education and health. The National Human
Development Report has held a mirror to our conscience, which
we cannot ignore.
In this context,
I would like to emphasise that there is no need to be skeptical;
there is no need to wonder whether it is at all feasible for us
to climb from the growth rate of 5.5 per cent last year to 8 per
cent during the Tenth Plan. Our economy has shown great resilience
in the face of adversity – both domestic and global. Already,
trends of revival and growth are visible in many sectors. If we
remove the many constraints and hurdles in agriculture, industry
and services, India’s economy will undoubtedly attain a higher
growth rate.
I wish to underscore
a few issues on which we must speedily build consensus, no matter
how difficult are the decisions involved.
Fiscal deficit:
Our biggest worry for quite some time has been the management
of the fiscal deficit, at both Central and State levels. A high
fiscal deficit, which stems largely from unwarranted revenue expenditures,
crowds out investment -- both public and private. It thereby reduces
the prospects of increased future GDP growth. To ensure fiscal
consolidation at both levels, we need to enhance revenues, and
address the problem of untargeted, runaway subsidies.
We should ensure
that the VAT regime is implemented in all States from 1 April
2003. This will open the door to enhance revenues for the States.
The Finance Ministry is also preparing a paper on reform of subsidies.
We need to be clear in our minds for what purposes the subsidies
are meant, for whom, to what extent, and how we can make sure
that they reach the poor and are not siphoned off by others. Where
the existing subsidies do not fulfill these objectives, we should
put in place a firm roadmap for applying correctives in a time-bound
manner.
Stabilization
function of the Plan: The business cycle is a fact of life
in market economies, and one of the most important Governmental
functions is stabilization of the business cycle. While the appropriate
mix and sequencing of fiscal and monetary measures is a matter
of policy debate, the Plan provides a pipeline of investments,
which, implemented efficiently in a time-bound manner, would act
as a fiscal stimulus to the economy. We need to take a view as
to what further stimulus is necessary at this point in time.
Public Private
Partnerships: We have to forge public-private partnerships
in the widest possible range of activities in both physical and
social infrastructure to leverage private sector resources and
skills for development. An outstanding example of public-private
partnerships is our National Highway Development Project. The
scope of such partnerships could be extended to virtually all
physical and social infrastructure schemes. I would urge that
all concerned Central Ministries and Chief Ministers to actively
participate in the Task Force which has been set up to develop
model contracts for public-private partnerships. I would also
like the NDC at this meeting to endorse the norm that once PPP
model contracts are validated, they should be the standard modality
for financing projects and schemes in each of these sectors.
Need to accelerate
and expand reforms: We have to undertake thoroughgoing reforms
and remove bottlenecks in our energy-transport-and-water infrastructure.
In particular, I can see danger lights flashing because of the
slow pace of reforms in the power sector.
In this context,
we have recently begun an exercise to overhaul of the process
of project preparation and approval for publicly funded projects
in both physical and social infrastructure. We expect that this
measure will significantly reduce time and cost overruns in the
implementation of schemes and projects. An action plan has been
prepared for re-engineering all regulatory requirements, whether
at the Central, State, or municipal levels, involved in the execution
of investment projects. We seek the cooperation of the State Governments
in its implementation, so that the present inefficiencies and
harassment at the business-Government interface will disappear.
Reforms for the
poor: Economic reforms and development planning are without
meaning if the poor and marginalized are not enabled to better
their lives. This calls for action on many fronts. A jungle of
laws, in particular municipal, police, and forest laws, many of
which have not been reformed since many decades, render numerous
legitimate occupations of the poor illegal. While microfinance
modes of lending have been shown to be fully viable, the commercial
banking system has yet to mainstream microfinance lending to the
poor. The SSI sector, which has unequalled employment potential,
faces a number of challenges, including availability of credit,
technical and marketing support, and realizing its comparative
advantage in the context of globalization. These are some of the
directions in which serious reform is necessary.
Problems of urbanization:
Urbanisation is an irreversible process. Accordingly, conditions
of living in our towns and cities must improve. This will require
reforms in municipal fiscal practices to enable raising of resources
from financial institutions and user fees for municipal services.
