The new deputy chairman of the Planning Commission is sharp, clear-headed, and not the kind of person who can be fobbed off. KC Pant is a politician who thinks for himself, takes his job seriously, but manages to keep his suave cool. His low-key approach to the finance ministry for increased budgetary support to central and state plans for 1999-2000 should not be dismissed as the perfunctory pleading of a planner. Pant is coy about saying how much he wants. But it is clear he will negotiate hard with Yashwant Sinha. The standard argument of finance ministers that they must be tightfisted on plan support to bring the fiscal deficit under control will not carry Sinha far. Pant can point out that by reversing the declining tax-GDP ratio, the deficit can be pared while raising plan support. Besides, it is no secret that North Block has inflated non-plan expenditure for the coming year while sharply underestimating the growth of tax revenues. Sinha is on a weak wicket.This is not to say that there will be aslanging match between the finance ministry and the Planning Commission. To view the issue thus will be to miss the point. Rather, it is that the finance ministry will no longer find it as easy as it has in the past to axe the plan. Pant will be a brake. True, in the present milieu, Hayekian theology prevails in the North Block. But less plan does not mean more private investment, as has been seen since 1995-96. For three years now private investment has remained in the doldrums.
Aggregate investment has remained below savings; if this continues for long, income growth will slow down -- note the stubborn slack in industry, financial services, construction and real estate - and this, in turn, will reverse the savings growth. Sinha will find it difficult to duck Pant. In any case, as the finance minister, Sinha must tailor the budget to the requirements of growth and not choke investment to avoid hard decisions on raising tax revenues. It is time he got on top of the bureaucrats of his ministry.
Pant isnot merely asking for larger budgetary support for the central plan. Judging by available reports, he is pressing for larger central assistance for state plans. This is logical. The states have to implement the prime minister's plan for social spending. Trickle-down growth alone will not do for the poor. The Government must provide more for education, health, drinking water, sanitation et al. Sinha must realise that he has to cater to a constituency that is larger than the Bombay Club. That is Pant's point.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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