I doubt many would argue that India should NOT invest in infrastructure and social services, but some kind of credible plan for implementation, and for a time-bound return to fiscal discipline is essential, especially in light of the investment requirements.

The statement about shifting the targets to be ‘‘cyclically adjusted in keeping with international best practices’’ is a little misleading here, as the implication is that relaxing the FRBM targets for a few years to enable expenditure on infrastructure and social priorities would be consistent with ‘‘best practices’’. These ‘‘best practice’’ cyclically adjusted budget rules, however, typically vary the target according to a transparent formula linked to overall macro indicators.

Third, the Plan is somewhat vague on the macro fundamentals. Some clarification on the feasibility of the targets and assumptions outlined here:

• Where do the investment rates and domestic savings rates required for different growth targets come from? What kind of macro-economic model and what kind of assumptions?

• What is the strategy for increasing the private sector’s willingness to invest? Some essential investments are mentioned—infrastructure, education, among them—but what about specific ways to increase the private sector’s willingness? The discussion on enabling programmes for PPP in the Plan is vague; recommendations that the process ‘‘be seen to provide services at reasonable cost and in a transparent manner’’ are easier said than done.

• What would be the strategy for addressing an endogenous business cycle? Wouldn’t early recognition, with fiscal and monetary response, further affect expectations? Besides, what does endogenous mean? Does it mean politically induced business cycles?

... contd.