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Opening Address of Prime Minister

Shri Atal Bihari Vajpayee

at the 49th Meeting of National Development Council
1st September 2001, New Delhi

Deputy Chairman, my Cabinet colleagues, Chief Ministers, other distinguished members of the Council, and Friends,

I welcome you all to the forty-ninth meeting of the National Development Council.

The most important item on our agenda for today is the consideration of the Draft Approach Paper to the Tenth Five Year Plan. This will set the broad policy directions for the Plan covering the period 2002 to 2007.

The Tenth Plan will be a major landmark in the history of development in India. It is the first Five Year Plan of the new century. As such, the nation awaits it with high hopes and great expectations. Our people want to know:

  • Will the Tenth Plan chart a new path of sustainable development, fully harnessing the enormous natural, human, and financial resources in the country?
  • Will it fully take into account the new national and global realities, especially the expanding capabilities of the non-State sector in India's socio-economic development?
  • Will it preserve the many achievements of the previous Five Year Plans and build a solid foundation for all-round development in the new era?
  • Will it also carry the lessons from the failures of the previous Plans and reliably reassure the nation that the backlog of unmet targets and unfulfilled objectives will soon be cleared?

We in the National Development Council, as representatives of the Governments elected by our people, have a responsibility to answer these questions in the affirmative.

We cannot disappoint them. And we shall not disappoint them.

The country believes, with good justification, that our economic performance so far has not matched our potential. So too does the rest of the world. Our endowments of productive resources — human, natural, technological, and financial — are the envy of many. However, we are yet to harness them in a manner that yields the best results.

The shackles that have bound the productive energies of our people must be cast off. We must take the economy to a significantly higher path of growth.

That is why I had asked the Planning Commission to set the goal of doubling our per-capita income within the next ten years. I knew then that it was a difficult target. But it is surely not an impossible target. After all, several countries with lesser resources have succeeded in achieving such high growth rates.

Dear Chief Ministers, the process of planned development in India, through the mechanism of Five Year Plans, began at a time that was very different from today’s situation. It was natural for the State-sector, through the agency of the Union Government, to play a dominant role in almost every aspect of the country’s economic and social development.

As a result, the Five Year Plans in the past half a century were moulded by a thinking in which the government, in particular the Centre played a predominant and all-embracing role.

India is a vastly different country today. Our State Governments have amassed a wealth of experience of planning and executing developmental activities on their own. Ten years ago, we amended our Constitution to empower our Panchayati Raj Institutions to function as effective agents of decentralized development.

The private sector has grown phenomenally, both in size and capability, and now plays a pivotal role in India's economic development by mobilizing investments and executing projects, including in infrastructure and core sectors. The private sector has received, especially after the advent of economic reforms a decade ago, a larger mandate to contribute to the realization of our growth targets.

The past five decades have also seen a tremendous growth in both the number and diversity of non-governmental organizations and community-based organizations, and in the scope of their contribution to the development of our social and environmental sectors.

India needs a strong partnership between these five agents of development — the Union Government, State Governments, PRIs, the private sector and non-governmental and community-based organizations — to achieve all-round development.

I believe that one of the main reasons for the wide gap between India's developmental potential and her actual performance lies in insufficient appreciation, in the planning process, of the need for a partnership between all the five drivers of national development.

I am happy that the Approach Paper to the Tenth Plan seeks to correct this critical shortcoming.

Friends, today’s meeting is an occasion for all of us to look at the Indian economy in perspective and, also, to dispassionately view the difficult situation we are facing at present.

The decade of the Nineties witnessed an impressive rate of growth of our national economy. Yet, it is also true is that growth has currently slowed down to a level that must make all of us sit up, think, and act. The rates of growth of our agricultural production, our industrial production, and our exports have come down. Credit offtake has considerably reduced in spite of abundant deposits available in our banking system. New investments have dried up.

This is due to cyclical and episodic factors as well as structural weaknesses within in our economy. It is also partly due to the slowdown in the global economy, although India is relatively better off compared to the downturn in many developed economies in the world.

This, however, cannot be a consolation to us. I would like the Chief Ministers to know the realities of our present economic situation. There is no easy or quick solution to the problems we are facing, especially since many of them are systemic in nature.

We must also bear in mind that the slowdown has come at a time when the legitimate aspirations of our people, especially those belonging to the poor and deprived sections of society, are rising.