The flow of Plan resources to municipalities and States should
help to leverage such reforms.
Connecting major
rivers: As you are aware, we have set up a Task Force to prepare
a blueprint for linking the major rivers in our country. This
will significantly solve the problem of repeated floods in some
States, and drought in others. Already, the very concept of inter-connecting
our rivers has generated great expectation and excitement among
people all over the country. I am glad to note that a consensus
is also emerging among political parties. I would like the States
to give their response to this project, so that we can move forward
quickly.
I would now like
to make four specific suggestions for the consideration of this
meeting.
1) Governance
Reforms, with special reference to e-governance: A central
message of the Tenth Plan, which has been echoed by a number of
Chief Ministers, is the imperative of Governance Reforms to speed
up India’s all-round development. Our experience has shown that
adequate resources are not enough, and that the best policies
and programmes can flounder on the rocks of poor governance and
implementation. We need to bring about dramatic improvements in
the functioning of our administrative, judicial and internal security
systems in order to foster a dynamic and vibrant market economy.
It is an issue that concerns us all. Since it is not possible
to have different institutional structures in different parts
of the country, I propose that we constitute a sub-Committee of
the NDC on Governance Reforms to go into this matter in detail
and present a set of proposals to the NDC, which we can adopt
uniformly.
E-Governance, which
can contribute significantly to better governance, is a major
thrust of the Tenth Plan. I congratulate those States and Central
Government Departments, which have already launched major initiatives
in this respect. I am heartened by the fact that the judiciary
has also recognized the need for and scope of e-governance for
speeding up the judicial processes. I urge all concerned to implement
this strategy.
2) Barriers
to Internal Trade: Creation of a common economic space is
one of the most basic advantages of nationhood. All over the world,
countries are coming together for this purpose, but we have continued
to maintain and erect barriers. There may be logical reasons for
doing so at the State level, but the country as a whole loses.
Although it is within the Constitutional powers of the Centre
to bar such measures, I appreciate the political difficulties
that you may face. I, therefore, propose that we constitute an
empowered Committee of the NDC under my Chairmanship, which can
consider all such barriers on merit and decide what would be the
most appropriate steps that can be taken. I would, however, only
remind you that the most developed States also need the markets
that are provided by the under-developed States, and therefore
regional balance is to the advantage of all.
3) Creating
an investor friendly climate: Although the responsibility
for creating an investor-friendly climate is the responsibility
of each State government, the progress on this front varies widely
between States. We have inherited a wide range of controls and
restrictions from the past, and it may be beyond the powers of
any individual State government to even identify these or even
correct them. Since this is likely to be an extended process,
I propose that we constitute a Standing Committee of the NDC under
the chairmanship of the Union Minister for Industry and Commerce
to oversee the process of dismantling such barriers.
4) Financial
and Administrative Empowerment of Panchayati Raj Institutions:
The problems faced in transferring functions and resources
to PRIs has been raised by some of the Members. However, we believe
that this is essential if we are to bring about accountability
and speed up development at the grassroots. In this context, we
may consider the manner in which the Centre can help in terms
of resources. One method could be for the Centre to directly fund
the PRIs for specific activities, provided that the appropriate
powers are transferred. These are contentious issues, and I would
suggest that we set up a small sub-committee of the NDC under
the chairmanship of the Minister Rural Development to go into
these issues.
I would like to make
one last point. It is very important that we effectively communicate
the goals, strategies, tasks and targets of the Tenth Plan to
the various constituencies of our diverse society, without whose
support we cannot hope to move ahead rapidly. We should generate
enthusiasm about the Plan and its targets among our people, especially
among the youth. Let us pledge today to make Development a
People’s Movement, and the Tenth Plan a People’s Plan.
I request you to
join me in congratulating the Deputy Chairman of the Planning
Commission and his team for having laboured hard to detail a plan
of action which would enable us to achieve our objectives. The
draft Tenth Five Year Plan is now before us. I would request the
Deputy Chairman to make a presentation of the salient features
of the Tenth Plan document so that we can deliberate upon the
strategy that is proposed and the specific suggestions that have
been made.
At the end of the
meeting, we shall formally adopt the Tenth Five Year Plan document.
Thank you".
