1

An Overview
1.1 clouded inflation The Indian ~conoI1lY, on the eve of the TWelfth and a very good pelfonn~lnce in growth in the Plan, is characterised yeJr, continuine by strong Jbout of maCro fundamentals, over the l;;leventh Plan period, though current concern The objective Inevitably,

by some slowdown

and a sudden increase in uncertainty in substantial

about the global economy. both objectives.

the Eleventh Plan was faster and inclusive growth Plan period have resulted

and the initiatives taken in the Eleventh

there

progres~ towards

and also new challenges that need to be faced. Some of the c1hallenges are themseli/es the consequence of the economy's transition to c: higher and more inclusive growth path, H1C structural changes th(1t come with it. and

are some weaknessE!>s that need to be addressed

the expectations it generates. There are external challenges <1150 arising frorn the fact that the global economic environment is much less favourable than it was Clt the start of the
1
Eleventh Plan. These challenges call for renewed efforts on multiple fronts learn"hlg from the ~xperienc~ gained, al~d keeping in mind global d~vE!lopmellts. 1.2. more have In prepc'lring the Approach

Paper,

the

Planning

Commission

has consulted

much

widely than ever before

r~cognising

the fact that citizens are now much better across the country
small enterprises institutions This process and of including those representing

inform~d ;:lnd also keen to engage. Over 950 civil society organisatiolls

prv',.'ided inputsi business associations,

modern electronic
All State Governments, through consulted

have been consulted;

to give suggestions, unions, have been consultation

alld social media <3re being used to enable citizens

as well as local representative five

rer;iollal

cOllsultations.
the Twelfth

will be strengthened

in the course of preparing

Plan over the next

few months.

1.3

The Eleventh ~ive Year Plan (2007/08

- 2011/12)

had aimed at achieving faster and opportunities

1110rc incflJsive growth, Rapid GDP growth, targeted

were needed for improving in living standards for

at 9 percent per annum, was regarded

that
and second, to

necessary for t'oNO reasons: first, to generate the income and employment gencrc'lte the resources needed for financing povel1y ;:.:ld enabling inclusiveness, 1.'1 projected The economy f1as pp-rformed well on the growth Y[~Jrs. Growth at around
9

the bulk of the papulJtion;

social sector programmes,

aimed at reducing

front, aVNJging Eleventh

S) per cent in th:: pidn was origin<.11ly

f1rst four

in 2011-12, the fin31 year of the

continuing

per cent

the stron~

rebound

from the crisis, which

Sow an

8.5 per cent growth in 20~0-11. In5tead, the economy has slowed down comptlred with the previous year - a phenomenon has a rebound from depressed common to <'Ill111ljor economies < reflecting the ft:lct that 2010 levels in 2009. Growth in 2011-12 is likely to rdnge between

8.0 and 8.3 per cent. The economy will average GDP growth of around 8.2 per cent in the Eleventh Plan period whicH is low~r than the 9.0 per cent originally
the 1.8 percent achieved in the lenth cdpita GDP in this period. 1t. has also led to a substantial

targeted,

but faster than

increase in perrevenues,

Plan. Thi~ implies a nearly 35 percent

increase in government

both <'Itthe Centn~ and the States, which has enabled

I

a significant step-up increase

of resources for savings and of our economy

the programmes

aimed

'ilt

inclusivenl:!ss. A healthy

in aggregate

investment rates, particularly in the private sector, testifies to the strength dS it enters the Twelfth Plan period.
1.5 The acceleration in growth in the Eleventh Plan period compared

with the Tenth Plan

d

is modest, economic weakest

discipline

but It is nevertheless
crisis depressed

a good performance,

given the fact that

severe global

growth in two of these five years, and also that India had the in the year 2009. The slowdown in 201112 is a matter

monsoon

in three decades

of concern, but it can be reversed if the investment is strengthened.

climate is turned around and if fiscal

1.5

Progress tow<;lrds inclusiveness

concept. Inclusive

is more difficult to assess, because in health outcomes,

inclusiveness

is a

multi-dimensional

growth should result in lower incidence

and improved standards

of poverty, of education,

broad"based
to school,

and significant improvement

increased

universal access for children

accej;S to higher education

including skill development. It should also be reflected better opportunities electricity, roads, sanitation and housing. Particular attention
in all these dimensions

for both wage

employment and livelihoods and in improvement in provision of basic amenities like water,
needs to be paid to the needs and other excluded and of programmes, but on multiple interventions, of the SC!Sr and OBC popullation, groups. To achieve inclusiveness success depends institutional outcomes and attitudinal women and children asalso minorities requires new policies and government time.

not only on introducing

changes, which take

A comprehensive

assessment

on all these frollts during the Eleventh Plan is not possible at this point, because

the data for recent years lis still not available.

further 1.7 work is needed. An impor1ant
(:of1sl1'quence

However, available

evidence

suggests that

there have been gains on many of these fronts, even though there are shortfalls for which

of the focus on inclusion during the Eleventh Plan has

been the much heightened people. There is today

entitlements

awareness

about

inclusiveness

and empowerment about the

to demand

amongst rights and

a greater

desire

to access

information

made aVdil~~10 by law and policy, and eagerness

<'Iccountability

from the public delJvery systems. This augurs well for tile future.

