For the first time, the Plan document has talked of three alternative scenarios. The draft Plan, approved by the full Planning Commission meeting, chaired by Prime Minister Manmohan Singh, said adequate policy measures would be taken to meet the target of an average annual growth rate of 8.2 per cent . If half-hearted measures were taken, growth might slip to 6-6.5 per cent and, in the case of policy logjam, it could even fall to five per cent, it said. Planning Commission Deputy Chairman Montek Singh Ahluwalia tells Sanjeeb Mukherjee, the idea behind these is to send across a message that strong policy decisions are needed to reach 8.2 per cent growth. Edited excerpts:
What was the idea behind giving three scenarios in the draft 12th Plan document? This was done for the first time.
We wanted the people of India to know what could be the fallout unless you take certain decisions. That is the basic idea behind the scenarios.
As mentioned in the scenarios, do you think that growth could fall to five per cent?
The draft document pegs manufacturing growth at 10 per cent a year on an average for the 12th Plan. In the first year , this growth has not been quite subdued. Manufacturing grew just 0.6 per cent in the first four months of this financial year. Don’t you think the target of 10 per cent is too ambitious?
Whatever we have given in the Plan, I feel we have appropriate steps and measures for that.
There have been some issues with the health sector allocations. Have these been sorted?
We have reached complete agreement on all the contentious issues, and they (the health ministry) wanted to make some changes in the allocations, which we have agreed to.
The Reserve Bank of India (RBI) today did not cut the policy rate, but only reduced the cash reserve ratio by 0.25 percentage points. Do you think it was adequate to spur growth?
What RBI has done is that it has released resources (by reducing CRR). This will make an impact on the rest of the system. It is a step in the right direction.
Will this spur growth?
The revival of growth requires many actions, and monetary policy adjustments are just one component of that.
This should be read with the totality of actions taken by the government, with possibly more to come. This is going to bring back better macro balance into the system.