Background note to an intervention made at the Southern Regional Consultation on the Draft Approach Paper for the Eleventh Five-Year Plan

held at Thiruvananthapuram on 22 July 2006

By Pulapre Balakrishnan

Senior Fellow, Nehru Memorial Museum and Library, New Delhi

and

Professor of Economics, IIM Kozhikode, Kerala

It may be said that while the Approach Paper has plenty of vision it is somewhat less definite on the modalities or the instruments with the planning authority to attain the goals indicated as desirable. Two comments are appropriate to the preamble of the document. First, as growth is an overriding objective for the 11^th Plan an idea of the planners’ understanding of the mainsprings of growth may be indicated. Section 2, entitled ‘Growth potential in the 11^th Plan’, gives out no clues. The document as a whole gives the impression that this growth is going to be agriculture led. If this is intended, it could be made clearer. Essentially, while eschewing an explicit model is unexceptionable, a statement of the levers of growth as imagined is de riguer. As it is, the Paper may be faulted for not displaying sufficient strategic vision. Second, the section ‘Some major challenges’ is very impressive, pinpointing some major problems – such as the accountability of public servants. But it misses out on gender. This is a major oversight, as gender is clearly the basis of the most fundamental inequality in India today. It deserves a more prominent presence in the document than it gets, coming as it does under gender-balancing later on. With these brief comments on the paper overall, I make brief comments on three issues raised by the authors. These are the Public-sector Plan, Education and Sanitation.

The Public Sector Plan: This section of the paper raises some very good points, highlighting among other things the need to review "out-dated schemes" and to transit to a system of "zero-base budgeting". There is also a very good discussion of the ‘Revenue Deficit Problem’, with the document making a case for amending the FRBM Act so that it conforms to economic logic as contained in international best practice. But nowhere in the document is there a(n explicit) recognition that the public-sector enterprises have a role in contributing to the plan. This is a serious oversight. Here the constrast with what had been envisaged for the public sector could not have been more stark. In the Second Five-Year Plan document, for instance, the actual financial contribution by the PSEs to the Plan appears as a line item.

About the mid-fifties, when the public sector was launched in this country, its expansion was seen as a way of bringing more resources into the government’s kitty. Somewhere along the history of planning this clear-sightedness has been given a go bye. It is now time to retrieve it. The Paper makes only a half-hearted reference to the contribution that PSUs can make to the Eleventh Plan (and that too in a final section, on the last page).

More generally, there is a role for the public sector even in the growth process. It has by now been established that the positive turnaround in the rate of growth of the Indian economy occurred sometime in the late seventies, and not so recently as in the nineties following the initiation of the reforms. What has gone unnoticed is the improved performance of the public sector too from around then. A plausible link between this and quickening growth exists, as a large part of the infrastructure is in the public sector. Improved public-sector performance in the infrastructure sector has a cascading effect, raising productivity growth in the rest of the economy. Much scope exists for improved public-sector performance in the infrastructure sector yet. The recent turnaround in the Indian Railways also shows that it is possible to improve performance without re-allocation of labour or raising user fees (even though this may well be necessary in some cases). Indeed it has been achieved through more imaginative use of the capital stock.

Education

Overall, I have found the Approach paper’s views on the challenges in education (largely contained in Section 4) very valuable. The paper is commendably forthright on the issue of quality, especially in primary education where it is perhaps most important. However, if quality is to be improved, resources would have to be earmarked for the task. There are two issues here. First, how is the need for resources to be combined with the implications for the Revenue Account Deficit under the FRBM Act? Secondly, what is to be the role of the states in providing more of better education. Apart from Education being on the Concurrent List, the states have a responsibility here, one at least as large as that of the Centre. This is insufficiently acknowledged. It is useful in the context to recall that Kerala had invested substantially in education at a time when it was not only among India’s poorest states but also when its income was very low indeed.

As the Paper appears to see education as contributing directly to employment – necessary for the "inclusive" growth desired – it is necessary to explore these links. If the links are well-understood, then so would be the necessary interventions.

Overall, the section on education is impressive for both its incisiveness and its range. The Approach paper is entirely right to identify "service conditions" as a barrier to enhancing the quality of faculty in our institutions of higher learning. The Planning Commission may wish to take note of the observation by eminent Indian educationists that our universities continue to be administered according to procedures written down in the mid-nineteenth century.

Sanitation

The Approach Paper is right to outline the importance of "sanitation facilities" in its very opening statement (p. 1). I would, however, recommend a more ambitious approach to the problem. I propose that a bold plan to achieve one hundred percent access to state-of-the-art sanitation facilities for all Indians by the middle of the Eleventh Plan, which is still over three years away. Such a target is entirely within India’s reach, as may be verified by reference to the work of NGOs already active in this field such as SPARK of Mumbai. Access to sanitation facilities is arguably an empowerment more fundamental to our citizens than being "empowered to claim (their) share in the benefits of growth". (p.1)

***

I am grateful to the Planning Commission for having given me this opportunity to comment on the Approach Paper.

Pulapre Balakrishnan

Kozhikode

July 25, 2006