1.3 relevilnt

One important

feCltLlre

of the growth

experienced

in thp. Eleventh growth

Plan, which

is

for inclusiveness,

is that high rates of economic

have been more bro;ldly

shared thiln ever before ,Kross the States. While most States hcve shown sustflined high r<:\te) uf growt!l, several of th~ economically weaker States hiwe demonstrated an
impr-ovement

Chhattisgarh,
to available

in t~eir growth riltes. Amongst them are Gih<lr, Orissa, Assam, Madhya Pradesh, Uttarakhand and to some extent Uttar Pradesh,

R<Jjasthan,
1

According

datd, no Stat~ has averaged GSDP growth of less than 6 per cent during the

Twelfth Plan perioq:

1.9 While the econohlically~weaker st;:;tes are catching up in growth rates, there is growing concern a90ut the backwardness of indiVidual districts, several of which are located in States that are otherwise doing well. Many of these distrIcts are also affected by Left-wing Extremism. The Backward Regions Grant Fund and various other regional initiatives have
been specially designed to address this problem.

1.10 Reducing poverty is n key element in our inclusive growth strategy and there is some progress in that regard. According to previous offiCial poverty estimates, the percentage of

the population Iivin~ below the poverty line had declined by 8.5 percentage points between 1993/4 and 2004/5. Since the appropriateness of the poverty line was questioned in some
quarters, the Government appointed
i3n

Expert Committee

under the Chairmanship a recalilJration

of the of the

late Prof. Suresh Tendulkar.

The Tendulkar

Committee recommended

rural poverty line to make it more cOr'nparable with the

urban poverty linc, which it found to

poverty line provides a higher

be <'lppropriate. The application of the Tendulbr

Committee

estimate of rural povelty and therefore also of total poverty, but if the new method is applied to the earlier years} as it should be, it shows thC1t the percentage of the population
in poverty declined from 45 per cent in 1993(94 to 37 per cent in 2004/05. was declining at roughly 0.8 percentage Thus, poverty points per year in the year before the Eleventh Plan.

1.11 ThG Eleventh Plan had set a more ambitious target of dcllieving a decline of 2 percentage points p6:r year. Preliminary estimates lIsing the latest NSS survey for 2009/10 suggest that the percentage of the populeltion in poverty declined, at a slightly more rapid
rate thfm before,

by i;lpproxil1lately 1 percentage point per annum, during the five-year period 2004/05 to 2009/10, Since 2009/10 was a drought year, and poverty in tnat year could have increased tempordrily, the underlying rate of decline is probably more tl13n one
percentaGe point per year. It is also pO$~jble thJt the p<Jce of poverty reduction has

1The improvc;l1el1t ill this fOllllerly low growth and low income Stil(eS i~ eviden( in many ,~<lSc;S llwr lhe X'i1 Plan period, and in some other~, more ~o over the XTth p.;]]) period. ~hOlild be cn~ph;JSiL.ed that tho,e Sta:es which picken t:p oye[ the Xth Plan period, have cQnrillucd l() perform b~ller in the Xllh Plan, .l1.),'v(:vl'r, '~I1lf: Jormerlv higher incOllW !\Jld high gwwlh Sti'.te~ ;.t'lVC sl:own :;lighlly weaker f.:row~h over the XHh Plan perJOG, most p:;)mi~cnt ()f which are K;;malaka ard Tatoil Nadu.

rt

accelerated

in the last two years of the Eleventh

Plan period, since several Eleventh

Plan

programmes

aimed at increasing

inclusiveness

would have begun to have a fuller impact. 1\ has accel:!rated,

of poverty

summllry assessment
Millennium

is that the pace of poverty reduction

too king ahead, Goal targ't of SO percent reduction

though

it may

still be short of the targe~, However, Development

India IS welt poised to meet the between 1990 and

1.015,

1.12

One critical parameter

to examine the degree of inclusiveness

is to see what has

of

happened

to the real farm wages in the rural areas. This is because the largest number It is comforting

poor, prim<lrily landless (calendar

workers, is in rural areas and the majority of them still rely on farm
to see that during the period 2007 to 2010 by 16 percent at an all India respectively,

work for their livelihood. level. The growth

years). the averag~ real wage rates have increased

was the f stest in Andhra Pradesh (42%) and Orissa (33%). Even in states

like Bihar and Uttar Pradesli, over the three year period,

real farm wages went up by 19 and. 20 percent

1,13

The Eleventh

Plan gave a special jmp~tus to several programmes

I

aimed at building new, while others

rural and urban infrastructure; inclusiveness and reducing

and providing basic services, with the objective of increasing Some of these programmes were

poverty.

represented augmenting the existing initiatives.

listed in Box 1.

Thirteen such flagship programmes ;m~

1.14

Most

of
with

these

pr6grammes
State

are

Centrally
share.

