A walkout by miffed Tamil Nadu Chief Minister J Jayalalitha overshadowed the National Development Council’s meeting on Thursday, called to approve the 12th Plan economic growth target.
An angry Jayalalitha created a flutter by walking out of the meeting after accusing the Centre of “stifling” the voice of chief ministers belonging to opposition parties.
Although the government dismissed her accusations, her move got support from two BJP chief ministers, Gujarat’s Narendra Modi and Chhatisgarh’s Shivraj Singh Chauhan, who said the representatives from states should get more time to speak.
At the meeting, Prime Minister Manmohan Singh stressed on slashing fuel subsidy to keep Centre’s expenses under check.
The NDC approved 8 per cent gross domestic product growth target for the 12th Five-Year Plan, drastically lowered from the original 9 per cent, but was still called an ambitious target by the prime minister, who said that “business as usual” policies will not be sufficient to achieve this. He, however, said that lowering the growth rate was a realistic reflection of the external constraints on the growth.
Jayalalitha, who was among the first speakers, said it was humiliating to have been signalled to stop her speech in 10 minutes.
In his speech, the prime minister said the subsidies should be well targeted and financially viable to give the government more fiscal space for other social sector development programmes.
"Failure to control subsidies within these limits only means that other plan expenditure have to be cut or the fiscal deficit target exceeded," he said.
The government had increased the price of diesel by 14 per cent in September after leaving the price unchanged for 14 months. It had also capped discounted LPG cylinders to 6 per household, evoking an all-out protest, which also saw ally Trinamool leaving the UPA for good.
Alongside lowering the GDP growth target, the 12th plan raised the farm sector growth rate ambitions to 4 per cent in the plan period ending 2017 and set an objective to achieve 10 per cent expansion in manufacturing sector growth.
It also emphasised on raising investment in infrastructure to 9 per cent of the GDP by the end of 2017. Creation of 50 million jobs in non-farm sector and reduction of poverty by 10 percentage points were some of the other major targets set out by the plan document, which was approved almost at the end of the first year of the 12th five-year plan.
Agriculture growth accelerated from 2.4 per cent in the 10th Plan to 3.3 per cent in the 11th Plan. The prime minister said “better agricultural performance is an important reason why poverty declined faster” , Singh said. He, however, said that India needed to move people out of agriculture by giving them gainful employment in the non agricultural sector as that was the only way to raise per capital income on agriculture.
Coming to performance of low-growth states, he said states that used to grow slowly in earlier periods have done much better. He said the average growth rate of the five poorest states exceeded the national average for the first time in any Plan period. “I think we may be reaching the stage when the term ‘BIMARU states’ can be relegated to history,” he said.
Plan panel Deputy Chairman Montek Singh Ahluwalia emphasised on the need to remove policy logjam to speed up economic growth, while Finance Minister P Chidambaram said cutting down bloating fiscal deficit was necessary.