Tenth Plan and Growth Parameters

By Sisir Basu

The Prime Minister, Mr. Atal Be-hari Vajpayee, presided over a full meeting of the Planning Commission on October 5 to endorse the draft Tenth Plan (2002-07) document, with the aim of achieving 8 per cent GDP growth, the portents for the inaugural year do not appear very auspicious. September is generally touted to herald hope for the economy to get going, but the month delivered dampening tidings, leaving in its trail not only diminution of hope but also drastic slicing down of the growth rate target by reputed agencies.

With the deferment of a decision on disinvestment of two public sector oil companies, BPCL and HPCL, due to differences in perceptions in the Union Cabinet and the subsequent steep drop in public sector market cap and also the downgrade of Indian government’s sovereign domestic debt by Standard and Poor’s, the mid-point hope associated with the fiscal year evaporated earlier than expected.

The International Monetary Fund (IMF) too in the World Economic Outlook report, released in the run-up to the annual Fund-Bank meetings in Washington towards the end of September, lowered its prognostication for economic growth in India this year to 5 per cent from an earlier projection of 5.5 per cent. The downward revision emanates from concerns over regional security, lower farm output, higher oil prices and a rising fiscal deficit.

The Asian Development Bank (ADB) also whittled down its GDP forecast for India this fiscal to 4 per cent from an earlier projection of 6 per cent. The National Council of Applied Economic Research (NCAER) pruned the GDP growth to 4.8 per cent for 2002-03 on the back of a tepid monsoon which has watered down the farm output expectations. The economy’s potential for growth remains under exploited for various obvious reasons is by now known, even as the National Democratic Alliance (NDA) is focusing its attention on papering over cracks within the principal party and also among its allies on various economic issues.

It is rather odd that economic reforms in India is pursued in increments and not in their entirety to make any effective dent on the twin scourges of endemic poverty and unemployment. The IMF has rightly stated that trend growth in India has declined since the mid-1990s as the benefits of earlier structural reform have faded. Thus, according to the IMF, since 1997 the pace of tariff reform in India has slowed. While the statutory peak rate was gradually reduced, higher duties continued to apply a number of items, the rates on certain tariff lines were increased and additional surcharges introduced. As a result, the average tariff rate remained broadly unchanged at over 30 per cent during 1997 to 2001. The lingering quantitative import restrictions were removed in two steps, in 2000 and 2001, but in some cases, new non-tariff barriers were imposed.

The IMF has said that India’s export and import growth rate slowed and the share of trade in GDP remained flat. Thus, despite the reforms of the 1990s, India remains in the group of countries with the most restrictive trade regimes. India’s average tariff remains one of the highest in the world and shows substantial escalation in some sectors. A range of non-tariff barriers continues to be in use, including some import bans, import restrictions through state trading monopolies and stringent standards or certification requirements. India has also become one of the major users of anti-dumping measures. Overall, measured by the IMF’s trade restrictiveness index, India stands at 8 (on a scale of 1 to 10) compared with 5 for China and 4-5 for other countries in East Asia.

The IMF also points out that effective protection in India and the anti-export bias may have been increased by the way trade has been liberalised, with tariffs on inputs and intermediate goods lowered at a faster pace than tariffs on outputs. Also, trade development has been hampered by several domestic impediments to investment and growth. These include a relatively restrictive foreign investment regime, the policy of reserving the production of a large number of goods exclusively for small-scale industries; the poor quality of public infrastructure such as transportation and power; the slow pace of industrial restructuring, reflecting weak bankruptcy laws and regulations that severely stymie labour market flexibility and transaction costs associated with administrative hurdles.

