Approach to The Tenth Five
Year Plan
Over the last fifty years or so, planning for economic and social development has been an integral exercise. This is manifested in the formulation of five year plans. The transition from a traditional and subsistence economy of the fifties to a modern and industrial economy of the nineties has largely been the outcome of plan exercises spanning a total of nine five-year plans and a few annual plans. As we stand in the terminal year of the Ninth plan, our sincere endeavor to consolidate and add to the past gains in the framework of the Tenth plan cannot be overemphasized.
Planning has more substance to it than a mere allocation of
resources among competing uses. Planning prescribes a direction towards which
the economy is sought to be moved with a view to attaining pre-determined goals
and objectives. And given the federal character of our polity, it is the
combined effort of both Union and State governments towards achieving plan
objectives that is given shape in the exercise of five-year plans.
The federal character of Indian polity with a unitary bias
has long been established as an unchallenged perception. This is clearly
reflected in the composition of public sector outlay wherein the Union
government is accorded a substantially larger chunk of plan responsibilities
Vis-à-vis State governments. Such a compositional mismatch is further reflected
in the vertical devolution of financial resources under the aegis of Finance
and Planning Commission.
Of late, the realisation that most development activities
are taking place at the State level is gaining ground. This calls for greater
decentralisation of plan responsibilities to States along with matching
resources. Within States, further decentralisation of plan responsibilities is
no longer a far fetched dream and Constitutional obligation in the light of
seventy- third and seventy- fourth amendments, but a distinct and desirable
developmental necessity.
The national level objectives at best provide broad
guidelines to State level plan formulation. The decisive thrust and direction
still remain the State’s prerogative and are thus based on State level
specificities and peculiarities. The latter, therefore calls for a brief
description to facilitate the designing of the approach paper to the Tenth
five-year plan.
The approach paper to the tenth five-year plan envisaged an
average growth rate of 8% for the Indian Economy as a whole. This is a gigantic
task, given the global recession and also the historical growth rate of 5 to 6
percent in the last two years. It is not something uncommon to the Indian
planners to set huge targets, bordering dreams and fantasies before the nation.
No wonder, we have ever achieved our plan objectives either in terms of numbers
or in terms of time frame. However, the high growth target is justified, as it
would motivate people and thus bring out the best of them. In order to achieve
this high growth rate at the national level it is important to identify areas
of high growth potential both in terms geographical as well as sectoral. India
being huge country with vast inter-regional and intra-regional disparities,
decentralisation of resources, planning and decision making should be the main
strategy to achieve the objective of high growth.
Even after more than 50 years of development planning,
above 30 percent of the population live below poverty line, nearly 30 percent
of the people cannot even read and write and vast majority people do not have
access to the safe drinking water. The globalisation, liberalisation and
structural reforms have no meaning to these people. These are the prescription
of the free market paradigm and only for those people who can participate in
the market either as consumers or as producers. But, unfortunately vast
majority of the Indian masses do not have capabilities to participate in the
market. Thus, the Indian society is much larger than the Indian economy. The
development planning has to build up capabilities of the all the people and
enlarge opportunities for all, but not a select few. This process would enlarge
the concept of freedom from the domain of the market to the civil society.
The single most significant change in MPs vision of
development is the recognition of the agency of people as central to
development. The relationship between state government and people has been
perceived as one of the partnerships based on mutual sharing of rights and
responsibilities. This has been guiding vision in the choice of strategies.
This has been articulated as the new architecture of governance grounded on
decentralisation, greater accountability and increasing space for direct
community action.
Decentralisation became the premise for development in the
state, because it was seen to open up opportunities for new ways of doing
things and because it was possible to create new partnerships. The
dichotomy between demand and supply could be dissolved. Stakeholders could be
given greater control and ownership. The Panchayat system provided an
institutional framework for decentralisation right down to the village level. The
state government also introduced the system of District Government and recently
the village government system, further decentralising the power of the state
level administrative structure to the district and village level inevitably.
The implication of this development vision is that development is measurable
not just through creation of assets and resources, but through the
effectiveness of the process of empowering communities to make choices and
participate in creating those assets and resources.