You know and I know that these aspirations can be fulfilled only if our economic growth become faster, sustainable, and more capable of removing regional, social, and gender imbalances.

To fulfil their hopes and aspirations is our common commitment, irrespective of the parties or coalitions we belong to. We cannot dilute this determination.

The Planning Commission, after careful deliberation, has given form and content to this collective commitment. The Approach Paper has set a growth target of 8 percent a year during the Tenth Plan and a further step up during the Eleventh Plan.

We are today at a growth rate of slightly more than 5 percent. Moving from this level to our Tenth Plan target will require removal of the many policy, governance, and infrastructural impediments to faster economic growth. This will entail difficult decisions — both by the Centre and the State Governments. We must have the courage and will to accept this challenge.

We cannot afford to be complacent. Nor can we afford to make promises that we know we cannot fulfill without taking the correct decisions, be they for the moment unpopular. The people expect us to act — they expect me to act and they expect you to act. They expect us to take such necessary decisions that will infuse confidence and impart a new momentum to the economy. Our citizens will support our actions if we properly explain what the situation is, and how our decisions, while sometimes causing temporary hardships to some, would ultimately benefit all.

Some of the areas where we need urgent action are the following:

  1. The weak finances of both the Centre and the States need to be improved immediately. Unproductive and unnecessary expenditure will have to be drastically pruned. The borrowings and contingent liabilities of many States have been over-stretched. Living on borrowed money and borrowed time is not a mark of good governance. Somewhere down the line, we seem to have forgotten the traditional Indian virtue of prudence and thrift. I cannot over-emphasize the importance of both the Centre and the State Governments to increase our revenues by expanding tax collection, ending the losses of state enterprises, and launching innovative ways of resource mobilization.
  2. The downsizing of the Government cannot be delayed. There are States whose salary bills alone far exceed their revenue collections. Obviously, the people who have elected us cannot want this sorry situation to continue. For they too know that every unnecessary government job robs them of resources for much-needed welfare and development activities. The Centre will not be found wanting in this regard.
  3. We have taken some steps to reduce untargeted non-merit subsidies. There is, however, a big need and a lot of scope for pruning them further and targeting them better to benefit the poor.
  4. We need to comprehensively review our strategy of increasing food production based on periodically increasing procurement prices. Another matter that deserves urgent attention is to increase the States’ ability to lift low-priced foodgrains for distribution to the poor and for food-for-work programmes. The Government will operationalize, within this month, the Sampoorna Rozgar Yojana. It will provide assured employment to the rural poor for building durable assets. I appeal to all the State Governments to cooperate in implementing it.
  5. The area that is truly crying for reform and rejuvenation is our power sector. We agreed on many important points of action at the Chief Ministers’ Conference in March. I know that some States have begun to act on the reform agenda. I urge all of you to implement the milestones for power sector reforms within the accepted timeframe. If necessary, I am prepared to call an all-party meeting to build the necessary political consensus, so that the reforms are not derailed in States due to compulsions of competitive politics.
  6. Labour reforms cannot remain pending any longer. We need to patiently explain to our friends in the trade unions and others that these reforms, far from being anti-labour, are indeed pro-labour because they will create large-scale new employment. They are urgently needed to enable our industries and businesses to attract new investments, new technologies, and to be able to compete, both on cost and quality in the global market. I am happy that some States have begun to take positive steps in this direction.
  7. The health of our banking and financial system is a matter of worry. Many economies have got into serious trouble because of the bad debts that led to the failure of their banks and financial institutions. We have enough warning signals and much sobering experience to go by. You too are aware of the problems being faced by cooperative banks in your States. The Government will accelerate reforms in the financial sector.
  8. We have removed many restrictions to foreign direct investment. Yet, the climate for FDI has not improved. We need to seriously take many promotional measures in cooperation with industry associations to ensure that both FDI, and FII investment increases on a stable basis.
  9. Our agriculture, industry, and services face many barriers to their rapid growth. These are in the form of harassment, corruption, red-tapism, and other indignities of the Inspector Raj. We must quickly identify and eliminate, root and branch, all such perverse laws, regulations, and procedures that lead to unproductive activities, increase costs, and sap the energies of our entrepreneurs.
  10. Major hurdles to faster economic growth also come in the form of the delays and other deficiencies in our judicial system. These too will have to be resolutely removed.
  11. Natural Calamities have become a recurrent feature in recent times, leading to heavy losses in life and property. We should soon put in place an effective disaster management plan, both at the Centre and in States. We should also devise suitable long-term strategies to control droughts and floods.
  12. The Tenth Plan should see redoubled efforts by us to control the growth of India’s population. We should transform our endeavour in this regard into a people’s movement, which alone can help us reduce the decadal rate of population growth between 2001 and 2011 by 5 percentage points to 16.2%. Clearly, certain States and certain districts, which are growing faster than the national average, will need to make extra efforts.
  13. Effective devolution of financial and administrative powers to Panchayati Raj Institutions still remains an unfinished agenda. The Central Government, in cooperation with the State Governments, plans to soon launch a structured national debate on empowerment of the PRIs to achieve our common commitment towards decentralization.
  14. Lastly, we need to give our economic reforms a strong pro-poor focus and make elimination of poverty the central objective of development. The Tenth Plan period should see a major progress in rural connectivity by road, telecom, and the Internet; primary education and primary healthcare; and housing, drinking water, and sanitation. We should also ensure better care for the aged, disabled, and the destitute. Equally important, I urge the State Governments to quickly eliminate all laws and regulations, which are used to harass the poor and deny them livelihood with dignity.