These restraints, the IMF contends, show that India is still lagging behind the rest of Asia in terms of opening up to global trade. Between 1980 and 2000, India’s trade openness increased by about 50 per cent while that of China surged by 150 per cent. Again, while India’s share of world merchandise exports increased from 0.5 per cent to less than 0.7 per cent over the last 20 years, China’s share more than tripled to almost 4 per cent. Foreign direct investment inflows to India also remain very low compared to some other emerging countries. The IMF contends that to achieve the authorities’ objective for trade integration, more efforts are needed to eliminate the anti-export bias. Priorities should include significantly reducing and simplifying the tariff structure – for instance, to bring the average tariff rate down to or below the "Asian level" of 12 per cent – and removing the remaining non-tariff and administrative barriers on imports and exports.

Additional support could arise from liberalising the foreign investment regime and allowing the exchange rate to respond more flexibly to structural changes in the economy. As an indication of the potential impact of such reforms, the IMF trade gravity models (which explain bilateral trade in terms of countries’ characteristics such as economic mass, distance apart, geographical contiguity, common language and free trade agreements) suggest that if India unilaterally liberalises its trade and balance of payments regime, its average bilateral trade flow would increase by about 44 per cent.

The IMF argues that more broadly the array of domestic reforms needed to unshackle Indian industry and improve its global competitiveness would receive further impetus from reduction in industrial countries’ trade barriers which impede India from fully exploiting its areas of comparative advantage. It is not that the authorities in India are not aware of the various policy reforms needed to pep up the rate of economic growth since the Tenth Plan document, as prepared by the Planning Commission, also lists the various reform programmes as outlined by the IMF and other development financial institutions, though as of now India has not lined up for any borrowing requirements from these organisations.

For instance, the Tenth Plan final draft given the imprimatur at the full meeting also talk of eliminating the plethora of tax exemptions and concessions that distort the tariff structure.

It also underlines the need for simplifying laws and procedures for investment, eliminating inter-State barriers to trade and commerce, reforming development financial institutions for long-term financing of small and medium enterprises, besides putting in place measures for improving governance, fostering the productive base, invigorating the rural India and programmatic initiatives.

But even as it talks of enacting a Fiscal Responsibility and Budget Management Bill at the State level under which borrowings should be confined to attain a non-rising debt-to-GDP ratio from current levels in order to reduce the burden of interest payments, the Deputy Chairman of the Planning Commission, Mr. K.C. Pant, went on record that public investment ought to be stepped up without bothering unduly over the fiscal deficit targets.

While this dichotomy in thinking needs to be squared up, the finances of the States are in bad shape, calling for cooperative efforts on the part of both the Centre and States to bring about a modicum of fiscal consolidation if the threat of being swamped by internal debt trap is to be staved off.(INAV)

Medicine to achieve immortality?

By G. V. Joshi

In 1513, Spanish explorer Juan Ponce de Lcon set sail towards west, in an attempt to find the legendary ‘Fountain of Youth', a spring reputed to have the power to make old people young again. Of course, he found no such source.

However, even after five hundred years, there is no medicine that can enable a human being to live forever.

Growing old used to be an accepted part of life, and people did so gracefully. But times have changed. Prolonging physical life has been a preoccupation of people in all ages.

Why do humans want to achieve immortality? Some might say it originates in the fear of death, or in a longing for better opportunities, or just to see grandchildren and great- grandchildren.

The scientific search for extended youth and longer life is now becoming more intense than ever, and anti-aging has become an increasingly lucrative branch in the field of medicine.

Anti-aging began to develop as a separate area of research in the mid 1980’s. Each of the futuristic fields as cryogenics, organ regeneration, organ transplantation, gene mapping, genetic engineering and cloning promises biomedical breakthroughs towards efforts to enhance health and prolong life.

At the top of the list is human growth hormone (HGH). An increasing number of affluent people, entering their 50s and 60s, especially in the developed and developing countries, have become enamored with this bio-engineered hormone. In an effort to postpone inevitable aging or line as long as possible, they are injecting themselves with HGH.

At the beginning of the 21st Century, there is excited expectation among biological scientists and medical researchers, that advancements in genetic science may soon unleash the key to longer life. Geneticists are achieving some progress toward greater understanding of what makes us what we are, with all our human potential and limitations.