The district planning has become an integral part of the
planning process. The plan allocations at the district level are based on
socio- economic indicators to bring balanced regional development. More than 30
percent of the total plan allocation is made to the district sectors. The
sectoral allocations are made following bottom up approach rather than top down
approach. This method has ensure the horizontal sectoral integration at the
district level to make district planning a more realistic exercise.
Keeping in view, the historical growth rate and potential
of economy, we would like to target an average growth rate of seven percent for
the State of Madhya Pradesh. This is slightly lower than the national target of
eight percent. The state economy has been growing at an average exponential
growth rate of 5.55 percent during the period 1993-1999. This requires an
improvement of 1.45 percentage points over the previous period, which is very
substantial. With an average ICOR of four, it is necessary to increase the
capital investment by 7.8 percent of the NSDP to achieve the target growth rate
of 7 percent. This would imply that we
require roughly Rs. 7000 Cr. investment in the initial year and an annual
increment of 7 percent. We anticipate
the primary sector constituting roughly 40 percent of the NSDP to grow at 4
percent per annum, the secondary sector constituting slightly above 20 percent
of the NSDP to grow at 8 percent per annum and the service sector constituting
roughly 40 percent of the NSDP to grow at 9 percent per annum.
The most critical part of the planning exercise is the
financing the plan. The resource projections for the Ninth Plan were off the
mark by miles, both in terms of central assistance to State plans as well as
the State own resources. The expected central assistance to the State plan is
falling short by 40 percent as against the projections. The Balance from Current Revenues (BCR) is
falling short by 50 percent as against the projections of the pessimistic
scenario. The growth rate of the Central taxes during last two years has been
sluggish to put it modestly. It is in this background, the State has to
mobilise resources to finance a plan to achieve a growth rate of 7 percent and
above.
We projected the tax devolutions from the Center based on
the growth rate given by the Planning Commission. The plan assistance from
Center based on Gadgil-Mukharjee formula and for the Centrally Sponsored
Schemes is assumed to be growing at 10%.
The State own tax revenues are assumed to be growing at 11.5% which is
historical growth rate. The non-tax revenues are projected at 5.5%. The major
proportion of the non-tax revenues is revenues from mining and forest and is
dependent on policies of GOI.
The assumptions about the State own resources are based on
the structure and the potential of the economy of the State. The introduction of VAT from the coming
fiscal year will not only result in reduced fiscal autonomy of the State
Governments but also bring in revenue uncertainty in the short run. Thus, the
fiscal policy of the State Governments has been reduced to non-plan revenue
expenditure management, which has very little degrees of freedom. The major
portion of the non-plan revenue expenditure is salaries and interest payments
and these two parameters are given by the Center. Thus, the State Budgetary
exercise is susceptible to Center's fiscal policy and the State Governments
cannot achieve their fiscal goals of resource mobilisation without the
cooperation form the Center.
Agriculture
The agriculture sector forms the backbone of the Madhya
Pradesh economy. It contributes almost one-third of the GSDP and provides
employment to three-fourths of the labour force. With majority of the
population deriving its livelihood from agriculture, its health has a direct
impact on the prosperity of Madhya Pradesh. Any developmental initiative is
therefore incomplete without due consideration to this sector.
Agriculture development is a desirable not only for its
direct impact on the lives of 70-80% of the population dependent on it,
directly or indirectly, but also for its favourable impact on the other sectors
of industry and services. Agriculture and the employment opportunities that it
generates are critical to the size of the market for the industry and services
sectors. Development process through employment creation, higher incomes and
poverty alleviation is also reliant on a dynamic agricultural sector for its
growth.
The development objectives of employment generation, higher
incomes, balanced regional development, poverty alleviation and quality of life
can all be addressed through a focus on Agriculture & Allied sectors.
It is the main source of employment for the majority of the
working population. In addition the allied sectors of Horticulture, Dairy and
Inland fisheries provide ample employment opportunities, as they tend to be
labour intensive in nature. Finally, through its impact on the RNFS it can
further catalyze employment growth.
Growth in the sector will directly impact income levels,
even more so through its stimulus on the non-farm sectors Rapid agricultural
growth is central to sustained poverty alleviation as its is a source of
employment to 70-80% of the population and provides about 60-75% of the rural
incomes. Backward areas can be better targeted through development of
agricultural activity in those regions.
