Summary of the approach paper to the 12th five year plan

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Summary of the approach paper to the 12th five year plan

Wide consultations were held. Eleventh plan – Good growth and performance. Strong macro-economic fundamentals with some slowdown recently.

8.2% growth achieved in first four years of 11^th plan. 8% overall for 11^th plan with 8% in 2011-2012% is lower than the 9% that was planned but higher than 7.8% that was achieved in the 10^th plan. 35% increase in per capita GDP during this period. Growth acceleration in 11^th plan is modest compared to 10^th plan but considering world financial scenario it is ok.

Some weaker states also grew well – Bihar, Odisha, Assam, Rajasthan, Chhattisgarh, Madhya Pradesh, Uttarakhand and to some extent UP. No state less than 6%. Some formerly high growth states have shown weaker growth in 11^th plan – Karnataka, Tamil Nadu.

Poverty Declined by 8.5% between 1993-94 and 2004-05 but we have shifted from Lakdavala method to Tendulkar method. If new method is applied to before poverty decreased from 45% to 37% in 1993-94 – 2004-05 period. Targeted at 2% per annum reduction in 11^th plan. Actual performance was 1% per year from 2004-05 to 2009-10. 2009-10 was a drought year so poverty could have increased temporarily.

MDG goal will be met. Average farm wages went up by 16% all India. In Andhra by 42% and Orissa by 33%.

Several Rural implementation programs started. Many are Centrally sponsored schemes implemented by state government agencies. Expenditure in 2011-12 estimate is 188,000 crore and in 11^th plan period is almost 700,000 Crore.

Funds are sometimes misused but the overall impact is positive.

B.K Chaturvedi commission – review of centrally sponsored schemes.

MGNREGA – 5.45 Crore households. 253 Crore person days. With better project design leakages could be reduced and value of assets could be increased.

Population is 1.21 billion. Growth rate has come down from 1.9 to 1.64% per annum. TFR is 2.6. Almost all southern states are at replacement level. Labour force will increase by 32% over the next 20 years (whereas it will decrease by 4% in industrialised countries and 5% in China). Demographic dividend can be harnessed if – Health, Education and skill development must be improved. Economy must grow along with good quality employment opportunities being created.

Young people who continued in Educational institutions has doubled from 3 Crore to 6 Crore between 2004-05 to 2009-10. Unemployment rate 6.06% in 1993-94, 8.28 in 2004-05, 6.60 in 2009-10. GDP from manufacturing increased only 9.5% in this period so not enough job creation. 66^th round NSSo survey on employment suggests overall employment in manufacturing actually declined in the 11^th plan period. Much creation was in casual employment like construction. In rural areas more permanent jobs can be created in in Agro processing, supply chain, modernisation etc.

Agri growth has been 3.2% in first four years. May be 3% in 11^th plan. 4% was planned. Supply side – seeds and irrigation. Demand side, controls must be removed to make seamless all India market.

IMR has fallen from 57 in 2006 to 50 in 2009. Institutional delivery has increased to 73%. MMR has come down by 32 points to 212. Publilc expenditure on health is 1% of GDP must be 2-3%. Constraint is both financial and of professionals.

11^th plan articulated need for expanding educational facilities. RTE. Non enrolment ratio has reduced to 3.5% according to ASER. 11^th plan approach for higher education – Expansion, equity, excellence. Introduced program of Central Universities. Tech enabled learning, ICT. Govt. is setting up innovation universities.

Investment in infrastructure is 8% of GDP as compared to 5.7 in base year of 11^th plan. 12^th plan must continue accelerating pace of investment in infrastructure.

For economy to grow at 9% per annum, Energy will have to grow at 6.5 and 7% each year. 80% petroleum will be imported.

Integrated energy policy 2009 – Principles of Energy Pricing that equalize domestic energy prices with prices of imported energy.

Water use – Some more water resources harnessed but mainly better efficiency in utilization of water resources. Reducing chemical contaminants in drinking water especially in drinking water.

Four aspects of governance that will be emphasised in the 12^th plan –

· Better outcomes from large outlays in flagship schemes. Total Quality Management and ICT

· Project Management coordination to ensure better implementation and reduce overruns and delays

· Corruption. Lokpal.

· Speedy prosecution in corruption cases.

Drivers of growth in 12^th plan

Macro-economic fundamentals- High investment 36% and High private sector saving 34% of GDP. Government savings also had improved till 2008-09. Challenge here is inflationary fears and global market uncertainties.

