Yojana Bhavan, it seems, has no idea of the resource constraint of the government. That is clear from the position taken by the finance ministry. Since the commission has no control over resources, its high annual GDP growth target of 7 per cent is a pie in the sky.

This indictment of the planning commission could be facile. A plan, a five year plan, and its component, the annual plans, presumes consultations with the finance ministry. This is because the action lies with the finance ministry with regard to public investment. The commission is engaged basically in policy planning which is all about consistency.

In pursuit of consistency, the plannersmust make certain assumptions regarding the inflation target, monetary policy, the fiscal deficit, the growth of tax revenues and so forth. These, it is only reasonable to expect, the commission adopts after fairly detailed consultations with the finance ministry, the Reserve Bank et al. Accordingly, the size of investment, including its public investment component, the likely incremental capital-output ratio, and the resultant growth are arrived at.

If this inference is accepted, that is, Yojana Bhavan makes its projections after proper consultations, it follows that the planning commission has been stood up. The plea of insufficient resources reneges on the promise of the finance ministry to boost the tax-GDP ratio. The ratio has fallen in the last few years from 10.6 to 9.4-9.6. Reversing it is no big deal. A full percentage point rise in the tax-GDP ratio would give the government an additional Rs 16,000 crore.

So,is the planning commission asking for too much? Successive finance ministers includingthe present one have talked of raising the tax-GDP ratio. But suddenly the finance ministry is in a blue funk. It asks the planning commission to take a realistic view of the trend: the commission must reckon with a sagging tax-GDP ratio! (To be fair to the mandarins of the North Block, they have to contend with roll-back Sinha).

The finance ministry on its part has done some number-crunching. It has reportedly inflated the estimated growth of non-plan expenditure for 1999-2000. During the seven years ended 1998-99, the average annual (non- plan) expenditure increased by 13.6 per cent. This rate of growth is assumed for the coming year. But pay commission arrears inflated the expenditure during 1997-99. Surely, the arrears were cleared in that period! The growth rate of non-plan expenditure must accordingly fall in the coming year.

Expenditure inflation is accompanied by a sharp projected decline in the growth rate of tax revenues, especially collections from excise and customs. The consequent expansionof the fiscal deficit leaves little room for increasing the budgetary support to the plan. The game plan is to show at the end of the next fiscal that the government has curbed non-plan expenditure below target, and boosted tax revenues, overshooting the target. The fiscal deficit will, of course, show a startling reduction.

The gutless finance ministry is resorting to wizardry to hide its failure to enforce taxes. It can afford to grin at the toothless planning commission. But the effect of such wizardry will be to slow down public investment. This should actually be hiked because private investment continues to be in the doldrums.

So, aggregate investment will be pushed below savings for want of political will to collect taxes. Deficient investment will slow down income growth, and, in turn, push down savings. Reduced savings will thus match investment. The performance of the economy is to be held below potential, thanks to the spineless finance ministry. If such wizardry has its way, ab initio theninth plan will die in its third year.

What is on the cards is slowing GDP growth to the Hindu rate which is close to 6 per cent (fuelled by an equivalent rate of consumption growth), up from Raj Krishna's 4 per cent a year. (Note to the political authority: if the economy grows by no more than 6 per cent, unemployment rises; a 6.5 per cent growth absorbs new entrants to the labour force, that is, stabilises the backlog of unemployed; and growth by 7 per cent reduces unemployment).