From lack-luster growth rate of 1.5 percent to 2 percent in
the eighties, the agriculture sector in Madhya Pradesh made rapid strides in
the following decade, growing much faster than the all India average of 3.1%.
The growth momentum that has evolved in the nineties shall be nurtured and
sustained.
High growth in agriculture in the long run can be achieved
through increase in the area under cultivation and through more intensive and
efficient cultivation of exiting sown area. This can be done by identifying the
low growth areas and supplying critical inputs to increase the productivity in
these areas. Given the high pressures on land, owing to growing urbanization
and industrialisation, the former is likely to be a major constraint.
Reclamation of wastelands is the only apparent solution, however, as the demand
for land for non-agricultural uses is likely to continue, net area increase
will perhaps be negligible.
In this scenario, improvement in yields is expected to be
the primary contribution to agricultural growth. This would involve greater
investment of resources in rain-fed areas, more efficient utilisation of
irrigation facilities, and continuous flow of improved technology and farm
practices.
Industry
The Present Industrial Policy seeks to consolidate the
progress made in the past and lay the foundation for a vibrant economy based on
'Connectivity', the cornerstone of the State's Economic Development Strategy
i.e. Physical Connectivity, Virtual Connectivity and Social Connectivity. In
consonance with this vision, the Industrial Policy 2001-2006 seeks to connect
industry to markets & suppliers, to infrastructure (both tangible &
intangible), to technology, to government and to skilled manpower as an
integrated effort towards economic development.
The Policy seeks to connect industrial development to the
overall economic development of the State by exploring and leveraging linkages
and opportunities with other economic sectors. It aims to provide comprehensive
infrastructure, aims at achieving larger value addition and streamline
procedures and the regulatory framework by aligning institutional mechanisms
with the new industrial paradigms and finally integrating private initiative
into the industrial development process.
The Industrial Policy attempts to maximize the trade and
industrial development potential of the state by adopting the following as its
objectives:
Facilitate the rapid development of sustainable competitive
advantage within the State
Provide access to world class infrastructure at the
door-step of Industry
Simplify procedures and streamline administration so as to
create a conducive environment for industry and commerce to prosper
Promote exports by providing requisite support to industry
to become internationally competitive
Encourage the development of robust Small & Medium
Enterprise (SME), Tiny Industries and Rural / Handloom Industry
Generate employment in the State through the development of
a vibrant industrial sector
Promote balanced regional development by encouraging rural
industry and local enterprise.
The Government's strategy for industrial development aims
at promoting industrial growth in the context of overall economic development
of the state by fostering clusters around thrust areas, providing comprehensive
infrastructure, facilitative administration, participative governance of
industrial areas and competitive incentives. Further, it seeks to promote
maximum integration of private initiative in the industrial development process
of the State. The strategy for industrialization would facilitate industrial
expansion and provide an enabling environment for units, large medium and small
to evolve into competitive enterprises.
Sustainable solutions to industrial development shall be
evolved keeping in the view the strengths of the state. Focussing on the
following simultaneously will do this:
Cluster Development around sectors of strategic advantage
to Madhya Pradesh Food & Agri. processing, Textiles & Garments,
Minerals, Gems & Jewelry, Information Technology, Life Sciences, Tourism
Access to world class infrastructure to investors so as to
enable them to compete effectively in a rapidly global in a rapidly globalising
world
Ensure a facilitative regime which unleashes the energies
of the private sector and creates an environment in which industry, both new
and old, can thrive
Provide incentives & concessions to ensure the
realization of the objectives of the State Govt and the true implementation of
the identified Strategy
Rural industries are an important ingredient in the
economic development process. A vibrant rural non-farm sector induces growth
through employment generation resulting in higher incomes reducing poverty and
finally brings balanced regional development. The government therefore seeks to
promote rural and cottage industries in big way.
Mulberry silk related activities to be promoted in
Hoshangabad, Narsinghpur, Balaghat, Mandla, Vidisha and Rajgarh districts. Saja
and Arjun plantations shall be promoted as a part of Social Forestry programme.
A proportion of all trees reared in forest nurseries will be of these varieties.