Sponsored
The total

Schemes,
expenditure

which

are

implemented Government

by State Government a defined

agencies, but which <Ire largely funded Government

by the Central on these

schemes by the Central Government the total expenditure would Instances

.

in 2011/12 (budget estimate) of their needs

implementation

is Rs.188, 573 crore, and crore. As

One

during the Eleventh' Plan period is almost Rs. 700,000

expect,

the

effectiveness

varies from

StQte to Stat~. and these

of misuse

of funds are frequently

I

reported
present

in studies and press reports,

However,

are a legitimate
imply that

sourCe of concern that of misuse or leakage

attention:

it must be kept in mind

they do not necessarily For example,

that while instances

serious problems, is not positive.

the overall

impact

of the programme

MGNREGA,

which was started

in 2006-07

and extended
miS1l5e

to cover the whole country

during the Eleventh

Plan, has seen several instances of success.

1,15 With a people-centred,

of funds, but it has also notched up a remarkable

demand-driven

architecture,

cornpletely

different

from the of 987

earliN rural ernployrnent

programmes,

MGNREGA has directly generating power of

led to the creation

crore person-days of work since inception.

In financial year 2010/11, MGNREGA provided

employment
successfully ;;lgriculturcd

to 5.45 [rore
raised wages,

households economic

253.68 crare person,d~ys.

agricultural labour, resulting and resulted in reduction

it has also in higher in distress

the ',negotiating improved

outcomes

migrCltion. This is not to deny that with better project dc~i~~nimplementation be greatly reduced; dl~d the Zl:;sets so cre<3ted could make d much 'ncrease in land produc.tivit)', l.Jf; Refor:lIS in implementation of plan schemes ~re a priority

leakages could to

lar'ger contribution

dnd should

receiv,~

Tocu$$l::!d Clttention in the.Twelfth ~;chctnes to reflect

Plan,

There is need for rnarc f1~xibility in the design of the across the States, SpeciQI provisions should be alJd special efforts to promote of the brolld nature of

the re<llities on ground innov3tion

considered

for encour1ging

level of implementation quality of outcomes, provided in Chapter VI.

convergence at the to prevent duplication and to'create synergies tnat improve the assessment

AI detailed

ttlC reforms needed is

--~-: SI.
i
.,

Box 1 IFlagship Development

Programmes
.!-hJ~t.:. Rs.
,-,

--CfOl'e

I
MGNRBG A Indira Awa._~ Yojana (I~:Y) Natinn<ll So cial Assist<lnce ProgTlim:ne
(NSAP) Pradhan M (PMGSY)

Mini.~tiyl
Department Rural Dcvelopme~:T~

No, I
J

2fJ07-08 --Actual

1-~'Olt-12

,xpenditutc 12,(;61 3,8&6

3,104 _. ---

HE
.- -

Total Xltll Plan

2
3
..

Ruml Development

--

.'10,000 10,000

- -" 15(}~JOl I 4U86 23,536

6,158
20,000
..... .

4 5 6 7

0,500
l-ieflllh & F<-tmily Wcifiue 10,509

__ .-

65,COL

NRHM
leDS Mid Day M
-

I &, I J5 10,000 10,380 21,UOU

09,214
.--"""]

Women &. Child De.ve!QjJment ... _ ... _._.School Education & Literacy
School Educ(1tjon &. Literacy 1 Jrhflt.\ DevdoplIlvnl
..

5,19J
,

....

....

38,980

I
J
I

5,&3?

,-- -------

? 8,602 I
"!

R
!)

Sarva Siksh JNl\URM Accelerated i~'igation Bdndit . Prognnuue (AIBP) ann Other wmer resources pr ogmmme
-"

11,477

_ .. _.

..17,5761' ~8/185 -16,622

5,:'l()~

13,700

I
I

:.

JO

5,':46

12,650

-" ..
3.913 ,
....

-6,000 25,913

Il

Yujllna(RG

RajlV G<lndl Ii Gramin Vicuya'i Kariln GVY) Ol'Ulki.ng W,'I<:r

Supply AgriclJ;one ,1/, I Cuoper<J:ion

I
1
r

12 I I

Ra;iivG<lmlh i Drinking W;,ter Mi<,$ioIl (Rural Drinl ,jng water) - NRD'""T' and rO~ill Sanila lion Camp3ign (TSC)
,

7,320

11,000

- <6,

722

r
U

Ri:lshlnya KI'ishi Vikas y'uj,ma

1,200
_0

I
-

.... 7,S 11

---_ ...
IM,539

] 8,550

L_"RANDTOTAL

8.l.217

';,_,,97.1

Notl!.'

SGSY is

1'I000Y

subsumed under rhe No{io"d

Rural Livelihood Missiol1 (NRUd)

1.17

The country's

total

population,

as rC'cordeej in Censu~ 2011, at 1.21 billion, is slightly has decelerated from 1.97 per cent per

more than what annum betwc~n also declined deceleration

was foreC<lst .. But the growth 1991 (lnd 2001, to

164 per cent per annum between 2001 and 2011. It has
those of the populolls in the Tot;:)) Fertility Gangetic Rate plains. The is decline

in afmost every St<lte including reflects a much needed

(TFR) which

estimated present replacement

to have fallen to 2.6 and is expected to decline to 2.3 in the first half of the decade. The Southern I States
level.

