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875 thousand crores, including the higher internal resource generation of PSEs and local resource mobilisation of the PRIs, with the current outlay component of the Plan dropping to 15 per cent of the investment. These are indicative figures, and to the extent that public investment turns out to be lower, there would have to be a corresponding increase in private investment in order to attain the growth target.
2.24 Although this is a feasible strategy to attain a 7 per cent growth rate during the Ninth Plan on the basis of the existing behavioural parameters for private savings and investment, it must be emphasised that it requires some deliberate and difficult decisions. In particular, it requires that the pricing of irrigation services, electricity, railway passenger fares, postal and telecommunication rates, petroleum and other mineral prices he rationalised so that both the value-added. and saving of these sectors improve substantially and are not eroded.
2.25 Private consumption expenditure in this scenario grows at the rate of 6.7 per cent, which implies a per capita consumption growth of 5 per cent. At this rate, the per capita consumption level in the country would double in 14 years as compared to 17 years in the base- line. More Importantly, this scenario sets the stage for even faster growth in the post-Plan period, which could be as high as 7.5 per cent, by creating the appropriate level of pipe-line investment in the infrastructure sectors.
2.26 The other positive outcome of this scenario is that it not only creates higher quality employment, it actually reduces the unemployment rate even during the Plan period quite significantly. In the post-Plan period (that is, by 2004-05) the unemployment rate can potentially be reduced to 5.5 per cent from the existing level of 7.5 per cent.
2.27 The critical aspect of this exercise in examining the implications of an accelerated growth of the economy is that the required increase in public investment can be accommodated only if public savings are increased substantially. Failure to do so would render the economy vulnerable to both balance of payments instability and to increasing public debt. It needs to be re-emphasised, therefore, that acceleration in growth can only occur if the government increases its tax and non-tax revenues, and also compresses its non-essential consumption, subsidies and transfers.
The Perspective 2.28 The Ninth Plan will contain a carefully worked out perspective vision. This will consist of economic/demographic scenarios and long- term plans for demographic, human resource development, infrastructure,
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environment and science and technology sectors. sustainability considerations will be important. Preliminary work shows that to meet the requirements of food security, diversifying domestic food demand and agricultural exports, since the. entire expansion of output has to be derived from productivity expansion, cropping intensity will have to rise in a manner not seen earlier. Land and water management practices required for this are of the kind developed through historical time in East Asia, will have to be internalised quickly in our country. A High-level commission on Perspective Planning for Water Resources will need to get into operational details. Similarly, exercises of the Vision 2020 kind will need to be detailed. A vision of India as a part of wider regions, both to its East and to its Western borders with increasing trade flows and cooperation on scarce non-renewable resources like water and energy, as also communication infrastructure would need to be developed as a part of the emerging multi-polar world.
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Annex-I: BASE-LINE SCENARIO
Table 1: Macro Parameters
VIII Plan IX Plan Post Plan
1. Domestic Savings Rate 23.7 25.2 25.7
(% of GDP at market price)
2. Current Account Deficit 1.3 1.7 1.6
(% of GDP at market price)
3. Investment Rate 25.0 26.9 27.3
(% of GDP at market price)
4. ICOR 4.24 4.34 4.2
5. GDP Growth Rate 5.9 6.2 6.5
(% Per Annum)
6. Export Growth Rate 11.4 12.0 12.0
(% Per Annum)
7. Import Growth Rate 13.6 11.4 11.6
(% Per Annum)
Table 2: Composition of Domestic Savings
(% of GDP at market prices)
VII Plan VIII Plan IX Plan Post Plan
1. Public Sector 2.3 1.6 2.0 2.1
(of which)
1.1 Government Sector -1.6 -1.9 -1.4 - 1.2
1.2 Public Enterprises 3.9 3.5 3.4 3.3
2. Private Corporate Sector 1.9 3.7 4.4 4.6
3. Household Sector 16.1 18.4 18.8 19
4. Cross Domestic Savings 20.3 23.7 25.2 25.7
Table 3 Inter-sectoral flow of Resources
(Rs. thousand crores)
(Figures in bracket are % of GDP at market prices)
Public Private House- Total
Sector Corporate hold
Gross Investment 663 633 708 2004
(8.9) (8.5) (9.5) (26.9)
Financed by:
1. Own Savings 149 328 1401 1877
(2.0) (4.4) (18.8) (25.2)
2. Borrowings
2.1 From Households 477 216 -693 0
(6.4) (2.9) (-9.3)
2.2 From External 37 89 0 127
Sources (0.5) (1.2) (1.7)
Note: GDP at market prices are assumed to grow from Rs. 1240 thousand crores in 1996-97 to Rs. 1675 thousand crores in 2001-02.
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Annex-II: ACCELERATED 7% GROWTH SCENARIO
Table 1: Macro Parameters
VIII Plan IX Plan Post Plan
1. Domestic Savings Rate 23.7 26.2 26.6
(% of GDP at market price)
2. Current Account Deficit 1.3 2.4 2.6
of GDP at market price)
3. Investment Rate 25.0 28.6 29.2
(% Of GDP at market price)
4. ICOR 4.24 4.08 4.05
5. GDP Growth Rate 5.9 7.0 7.2
(% Per Annum)
6. Export Growth Rate 11.4 14.5 14.5
(% Per Annum)
7. Import Growth Rate 13.6 15.3 14.6
(% Per Annum)
Table 2: Composition of Domestic Savings
(% of GDP at market prices)
VII Plan VIII Plan IX Plan Post Plan
1. Public Sector 2.3 1.6 2.8 2.9
(of which)
1.1 Government Sector -1.6 -1.9 -1.0 -0.9
1.2 Public Enterprises 3.9 3.5 3.8 3.8
2. Private Corporate Sector 1.9 3.7 4.5 4.7
3. Household Sector 16.1 18.4 18.9 19.0
4. Gross Domestic Savings 20.3 23.7 26.2 26.6
Table 3: Inter-sectoral Flow of Resources
(Rs. thousand crores)
(Figures in bracket are % of GDP at market prices)
Public Private House- Total
Sector Corporate hold
Gross Investment 759 683 748 2190
(10.0) (8.9) (9.7) (28.6)
Financed by:
1. Own Savings 214 345 1447 2006
(2.8) (4.5) (18.9) (26.2)
2. Borrowings
2.1 From Households 498 201 -699 0
(6.5) (2.6) (-9.1)
2.2 From External 47 137 0 184
Sources (0.6) (1.8) (2.4)
Note: GDP at market prices are assumed to grow from Rs. 1240 thousand crores in 1996-97 to Rs. 1750 thousand crores in 2001-02.
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