Production of Tussar Cocoon to be encouraged in Balaghat,
Mandla, Dindori and Shahdol districts. A proposal for boosting the production
and provision of financial assistance shall be prepared .
T
The world has become a global community bringing people
together and crashing distances between places. Travel has become global and
the expanding Tourism market has not left any place untouched. Growing wealth
and increasing propensity to travel has led to a huge demand for tourism.
Tourism has emerged as a major economic activity characterised by the following:
It has a high growth potential - The travel and tourism
industry plays an important role in generating wealth through out the economy.
This sector is expected to grow at the rate of 8.4% per annum in India and
therefore offers a huge opportunity.
It is an employment intensive industry - Tourism generates
employment opportunities at various levels especially for the unskilled and
semi-skilled people. By 2010 it is expected to account for at least 1 in every
15 jobs in India.
It has a large multiplier effect - A traveler's spending
flows through the entire economy and increases the circulation of money in the
state.
It catalyses the growth of other sectors - Tourism acts as
a catalyst for the development of other sectors. It stimulates the provision
for better infrastructure, impacts industry - especially the small scale and
rural industry and also creates a pull for agricultural produce
Tourism thus has a large role to play in the economic
development of any state. Madhya Pradesh has the advantage of having a large
number of diverse tourist destinations. Tremendous diversity and mystique, the
cultural heritage, cuisine, festivals and art and craft make Madhya Pradesh an
ideal tourist destination. In view of the huge economic benefits, the potential
growth rates, as well as the potential for broad based balanced regional growth
that can be achieved, the Government of Madhya Pradesh has identified Tourism
as on of its growth engines.
Despite MP's strengths as tourist destination and the
Government's initiatives, MP has not been able to attract tourists or investors
to the state. This can be attribute mainly to issues of connectivity to the
destinations, few marketing and promotion initiatives, lack of recreational
facilities for the tourist and an unfriendly tax structure.
The state has identified three key intervention areas to
give a thrust to the tourism sector in the State. These are:
Ensuring connectivity to destination
Marketing and promoting MP as a tourism destination
Creating a favourable environment for private sector
participation in tourism development.
The State envisages its role as that facilitator, leaving
the main thrust of development to the private sector.
Infrastructure
The infrastructure sector mainly consists of power, roads
and irrigation.
The power sector in the State is facing severe crisis,
which is a national phenomenon. The T&D losses in the State are higher than
the national averages. The vertically integrated large sized State Electricity
Board is not conducive for providing satisfactory services to the
consumers. For bailing out the power
sector from the present crisis, the process of reforms has already been
initiated in the State by signing of an MoU with GoI for achieving time bound
reforms and restructuring of the power sector.
MP Reform Bill has also been enacted for the State on 20th Feb 2001.
The Government already set up the State Electricity
Regulatory Commission in 1998 under the provision of ERC Act, 1998. The new MP
Reform Act has provisions for strengthening the powers of Regulatory
Commission. The Act also provides for reorganization of the existing State
Electricity Board.
At present the T&D losses in the State are 47
percent. Various steps are being taken
for reducing the T&D losses every year.
The first step towards this is task is metering of all EHV and HV
feeders for effective energy audit. This
work would be completed soon. With the
completion of this work, it would be possible to identify high loss areas and
to take remedial measures in those areas.
The work of 100% metering at the consumers' end has also been
started. A scheme has also been posed
to the PFC for funding. In addition to
above quality electronic meters are also been installed on all industrial and
big consumers. The major reason for
high T&D is theft of energy. Various
measures are being taken to curb the theft of energy and will be eliminated
within a specified time frame. Besides,
thorough checking of connections, a new Urja Vidheyak 2001 has also been
enacted. This Act provides for
additional powers for entry, search and seizure. Recovery provisions have also been made
stringent similar to the Income Tax Act.
However, the procedure for billing and assessment of theft case has been
simplified. So with all the above measures,
it would be possible to achieve reduction in T&D losses by 5% initially for
first 3 to 4 years. However, after that,
achieving the same level of reduction in loss would require more funds for
improving transmission and distribution systems.