have

reached,

or are close to raaching,

the

level of fertility. Fertility levels in the northern

states are also falling, but are

much higher than the rcpli;lcement 1.18 India

has a YOlmg;er population as compared to other countries, particularly the large

countries. As a result, the labour

developing

force in India is expected to increase by 32 per

countries

cent over the next twent~ years, while it will decline by 4 per cent in industri.alised provided two conditions are fulfilled. development economy opportunities not only grows rapidly,

and by nearly 5 per cent lin China. This ~Jdemographic dividend" can add to growth potenti<;ll,
First, much higher I~vels of health, ~ducation and skill must be a1chieved. Second, an environment to meet the needs and aspirations of the youth.

must

be created

in which

the

but also expands good quality

employment/livelihood

1.19

For growth to be inclusive it must create adequate livelihood opportunities

and add

to quality employment growth,

commensurate with the expectations of a growing labour force. As noted above, India's young age structure offers a potential demographic dividend for
but this pot~ntiar will be realised only if the extent and quality of education in new entrants things brought out to the workforce in education, is greatly enhanced. and skill most is of development remarkable One of the

by the 66!11 round NSSO .survey on Employment

rClte. 2

(2009/10)

that the number young working-age

of young people (1.5-24) people

dnd therefore out of the workforce, has

The total number doubled in educational institutions from

increased dramatically

causing a drop in the labour participation

who continued

about 30 million in 2004-05 to Over 60 million in 2009-10.

1.20

The survey also shows that between

2004/05 and 2009/10; the overall labour force

of youth in education, women. However, daily status and the among working-age were created came down by

expanded by only 11.7 million,

because of the much larger retention

and also because of lower labour force participation over the same period, 18 million terms, job opportunities unemployment basis. Thus, in absolute

on current

6.3 million;

1. In [hc age group of 5- 14 yeilrs, 89.3 per t:cnt of chilurcn wefe in school in 2009-10 .up from. 8).4 per c-:nl in 2004-05. Further rJlis increase wa$ higher for girls, risLng from 79.6 per cent in 2004.05 to 87.7 per cent in 21)09-10. Tn \he 15 19 years age gruup, .')9.5 per cent of young people were in the educatiOllal system in 2009-10

as compared to 46.2 per \~elll in 200-1-05. Once again, the incrc1:I5eW<lS more for girls, ITom 40.3 to 54.6 per cent. In the next hi.gher age group of 21}-24 ye<lrs, 22.5 /1er c.;lJt or boys <lnd 12.8 per cent of girls were still in the educational systelll in 2009-10 again$t only 149 anri 7.6 pCI' cent resp0Ctively in 200405.

unemployment

rate which h~ld inCt~r:lsed from 6_06 percent

in 1993-94 to 7_31 percent

in

1()99-2000 Clod further to ~L~8perc~nt

1 21

in 2004-05,

C;]fl1e

down to 6.60 in 2009-1C.

to continue in future and we

Thf' lower Growth in the labour forcE' is

f10t

expected

can aSSUrile that much larger numbers of educated youth will be joining the labour force in j',ucasing numbers during the Xllth Plan and in tl~(' yetlrs beyond. The c!eai- irnplicdCon of

this is that the

come from

p<lCC Df

job/livelihood
boost to

creation

must be greatly accelerated.

Part of this must

the manufactured sector of the economy, such that it grow5 at a rate that is faster- than most other parts of the economy. However, this may not be enough, in part because not all categories of manufacturing are labour intemive.
a significant Although GDP from manufacturing increased at 9.5% per annum in the organised in rnanufacturing between 2004-05 and 2009~1O along with some increase in emp!o'{ment this survey suggests that overall employment period. The implied shake-out source of jobs/livelihoods :t.22 The 66
th

manufacturing

sector,

actually declined during this manufacturing seCtor needs

of labour from the un-organised

to be stLidied in detail and steps t<lken

so that

the obvious potential

of the MSME sector as a

is realised fully. shows that the vast majority of new jobs

round NSSO Survey of Employment

m;:Jinly in construction. While such jobs are often more attr<3ctive for rural labour than casual work in ZlgriclJlture,
created between
;;l

2004-05

and 2009-10

was in casual

employment,

there

is

potential

for an <;lccelerated

pace of creation

of more

durable

rural non-farm for inputs

jobs/livelihood agro-processing, into various maintenance

opportunities.

Such job opportunities that is undergoing of

could come from faster expr,lIlsion. In personnel steady modernisation, and also the opportunities,

supply chains and the increased demand for t(lchnical and other elements

aspects of farming
of equipment

rural infrastructure.

The service sector

too Ilas to continue

to be a place for creation

of quality jobs/livelihood

in

both rural and urban areas. Agriculture

1_23 percent A weakness in the economic Plan target. performance thus far is th3t growth in tIle farm sector

(agriculture

& allied actiVIties), though better than in the Tenth Plan, remains short of the 4-

