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Spending-led growth plan

New Delhi, Oct. 5: A meeting of the full Planning Commission, which cleared the Tenth Five year Plan (2002-07) today, has pegged the growth rate target for the economy at 7.92 per cent on the back of increased socio-economic spending.

In five years’ time, the Plan aims at ensuring 5 years of compulsory elementary education for all children, taking the literacy rate from a current 65 per cent to 75 per cent and evening out of the gender gap in literacy and wage rates.

It also aims to reduce poverty levels to 21 per cent mark from the current 26 per cent and create 50 million jobs.

“The Tenth Plan will seek to double per capita income in 10 years. Since economic growth is not the only objective it is necessary to harness the benefits of growth to improve the quality of life of the people by setting some key target,” explained Krishna Chand Pant, deputy chairman of the Planning Commission. He added public expenditure will be increased in the social sector, power, rural roads and irrigation to achieve the growth rate.

However, when asked for a clarification on the Prime Minister’s claim of 8 per cent GDP growth rate and the Plan document’s declared 7.93 per cent growth, Pant said “there’s not much of a difference between these two rates. Both are same!”

The Plan will seek to reform ailing development financial institutions (like IFCI) along with firmer laws on bankruptcy and foreclosures to facilitate a lowering in the non-performing assets (NPAs) of state-run banks. It also seeks an annual increase in foreign direct investment (FDI) inflows to around $ 7.5 billion.

It will seek reforms in the agricultural sector by streamlining trade & commerce laws and an amendment in the Essential Commodities Act along with the Agriculture Produce Marketing Act.

The Plan has pegged the current domestic saving rates at 26.8 per cent of GDP, more than 3.5 per cent higher than before and a high investment rate of 28.4 per cent. It has, however, estimated the figures taking into account an increase in revenue collections along with broadening of the tax base. It also seeks to introduce an integrated form of value-added taxation between the Centre and the states.

The Tenth Plan has a public sector outlay (2001-02 prices) of Rs 15,92,300 crore out of which the central Plan will have an outlay of Rs 9,21,291 crore and the rest will be divided among the states and Union territories.

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