Under the Power Sector Development Programme, Asian
Development Bank approved a loan of $350 million. The loan comprises of two
parts, viz (i) a policy of $150 million
for financial restructuring of Madhya Pradesh State Electricity Board
(ii) a project of $200 million for strengthening and upgradation of
transmission and distribution systems in the State. Project implementation will
commence in January 2002 and will be completed in December 2005.
Another important area of infrastructure is roads. The
condition of the roads in MP is very bad. This sector has been neglected for
quite sometime as more plan resources flowing into social sectors. Without
roads it is not possible to have a road map for the development of the State.
On the one hand the resource constraint of Government and un-viable traffic
levels on majority of the routes for private investment on the other hand
choked the investments into this sector.
The State Government is raising Rs. 500 Cr. bonds through Special
Purpose Vehicle (SPV) to subsidise the private investment in order to make it
financially viable. This money would be
used to leverage substantial private investment. Also, the State Government is
taking advantage of the Centrally sponsored scheme of Rural roads and an
investment of about Rs.700 cr. is expected to take place in the year 2002-03.
The tax collected from the agricultural market yards is being used to develop
the road infrastructure. It is also proposed to leverage these resources to
mobilise private investment into the roads.
The other important component of the infrastructure is
irrigation, which is the most important input to increase the agricultural
production and its productivity. The
total irrigation potential crated by the end of year 2000 is about 20 lakh
Hectare and about 9.25 lakh Hectare is being utilised. The ultimate irrigation potential
of the state from surface irrigation and ground water is expected to be 60.9
lakh Hectare and 52 lakh Hectare respectively. When the above potential is
harnessed, the percentage of irrigation to net sown area would be 75%. Assuming
40% irrigation by private sources and 60% by Government sources, the Irrigation
potential to be created from Government sources works out to be about 67 lakh
Hectare. Out of this, potential anticipated to end of Ninth Plan is of the
order of 20.5 lakh Hectare. It would not be possible to achieve the ultimate
potential with present available resources and thus efforts would be made to
obtain funds from NABARD, AIBP, External funding agencies like JBIC (Japan
Bank), World Bank etc. In the mean time it is proposed to encourage minor
irrigation through water shed development
Social Sectors
According to the Constitution of India, it is the
responsibility of the State Government to provide universal elementary
education. The Government of Madhya Pradesh has been proactive in the field of
school education and has undertaken a large number of initiatives.
The Government is committed to universalisation of primary
education in the state. The focus shall be on providing better infrastructure,
improving quality of education, improving access for the disadvantaged groups,
and encouraging community participation and early education initiatives. The
State proposes to continue the EGS (Education Guarantee Scheme) and has
achieved the target of one school in radius of one Km. The community
participation is already in vogue and will be encouraged in future also. The
state government has decided to have a Middle School within a distance of 3 KM
from every habitation. The process of establishing these middle schools has
been initiated and has been expanded to cover the entire state. The state
proposes to provide a high school and higher secondary education within a
distance of 5 KM in the coming years.
The Government would ensure the availability of amenities like drinking
water and toilets in all schools.
Sarva Shikha Abyiyan (SSA) is being launched to
universalise elementary education and provide infrastructure support. The state
has already submitted SSA Plan to the GOI. State government has taken a
decision to establish digital libraries in each district. In order to improve the quality of education
imparted in the schools the state shall continue the program of providing
training to about one-lakh teachers every year. There would be a regular review
of the course content and curriculum of school education and the same would be
updated. The State Government has also decided to establish a school of
excellence in each district during the year 2002-2003. Vocational education is
being provided in the state through 300 higher secondary schools. The
government has decided to revamp this programme and make it more effective and
also introduce IT as a teaching tool.
It is also important to solve the problem of high drop out
rates. The government proposes to involve NGOs for spreading awareness about
benefits of education. It has been considered to adjust the school timings
according to the agriculture calendar and providing flexible timings to ensure
attendance. Incentives are being provided to girls and SC/ST students in the
form of scholarships, distribution of free books and uniforms and
mid-day-meals. Women's Polytechnics have been started for providing vocational
education for girls. There is a reservation of 30% for girls in co-education
polytechnics also.