The farm sector has grown at an average rate of around 3.2 per cent
Plan and assuming conditions remain favDurable
d

during the first four years of the Twelfth

in

2011, the average

farm sector

growth

in the Twelfth Plan period

from dependent

may be

little over 3 per

cent. This is a marked improvement

need faster f3rm S(lctor gtowth

the average growth of about 2 per cent in the

on aericulture many

Tenth Plan. Still, with half of our population

&. allied <Ictivities, we

are women. The

to benefit poor farmers, experience, in agriculture

of whom

below target grOlt/th in this sector is one of ttl(~ reasons for increase in food prices over the last: two ye<lrs. Global development tllat one pcrcentdge point growth e_~pccially fro1l1 the [}I{IC countries, is at least two to three ernanating from non-agriculture revf:'(:jls sector tirn~~,; more effective

in reducing poverty thdn the same degree of growth

1.24 which

Since agriculture had

is a State subject, the Centre will have to work hand in h;.Uld with in policies and strategies. than 21 of agri-GDP. Overall investment Higher in agriculture, in

th~ States to bring coherence raised and Jgriculture, reforms

dipped to less than 10 per cent of agri-GDP in 2002~03 has been 5ub~tantia"Y
tod<3Y stands at more both by the public levels of inve5tments results for the and private

sector

can yield much better structures

if th~

are undertaken

to strc~ltnlin~

not only the incentive

farmers, but
Seeds
on the supply

also the institutional

;md irrigation

framework

in which agrie:uJture and related agencies

operate.

are priority

areas, which can be catalysts for raising productivity

side. On the demand side; there is urgent effective

need to remove most of the controls that have denied a unified and seamless all India market for most of agri-products. Finding the most
ways of ushering in these changes must be a key priority Clrea in the Twelfth Plan,

1.25

The

Eleventh

Plan had

drawn

attention

to the

fact

that

India's

health

outcome

indicators continue to be weaker than they should be, at our level of development. The Plan had therefore expressed the necessity of allocating additional resourcp.s to health and laid

down monitorable
(MMR), parameters,
improvement. percentage (2007-2009). in 2009, while

targets for parameters

delivery, for the first

such as infant mortality (lMR), mJternal morti;lIity

of full years
irnmunisation,

institutionalised.
available! of deliveries

extent three

etc,

Data on these somQ

of the

Eleventh

Plan, show

The Infant mortality the Mat~rnal

Rate (IMR) has fallen from 57 in 2006 to 50 in 2009. The Rate (MMR) has come down by 32 points to 212 rate of decline is low~r than our

in institutions has increased from 54 per cent in 2006 to 73 per cent Mortality improvements but their

These dr~ marked

targets. We must acceler~te the pace of progress in this area in the Twelfth Plan. 1.26 The Eleventh Plan had noted that the total public expenditure on health in India by Centre and the States was I~ss than 1 per cent of GDP and it needed to be increased to 2 or
3

perceont. The process has begun and the percentage

health outcomes, objective. We

is estimated

to have increased

to

around 1.4 per cent in 2011/12 (BE). If expenditure on drinking water & sanitation in rural
areas} which are critical for better the Twelfth Plan to achieve the is included, should the percentage increase would be health

higher at 1.8 percent. Regardless, a larger allocation expenditure

1.27

of resources will definitely be needed in

aim to total

as percenta~e

of GDP to 2.5 per cent by the end of Twelfth Plan.

that financial resources are not the only constr6int. Shortage a serious impediment to achieving an to of

It must b~ emphasised professionals

of health expansion improving

at all levels has become and training capacities

in the public Jrovision of health services. There hdS been inadequate attention our education in this area. There are also problems

accountability rectify, but the

of personnel

even when these are n~cruited

These lacunoe will take time to

Twelfth P1lan rnust give a special empbasis to solve this problem.

1.28

The Eleventh P!an had articulated

quality of educction,

the r-eed fm expanding

educdtional

f<lcilitie$ and

improving

as key instrumEnts for achiWJing faster Jnd inclusive erowlh.

There has been notable

still persists. 1.29

success in expal1ding :::api:lcity but the challenge

of rC'lising qUdlity

There has been irnpro'Jement and in reduction

in the extension

of prill1ary education,

both in regard

to enrolrnent achievement enrolled

of dropout

rates. The Right to Education

(RTE) f~ct, which

became operational

in 2009, has laid a solid fOGndation

on which we need to build. A major of children who are not

is that most children has drppped

are now in school. The ASER 2.010 report shows that for froln 6.6 per cent in 2005 to 3.5 per cent in 2010. The

the age group 6-14 years in all of rural India, the percentage in school

proportion
children

of girls in the <lge group 11-14 years who were out of school hasaJso
this needs to be reduced,

declined
of it is not

from 11.2 per cent In 1005 to 5.9 pN cent in 2010. However, the absolute numbers who are out of school remains large. While

access is now more or less universvlised. We llOW confront the greater challenge of improving the quality of school education. This means extensive and
stClte thi;lt

unreasonable

to

improved

te ach er tra inlng, upgrad in g curricul um and enforci ng of accou nta b il ity in tedcher's As increasing number of children finish elementary schOOl, there will be need to of

attendance.

expand cap<lcity in second<3ry education 1.30 erecting The Eleventh for

secondary and higher secondary schools. Envisaging universalisation

by 2d17 should be a priority in the Twelfth PI<ln. Plan had outlined
a three fold

strategy

of exp,:Jnsion, equity introduced a programme

and of

excellence

higher

E!ducation. The Central

Government

new Central Universities

and other institutions

of higher I~arning in the Eleventh into the Twelfth with Plan period to as many teachers as 50 and an and Colleges is also critical. to contract

Plan. This

effort bas begun, but it will hav~ to be continued

Revitlllisation
unfilled, suffer ~rom underfunding

rec:ch its full potential. These universities percent adverse of faculty impact
all

of the State Universities

by State

Governmel1ts
resort

positions

forcing frequent

the qua~ity of teaching.

