| Pant: Playing safe
New Delhi, Oct. 29: The Cabinet today cleared the Tenth Five Year Plan after dropping all mention of disinvestment targets in the executive summary.
The controversial target of raising Rs 78,000 crore by divesting central stake in public sector units over the next five years was resented by many Cabinet ministers. They felt it would lead to more unpopular PSU sales, which could be politically disastrous for a government facing elections in some ten states over the next 20 months.
Though the disinvestment target has not been wiped out entirely and continues to figure in the still-secret three volume draft, sources said the Cabinet has taken a conscious decision to downplay it and kept it as just that — a target.
Planning Commission deputy chairman K. C. Pant underlined this by saying, “It does not matter whether the money for the Plan comes from disinvestment or in some other way. That’s for the finance minister to decide.”
This comes a day after the finance minister wrote to him stating that adhering to disinvestment targets were to fund the ambitious Rs 15,92,300-crore Plan and about three weeks after the Prime Minister had seemed to have pitched in, in favour of the significantly higher disinvestment target.
Vajpayee had earlier said that though the finance minister would try to accelerate tax reforms, which could help the government earn more money and prune down the size of government as well as cut subsidies to save money, the high disinvestment target of Rs 16,000 crore a year, which is factored into the Tenth Plan as a funding source for the Plan, will remain.
This was seen as implying that he has thrown his weight behind disinvestment minister Arun Shourie’s bid to hasten sell offs and go ahead with sales of several PSUs including oil and telecom companies which other Cabinet colleagues would like to save from the auctioneers block.
However, the anti-disinvestment lobby within the Cabinet which includes human resources minister Murli Manohar Joshi, defence minister George Fernandes and minerals minister Uma Bharti seem to have won this round and mention of the disinvestment target has been left out of the Plan’s executive summary.
The executive summary now speaks of widening the tax base to 10.3 per cent of the GDP, removing various tax sops, integrating state and central taxes into one nation-wide VAT, reduction of central staff by 22 per cent every year and reduction of subsidies and administrative costs.
The Plan itself aims at a 8 per cent GDP growth rate over the five year period, despite RBI predictions of low GDP growth this year at 5-5.5 per cent and warnings by various research groups that global recession was still not over.
However, Pant, who exuded optimism today, said the target was still attainable. “Good monsoons, industrial recovery due to better demand and higher public spend on infrastructure should make it do-able.”
The government will spend as much as Rs 830,000 crore in the Plan period on various projects — including social sector ones. Economic considerations on the need for a policy to revive the economy as well as electoral real politics will see India’s Tenth Soviet-style 5-year Plan pump priming the economy through spending increases on social sector indicators — education, health care, nutrition and rural roads besides more conventional economic indicators, power and irrigation.
With general elections just two years ahead and elections to 10 state assemblies looming large before that, this is also what the Vajpayee government feels may be best way of showcasing performance — investments in social projects which show quick results and help improve quality of life for voters.