Dear Chief Ministers,

The revival of the economy must become our highest collective priority. The Centre and the State Governments should together take steps to end the crisis of investment — both public and private — that has arisen in the economy. Towards this end, the Centre will accelerate large-scale public investments in infrastructure development.

You are aware of our recent initiatives in highways and rural roads. We are now determined to initiate long-pending reforms in the functioning of the Railways. We have already announced a Rs. 17,000 crore Railway Safety Fund to be spent in the next five years. We shall soon flag off a major investment package for the early completion of many critical and remunerative projects.

The Department of Programme Implementation is presently monitoring 461 projects that cost Rs. 100 crore and more and are at various stages of non-completion. Many of them have been under implementation for ten years and more. The Centre proposes to take up one hundred of these projects, which can be completed in a short time. The investments needed for this will be suitably provided for.

We should also identify a shelf of new bankable projects, in the areas of irrigation, agricultural infrastructure, drinking water, urban infrastructure, state highways and district roads, bridge construction, etc to give additional fillip to the economy. Given the resources in the financial sector and multilateral agencies, it should be possible to devise suitable financing mechanisms and implement these projects without causing additional fiscal pressure.

While emphasizing acceleration of economic growth, the Approach Paper has rightly pointed to the need for innovative and more effective ways to develop our social sector. The key here is to increase the scope as well as the depth of public-private partnership in developing our abundant human resources. Such partnership is possible, and has also become necessary, in education, healthcare, and sanitation.

The Approach Paper has rightly highlighted the importance of Good Governance. For too long we have neglected the institutional framework that guides all economic activities in the country and delivers basic social and economic services to our people. An excessive reliance on allocations to the neglect of performance has not served us well. There must be a reorientation of executive accountability towards results, and not only in meeting budgetary targets.

Be it the development of our physical or social infrastructure, be it our welfare or promotional programmes, a major lesson from the previous Plans has been our shortcomings in implementation and follow-up. This often creates disappointment and cynicism among the people.

In my Independence Day address, I had said that the Centre would observe the coming year as the "Year of Implementation". Today I call upon all of you to do the same in your respective States. Together, let us strive to set new standards of implementation, monitoring, and follow-up, which alone can guarantee achievement of the challenging objectives set in the Approach Paper to the Tenth Plan.

Over the years, we have significantly narrowed our ideological and conceptual differences over a wide range of issues. We are now poised to move decisively on the measures recommended by the Approach Paper on the strength of our collective political will.

Let us resolve to rise above partisan politics and lend our combined support to the proposed Approach to the Tenth Plan. Let us today direct the Planning Commission to prepare a Plan document which would detail the tasks to be performed and the responsibilities to be discharged by the Centre, the State Governments, and Panchayati Raj institutions. Let us seek the participation of our public and private sectors, civil society organizations, and, above all, the people themselves.

Let us make the Tenth Plan a People’s Plan. Let it be a Plan that can inspire all stakeholders to be participants in our development process. Let today’s meeting of the NDC, the apex development body of our Union of States, be remembered for sending this message loud and clear — India can and will stand tall in the comity of nations on the strength of her own capabilities and collective resolve.

I now request Shri K. C. Pant, Deputy Chairman of the Planning Commission, to take us through today’s agenda.

Thank you.