The task of achieving excellence in higher education demands academic: reforms to ard choice for the students, and strengthening of rese<lrch activjty linkages between teaching and research. in Universities by establishing mutu<3lly-reinfordng ways such <3S technology-enabled Faculty shortages need to be tackled through innovative
provide greater flexibility learning, collaborative in ilchieving wJII have tim~. 1.32 Resource constrair)t5 will make it difficult to meet the need of exp<:lnding higher
<1rc of

1.31

information

and communication

technologies (ICT). As an experiment 14 Innovation Universities Wflich

11ighcr qualitY1 tIle Government in existing universities,

is proposing which

ereater autonomy and freedDm. This effort needs to be supplemcntcd

by funding

Centres of Excellence

may yield greater results in a shorter

education entirely through-the

public sector. Not all private educational institutions

good quality free entry initiatives

and some Jre quite inferior.

Minimum weed out

stcindards will have to be ensured. the poor quality institutions. PPP-models, will therefore in the education

But be

will, in the end, automatically in higher educition, The current

Private

including viable and innovative "not-for-profit" prescription

actively promoted.

sector should

be fe-examined
equity.

in a pragmatic

manner

so as to ensure

quality, but witholJt losing focus on

1.33

Inadequate

infrastructure

was recognised

in the Eleventh Plan as a major constraint the need for a massive expansion of public and private investment in the

on rapid growth. The Plan had, therefore, investment in infrdstructure various

emphasized

based on a combin;;ltion

latter through

form; of public-private-partnerships. Substantial progress has been made in this respect. The total investment in infr<lstructure which includes roads, railways,
ports, airports, electricity, telecommunications, of the Plan. The oil gas pipelines iJnd irrigation
PclCQ

is estimated

to have increased from

517 per cent of GDP in the

base year of the Eleventh Plan to around of investment has been particularly into oil & gas pipelines; whil~ falling short

8.0 per cent in the last year of targets in electricity,

buoyant in some sectors, notably telecommunications,

infrastructure

through

1 thr PPP route

.

r ilways, roads and ports. Efforts to attract private investment

have met with considerable

success, not only at the

States. A large in both

level of the Central

Government,

but also at the level of the individual

number of ppp projects

hrve taken of( and many of them are currently operational

the Centre and the States.

1.34 Compared to

other devt!loping

countries/

India

has been slow to urbanise, but the

pace of urbanjsation
in 2011,

is expected to <lccelerate over the next two decades. 'fhe 2011 Census
from 27.8 per cent in 2001 to 31.2 per cent a heavy demand

also shows an increase in the urban population for better quality infrastructure
a sufficiently 1.35

and it is likely to exceed 40 percent by 2030. This would generate

in urban areas, especially water, sewerage,

Plan.

public transport

and low cost housing. Sin~e it takes time to create urban infrastructure, long term focus on urban planning in the Twelfth
I

We must introduce

'fhe Twelfth

Plan

nrust continue the thrust on accelerating

and accelerating

the pace of investment growth. Public investment

in in

infrastructure, infrastructure

as this is critical for sustaining

will have to bear a large part of the brunt of meeting infrastructure and expand

needs in

backward and remote ar~as to improve connectivity

services:. Since resourct! constraints in other areas, PPfJ-based development PPR, with

the much needed public

in infrastructure wherever

will continue to limit public investment

needs to be encouraged may be constraining regulation

feaSible.

It is

necessary to review the ~actors which steps to rectify them. encouraged are already
.

private investment,

and take

appropriate

or concern for equity,

CJn also be

in the social sectors, such as health and education. taking steps

.

Several Stilte Governments

in this direction.
1

The Energy Challenge

1.36 The energy
have

needs to
be

of rapid met

growth

will

pose

a major

challenge.
f::nergy

since

tl105(:

requirenlGnts constrained

in an envIronment

where

domes Lie

prices

<lIe

and world 0nergy prices Jr0 high rind likely to rise further.

~or the GDP to grow dependence upon

at 9 percent,
percent

cornmerc;:i~1 energy

supplies

will haV0 to glow

energy supplies

at cl ratl.? LJetween 55 rind 7

are limited, has always been high

per year. Sinc;e India's domesbc to be '80 percent

imports will increase. Import dependence and is projected import dependence

in the case of petroleum Plan. However, mines.

in the Twelfth

even in the case of coal,

is projected to increase as the growth ofth~rmal

gener3tion

will require

coal supplies which can'not be fully met from domestic 1.37 Rational energy pricing is critical for both

effective

del"l'land management

and a

healthy supply response.

no incentive domestic producers energy. supply,

It is relevant for demand management, because energy users have to economize if energy is underpriced, It is also relevant for expansion of
because under-pricing of energy imposes a large burden on the energy

reducing thelresourc~$

that should accrue to them for financing new investments

are significantly more expensive

in these areas. In the longer term, we must move beyond fossil fuels to non-conventional However, these new energy sources

than fossil

fuels and increased dependence 1.3& The Integrated

on these fuels will tnean higher per unit energy costs. in 2009, had enunciated principles
energy,