As a result of polices of economic liberalisation and
opening up of the global markets, the demand for skilled technical personnel
from both the manufacturing and service sectors has increased. Economic
development by way of attracting industry and the services sector to the State
calls for the supply of skilled and trained manpower at executive, supervisory
and shop floor levels. Investment in technical education, training and skill
up-gradation for ever-increasing numbers who join the work force is a major
challenge. The state government has taken a large number of measures in this
direction. These initiatives need to be strengthened and expanded.
The health policy of independent India of setting up an
extensive health care delivery system across the entire nation was based on
Bhore Committee report of 1946. The focus of the policy was on setting up a
primary health care system across the country to ensure availability of basic
health care for every individual. However, this policy of primary health care
was challenged by many international agencies, as it would be expensive to
provide primary health care. They suggested selective primary health care. This
approach would essentially select and priortise a limited number of major
diseases and attack them through specific programmes. The focus was on
delivering medical care for selected diseases rather than encouraging
participation by communities in defining their health needs, and
professionalise rather than deprofessionalise the health. This approach is technology focus approach,
where delivery of health care through health professional is the focus, and
thereby it detracted any society and community and medicine interface. It also
ignored the aspects of community empowerment vis-a-vis medical services. Thus,
the primary health care centre as main vehicle to deliver good and effective
medical-care has been subjugated by programmes and initiative that are disease
specific.
The health indicators like Birth Rate (30.7), Death Rate
(10.6) and Infant Mortality Rate (91) are above the national average. The
health policy of the state would strive to bring these indicators to the
national level. The policy intends to concentrate on both preventive &
curative medicine. In order to achieve
the goal of health for all it is necessary to adopt community participation
approach as being done in education. The latest amendment in Panchayat Raj Act
has created substantial space for community participation and local control
over health. The scheme of training Jan Swastha Rakshak is a step towards this direction.
More than 600 hospitals/health centers are being managed by citizens
themselves. With this kind of peoples' participation in the health sector would
enable us to achieve the health goals.
A large majority of the population of the State belongs to
socially and economically backward people. The participative development
approach adopted by the State would in the long run bring this people into the
mainstream of development. In order to accelerate the development process of
this community the government has been taking up many schemes and programmes.
TECHNOLOGY INTIATIVES
A latecomer to the Indian information technology
revolution, Madhya Pradesh has nonetheless made a lot of progress in the last
couple of years. The state has an annual IT turnover of 100 Cr. with IT exports
contributing 20 Cr. State government has put in efforts to ensure the wide
spread usage of IT in the state. It had set up a state level task force on IT
that announced an industry friendly IT policy.
Madhya Pradesh has formulated an IT Policy that lays down
the vision and policies of the state. The IT Policy envisions the creation of a
" Seamless Society with Global Opportunities". Madhya Pradesh aims to
become a large player in the IT sector targeting a 5-10% share of the All India
IT output by the year 2008. It aims to achieve high Standards in IT literacy
creating approximately one million jobs by the year 2008. The focus of the IT
policy is to impact the social sector by promoting the use of IT across society
and in the process develop skilled manpower for a vibrant IT led economy.
The Government of MP wants to extend the benefits of the
Information Technology revolution to the common man and use IT as an
accelerator for the socio-economic development of the state. It has therefore
recognised Information Technology as a thrust area and a growth engine for the
state.
Madhya Pradesh is endowed with rich and varied expanse of
natural resources including diverse soil and agro-climatic conditions, forest,
bovine and aquatic wealth. Bio-technology has great potential for providing a
wide range of benefits by application across sectors such as agriculture,
animal husbandry, fisheries, human health, forestry and environmental
protection. The present and future requirement of food, health and livelihood
security can be addressed only by ensuring the sustainable use of these
resources.
The State Government therefore proposes to initiate a
concerted action plan to ensure the sustainable use of its diverse
bio-reserves, to promote the use of applications for deriving benefits for a
wide range of sectors like agriculture, animal husbandry, human health etc. and
to encourage research, education and application centered development in
biotechnology.
As seen from above, the State is making sincere efforts to
bring all the people into the development process and enable them to
participate in this process. The approach of the plan is to create political,
economic and social opportunities to all people of the State through democratic
decentralisation, so that the people empower themselves rather than waiting for
the State to empower them.