National Common Minimum Programme of the Congress-led United Progressive Alliance: Policy Reform and Public Investment Requirements

Nirupam Bajpai and Jeffrey D. Sachs

Abstract

The National Common Minimum Programme (NCMP) of the Congress led United Progressive Alliance (UPA) lays down some of the key areas of focus of the new government in Delhi that came into office in May 2004. This note attempts to identify and analyze what the key policy reform measures and the public investment requirements might be in order to attain some of the critical objectives of the NCMP.

In terms of the thrust areas highlighted in the NCMP, focusing on rural development – agriculture, infrastructure, R & D, agro-based industries and higher public spending in health and education are the most prominent ones.

At the heart of the NCMP is the following assessment. India’s poverty reduction must be built on two pillars: rapid economic growth and targeted investments aimed at the poorest of the poor. The rapid economic growth is to be based largely on the private sector, including foreign direct investments into India. Thus, the budget, for example supports many critical areas of market reform and growth promotion, including financial sector deepening, export promotion, liberalization of foreign direct investment.

We are of the view that India’s rural development would essentially require an agriculture-led growth strategy. In short, the rural development strategy for India may perhaps focus along the following lines - agriculture-led growth as the main area of focus; under which, some of the key objectives may be: a) Productivity improvements, including agricultural extension, research and development, and crop diversification; b) Bringing in larger areas under irrigation so as to reduce monsoon dependence; c) Enhanced focus on agricultural exports, and much greater focus on building up rural infrastructure, with specific focus on power, roads, and availability of safe drinking water.

Just as in China, a careful balance will have to be struck between two kinds of investments in the rural hinterland (e.g. in Uttar Pradesh and Bihar): physical infrastructure in roads, rail, airports, and telecomms to bring these regions closer to the international markets, and investments in human capital, mainly education and health, to raise the productivity of the rural population. The latter investments may end up attracting jobs to the interior, eager to benefit from an increasingly skilled labor force; or it may provoke large-scale migration to more economical coastal regions. Either way, however, the currently impoverished populations would benefit from rising living standards, wherever in India they are enjoyed.

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