Energy Policy, which was approved

of energy pricing that equalize domestic while allowing for targeted in this direction, regulators, often

energy prices with the prices of imported below the world tariffs

subsidy to the needy and poor. While we have taken sorne steps prices. This i!: manner to

our energy prices still remain significantly prices (other than petrol) pressure, under political are not setting

true for both petroleuml

{lnd coal. It is also true of electricity, since

in a rational

reflect normative

costs. The Twelfth Plan I'nust address

the challenge

of aligning domestic
time span, but it

energy prices with the global price trends. This is not edsy to do in a short can be done gradu<1l1y laver a period of time. sustain high growth in tho Twelfth be de-linked It must be emphasized critically Plan will depend

that our ability to but energy prices

where

upon our ability to make this in a situation

adjustment.
in general

The poor will need subsidy, which Sl10uld be strictly targeted,

cannot from global price levels, particularly

import dependence

is increasing. - Water, Land & Forests

only if it is pursued In a manner which
Clre

Natural Resource Management

1

J.39

Economic development

will be sustainable tlccelcration

protects expected

the

environment.
iand,
I

With

of economic

growth,

these

prc!;sures

to intensify: and we therefore

need to pay greater ilttention to the management

of w;)t~r, forest5,Jnd

1.40 require

Management attention

of water

resourr.p.s

poses 't1crc<:lsine1y quantity

difficult

cl13:lenge that fresh water

will

in the Twelfth

Plan. The total

of usable

ilnnually

available increasing. While

in India is fixed, but its dem<Jnd from expanding Water reSOUrCes in many parts of the country

agriculture

and other sectors is leading to

are under severe stress

excessive exploitation
these grcClter efficiency

of ground water. There is sume scope for increasing water availability.

1l1ust be fully exploited,
' the real solution has to come from

opportunities

in walter use,

1.41

Agriculture
scope

accounts

for SO percent
efficiency holistic and

of water
of water

needs

at present,
irrigation strategies.

and there
better

is

consider<'lble management requires electricity electricity

for increasing in place for more

use in this area.

This requires

of water I in command areas of large and medium aquifer domestic this management use can help agricuiture ground

projects. It also Separation availability of of

putting feeders

limit the

for pumping

water thus breaking Wherever

1135

the vicious cycle between been done in combination

free energy with large-

and excess use of gro,-!ndwater. scale watershed 1.42 supplies additional reflecting prograimmes,

there is evidence that groundwater

levels haw recovered. pricing, but pricing 'lifeline' water for pricing in appropriately

Normally, efficient is a sensitive for drinking water

use of scarce resources requires appropriate This problem consumers. can be solved

of water

issue.

by providing

and cooking at very low prices. while charging

There is a stronger and industrial purposes. priced.

use by domestic of wat~r

case for rational

the scarcity of water for commercial for agricultural

use. There is also a $t~ong case of water recycled increased. This will

for rational pricing

The proportion

urban areas, and by Indian industry supply for commercial 1.43 Even

needs to be significantly

happens if

purposes is appropriately

itself will not lead to optimal use. For this, a , regulatory measures to ration water to different to discourage contains pollution, It is estimated

if we succeed in bringing about a major rationalisation of water prices, this by rational pricing must be accompanied by
,

agricultural

users, and stronger

measures

that up to 1:3 per cent of drinking water

in rural

areaS

contaminants, including fertilizer run-offs (particularly urea and its decomposition products). Contamination of drinking water is the principal c<Juse of health disorders, particularly amongst c:hildren.
1.44 The availability of land has become resources,
d

chemical

major

constraint

on

expansion

of The

infrastructure,

developlnent

of mineral

industrialisation

and urbanisation.

for acquisition of land, and also for change in land use (lre archaic, often unfair and non~tramparent. They need ~ comprehensive review, A new modern law is
needed to govern the acquisition urb~nisation. This shoul~ legislation has been put'in of land for industrial use, infrastructure d(!velopment or also contain provisions for resettlement and r~habilitdtion. A draft

present

arrangements

the public domain before a final view is taken. Finalisation of this with an appropriate balance between the need to protect the interests of current land owners or those dependent on it for livelihood, and th~ broader objective of

legislation,

development

is critical. .

1.45

The protetlon

and strenBthening

of our natural particularly growth

forests is ()nother critical

area. This
On

is also linked to co~lserv<1tion of soH and treJL'l1ent of watersheds, the

W2iy

which

helVe a lJe<lring on
Tlwy also impact WJI resource growth lies in

we dcal with our water

resources,

drinking wdter.

the availability under energy' supply

of energy for the economy, Since rapirJ economic dnd most of our electricity
I

sil~le rnost of the c~untrv's will lequire is expected

the forcst.

a (OmmenSIJrJte to be c031 based,

gCrler;Hioll

tl1ere are

potential

conflicts between

protecting. the forests

Clnd ensurin/1;

an adequate

supply of

energy to the economy. environmel1talprot~ction.

It will be necf!ssary to evolve mechanisms through the energy requirements of development

which a suitable Lmd thf! need for

balance can be struFk between

These issues are discu$sed at length later in this paper.