Effect of economic reforms – Exports increased from 14% of GDP in 2000 to 22% of GDP

Development of vibrant private sector – manufacturing sector productivity has increased. Indian companies are engaged in R&D and innovation.

Impressive managerial talent and skilled workforce. However MSMEs especially face some problems.

Aspirations of young people.

Growth alternatives

9% or 9.5%

Agri sector to grow at 4% or 4.2%

Mining to grow at 8% or 8.5%

Manufacturing to grow at 9.8 or 11.5%

Electricity to grow at 8.5 or 9

Construction 10 or 11

Trade, hotels, transport, communication, storage 11 or 11.2

Financing, insurance, real estate 10 or 10.5

Community and social and personal services - 8

Industry 9.6 or 10.9

Services 10

Growth v. Inflation

To expand demand to push growth beyond level consistent with supply potential will lead to inflation. This is because supply capacity of economy is fixed in the short run and supply bottlenecks ensure that demand can be met only at higher prices.

Energy efficiency –

Standards, labelling or appliances.

Energy efficiency in buildings – Energy conservation building code – 2 states have made it mandatory

Energy efficiency in industries – 467 Industrial units in 8 sectors consume about 35% of electricity in India.

Residential lighting – Bachat Lamp Yojana. Provides CFLs at the cost of incandescent bulbs

Energy efficiency in agricultural pumping

Energy Pricing – Tradeable fuels will be priced in line with global prices

Petrol is priced in line with international prices.

Diesel is 20% lower. Kerosene is 70% lower and LPG is 50% lower.

Initiated in 11^th plan period. Currently 3-5 % ethanol is blended in petrol.

12^th plan aims at creation of 100GW of power capacity which includes 28GW from 11^th plan

Renewable Energy – National Solar Mission aims at 22GW by 2022 and wind power capacity is 49GW.

Transport

NHDP 1 –Golden Quad

NHDP II – North South, East west corridors

NHDP VI – most trafficked sections of these will be converted to six lane

Sustainable Management of Natural Resources

Aquifer mapping and aquifer management

Bio-diversity Act implemented at the Gram Sabha level

Health

Long time no investment. According to RHS 19,590, 4,252, 2115 CHCs shortage. Infra development needed. Not only infra but also health professionals etc.

Bachelor of rural health care. New medical and nursing colleges set up. Each medical and AYUSH hospital to monitor health in surrounding areas.

All areas to be covered. Integrated Disease Surveillance System. There is a shortage of 2400 PHC doctors and Shortage of 11,000 specialists at CHCs which is 66% of the sanctioned number.

Publicly provided healthcare. Rashtriya Swasthya Bima Yojana.

Child nutrition and restructuring ICDS – restructured to make it decentralized. Focus on community based interventions.

Education and skill Development

Universal Elementary Education, SSA, RTE. Quality. Training for teachers. Enrollment at secondary school stage is very low. Rashtriya Madhyamik Shiksha Abhiyan. KVs and NVs need to be expanded.

Pre-vocational courses in IX and X.

Mean years of schooling has increased from 4.2 to 5.12 in these last ten years.

National Skill Development Plan launched in 11^th plan. Coordinated Action plan for skill development. National skill development corporation.

Curriculum for skill development has to be updated to meet industry requirements.

Now 12% have formal skills. 25 should have by the end of twelfth plan.

Higher Education

18% of all government spending on education and 1.12% of GDP is now spent on Higher Education. To be changed to 25% and 1.5%

Skills such as critical thinking, communication, collaboration and creativity. 4Cs are needed beyond reading writing and arithmetic – 3Rs.

Research culture to be inculcated. Growing pool of retired and elderly people available in the country whose talent can be harnessed. Hub and spoke model to foster curricular reforms projects.

Innovation universities.

Internationalization

Social and regional equity

Science and Tech

Currently private sector is investing around 25%. To be increased to 50%.

Strategies

National Skill Development Corporation –

Sectoral Skill Council –

Building Quality and Strengthening Local Institutions – National Rural Livelihood Mission.

National Rural Livelihood Mission – Economies of scale created by SHG federations. Local institutions to be strengthened.

Alignment and convergence of central ministries and departments in systemic issues.

Second ARC suggests that it is better to separate policy making and executing functions.

New multidimensional budget and accounting classification – Central Plan Scheme monitoring system

Good Governance in General

Good governance in this context includes ease with which citizens can access public services, rule of law, control over corruption etc.

Rule of law

Multipronged approach to tackle corruption

Institutional mechanisms of conflict resolution

Innovation – frugal inventions

Role of government, collaboration and clusters.