Dr Michael Rose, professor of evolutionary biology at the University of California at Irvine, predicts that the human longing for immortality may be partly achieved by the 22nd century, at least to the point of extending the average human life to 140 years.

Others say that absolute immortality may be possible by then. They claim that curing all the diseases of old age and giving unlimited life spans through full body regeneration or organ replacement may well be within reach by then.

However, most medical researchers believe that any advances should be used first and foremost to improve the quality of life of people who suffer from incurable diseases or degenerative conditions.

In the 1960s, Dr Hayflick suspected that cells contain some sort of clock that tells them when it is time to stop dividing. Later he discovered that cells have what he called an ,event counter", which measures the number of cell divisions rather than the passing of time.

Researchers have discovered through the mapping of the human genome what they feel may be the key to the problem. By experimenting on fruit flies, they have learned the position of genes that can prolong life.

The tips of chromosomes in cells are called telomeres, and they consist of thousands of identical sections of DNA strung together like beads on a necklace.

Scientists now think that they know where the counter is situated. It is on the tip of the chromosome now called a telomere. Each time the cell divides, some of the beads are lost. And finally, when the telomeres reach a certain minimum length, the cell stops dividing.

Cells removed from an organism and allowed to grow in tissue culture, undergo a limited number of divisions and then die. In the human body, the number of such cell divisions is around 50, in the chicken about 25, in the mouse 14 to 28. In the longlived Galapagos tortoise, cells undergo 90 to 125 divisions.

Furthermore, if the normal human cells that have attained say, 40 divisions are put into a deep freeze or a period of years, then thawed and put back into culture, undergo 10 divisions before they die. It appears that the cells seem to "remember".

Biologists then took cells from human skin and added a gene that causes cells to produce an enzyme called telomerase. Normally, skin cells divide about 50-60 times before becoming old.

But in this case, the cells divided more than 300 times and showed no sign of stopping at all. Nor did they show sign of any abnormality.

With telomerase enzyme, cells just keep going and going and going. Meanwhile, researchers have performed similar experiments with cells from human retinas. These cells also appear to become immortal.

In fact, telomerase has a darker side: It is found in 85 per cent of all cancers, and it may be the reason cancer cells proliferate out of control. However, if researchers can gain a better understanding of how telomerase works, they may be able to develop methods for thwarting both aging and cancer.

Geneticists now think that manipulation of the telomeres at the ends of genes, by using the enzymes that promote repair, can give cells some of the characteristics of immortality.

Though they admit that there are numerous obstacles in the way, some scientists suggest that science may be able to correct genetic flaws that lead to premature death and thus promotes ever longer physical lives.

According to current scientific research, the repair enzymes produced by these "immortality" genes could be synthesized and used as anti-aging pills or injections.

If cells are given an infinite capacity for self-repair, then immortality becomes theoretically possible, and the Fountain of Youth will finally have been discovered.

According to Dr Rose, early use of such substances in a person’s life span would prevent wear and tear, as well as lengthen life and improve its quality.

Nevertheless, a longer span of life alone is not enough. What we should truly seek is fulfilled, exciting and rewarding lives replete with opportunities for vigorous pursuits and continuing achievements. Although life span is largely genetically programmed, our achievements in life are determined by opportunity, means and a sense of purpose.

Those of the older generation who are most content have a purpose for continuing to live. They have personal goals or unfinished business. They are determined not to lie down and die but to continue to grow in relationships and achievements.

Without fulfilling relationships and achievements, life, however long or short, can be of little consequence for family, society, nation or humanity as a whole.

Is the extension of physical life through the modern-day Fountain of Youth-regeneration, transplantation and repair — a desirable aim? After all, as American writer Susan Ertz wrote in 1943, "millions long for immortality but they do not know what to do with themselves on a rainy day."

Do we really want an eternal extension of the human life? Or is there something better ?

Hindu Scriptures say that God does have a purpose for humanity, and that he offers immortality to all, by leaving behind foot prints on the sands of time, through their good work for society, leaving behind a better generation of children or good writing that lives for ever.

PTI Feature