New Delhi, September 1
Despite the drought hitting most of the country, the government is confident that economic growth will be back on track by the end of this fiscal year with an expansion of 6.3 per cent.

Chairing the first meeting of the full Plan panel in his second term at New Delhi, Prime Minister Manmohan Singh said too much pessimism about the economy was unwarranted, as effects of the global financial downturn have begun wearing out and that the drought too can be easily managed.

“We have been through a difficult year because of the global economic downturn which is only now coming to an end with a slow return to normalcy in the months that lie ahead. But we are in a very strong position to manage the drought situation. Our food stocks in particular are very high,” he said.

The government is giving focused attention to all aspects of drought management, including both relief measures and efforts to protect the kharif crops and try to ensure a normal rabi season, said the PM.

The discussions at Yojana Bhavan ranged from growth prospects, public investment, disinvestment, energy policy to improving exports and the way forward for the economy in times of slowdown.

According to the Planning Commission, India’s Gross Domestic Product (GDP) would expand by 6.3 per cent this fiscal Anticipating a strong turnaround in the last quarter, the panel also presented a paper before the members expressing optimism about high growth path from the next finacial year.

It also projected the GDP reaching 9 per cent in 2011-12. “We project growth of 8 percent in 2010-11 and 9 per cent in 2011-12. This is optimistic but not impossible. If we have normal monsoon in 2010-11, we can expect a strong rebound in agriculture next year,” read the paper.

The Plan panel also felt that exports would recover with industrialised countries returning to positive growth of one percent in 2010 with further acceleration in 2011.

India’ merchandise exports — which dipped for the 10th consecutive month in July — will also be able to register a growth next year because of the turnaround expected in the global economy. However, since the economy is going to be hit by drought for the second and the third quarter, the plan panel has called for enhanced thrust to public investment.

Manmohan Singh said there is a need to revive investment, especially in infrastructure, and containing fiscal deficit within limits of prudence. “Regarding the resource gap for the 11th Five Year Plan, it is expected that there is a need for Rs 1,60,000 crore.

Bold and clear disinvestment programme would have to meet some of these gaps in 2010-11 and 2011-12,” said Deputy chairman of the panel Montek Singh Ahluwalia, who along with Finance Minister Pranab Mukherjee, Home Minister P Chidambaram, Power Minister Sushil Kumar Shinde, Oil Minister Murli Deora and Agriculture Minister Sharad Pawar, was also present during the meeting.

To revive investment, the government would streamline the Public-Partnership Project norms, said the PM, underlining the need for expanding the scope of PPP to include projects in social sectors like health, education and urban development.

The Planning Commission should interact with the ministries concerned to exploit the opportunity for PPP more fully, Singh said, stressing that “any initiatives in these areas must not weaken our commitment to inclusiveness.”

He said the government’s rural employment flagship programme NREGA would be converged with other other programmes to minimise the impact of drought this year. Also, “we have ...to ensure that the momentum of planned development is maintained in the next two years (of 11th Plan) and that our flagship programmes are fully funded,” he noted.