1.46

An overarching

challenge that implementation

requires

much

greJter

attention

in the Twelfth

Plan

Lr;

that of ensuring better

and improved

accountability.

There are four aspects

of g~vernance that are important.

1.47

First, better governance

into enduring

is crucial for translating

the large outlays of our flagship with stakeholders

of programmes technologies and building

programmes
their

outcomes

on the ground. Interaction

that these programmes is poor. innovative Implementation
011

reveals
Can be

that whil~ there improved delivery, improve through

is general appreciation on the ground Management, a mUlti-faceted and supervision.

have the right objectives, of public service which

implementation Total Quality , monitoring

approach

relying

professionalization

use of IT and other of

It can also improve through and the community

greater emphasis on social

rnobilisation partnerships aspirations

2nd Capacity building, strengthening

with civil' society organisations of the people.

local institutions,

deeper

to determine

the needs and

1.48
different

Second, implelnentation
agencies to tJcilitate

in many areas, particularly in infrastructure

of reasons. Coordination capabilities progress in project implement;Jtion

development,
needed across

involving

large projec1s, is held up for a variety

is often lacking and can

lead to long delays and cost over-runs. "ProJect management'

for thQ country to get better returns from public investment soci<:ll sectors.

must be improved
ancl also in the experiences management

in infrastructure

Project management,

to deliver
A n3tion-wide

on time and within cost, is a learn<:lble

by the developrn~nt project

capability
Japan,

that can be institutionalised, Kore;), Singapore and China,

as demonstrated
five Year Plan.

of

drive to irnprove

must be an integral part of the Twelfth 1.49 Third, is the broadQr Several legislative Lokpal, irHroduction of a legislative both accountability

issue of how to rid the system of corruption, costs. A number of initiatives procurement measures Jre needed.

which

is both of

morally (lbhorrcnt and imposes economic pursued. effective creation

ensurG

n~ed to ce urgentlv
Zl'l

These include the establishment to tran~parencv,

of ~ law on public
governing

and t.he to

framework

the functioning

of rcguliltory institutions,

and independence.

1.50

Finally, to combat

corruption,

it is imperative

to ensure process

speedy

prosecution

and trial

in corruption the growing to

cases. The long delays in the judicial

further delays.

(lre an irnport<lnt factor behind

cynicism about the rule of law in our system. Reforms in the legal process need

be put in place without

1.51

India's
in

growth the

prospects

depend

largely but

on an ability be

to

tackle in

supply

side from more

constraints developments globally

domestic

economy, economy,

it cannot

viewed

isolation

in the world

if only because

our economy

is now much

integrated.

The share of exports of goods & services in GDP has increased from 14 to 22 per cent in 2010/11 (lnd India is now viewed as an important

per cent in 2000/01 destination for FDI.

1.52

Global economic
downturn

prospects
countries

arc clouded

with ,uncertainty. The world has avoided

as a possible consequence

prolonged but growth

that was at one stage feared

of the 2008 in 2009,

crisis. The industridlised

have resumed positive growth Emerging markets

after contracting much more

in these countries

r(!mains anaemic with serious macro-economic

imb.alanc:es
robustly,

and concerns

about

sovereign

debt.

are growing

and India has been one of the leaders in this process. However, debt ;md fiscal unsust<iinability the export rnarkets

concern about - sov(!reign about

in industrialised countries - not only weaken the prospects

countries. An adverse development

of an early return to robust growth in these countries, but also creates uncertainty in industrialised

affects

India

directly,
including

has

been

the

rise

in oil prices,

and

also

the

globdlly, which prices of other

commodities,

food. Economic management

over the next two to threfl y~ars will

have to cope with this uncertainty.

1.53 Taking a longer view, however, the changes taking place in the world economy, with

a shift in economic
favourable in nominal economies projected

strength

towards

emerging markets a projection

and especially in Asia, are inherently

of world
economy

for India. Table 2.3 presents US Dollar terms between are projected

over the next two and emerging Asia is per year. Tt1ese

and a half decades. Industrialised

countries are likely to grow at about 3.5 percent per year 2010 and 2025, while developing Within this group, developing at around 10 percent

to grow dt around 8 percent. US Dollar terms,

to grow, again in nominal

projections
forecasts,

are,

of course, subject

to the

usual

'qualifications

that

attend

long-term

but they

are not out of line with

the current

perceptions.

The advanced

economies' share in global GDP is projected to fall from 65 per cent in 2011 to 51 percellt by 2025, while the share of 'emerging economies is proJected to increase from 3S per c~nt to about 49 percent over the same period. l'his is shown in Table 2.3 below:

Table 1.3

~- - - -=.= =- =
I Wor~G~ .

Structure of Global GDP (in current US $ Trillion)

---r.
2000
32.2.

J
I

T I

2011-'
~.7

2016
9?5

!
T
I

2020

-II 2025-1
14'O~5

'11,0.5_

Advanced Economies

25.';

-14.4

53.3

61.1

I I

71 7

--,--Developing & Emerging

I
-

6.5

24.3

..~ __ .
Developing Asia

. ._

.~.Q9,3%) E4%). o/Which

.E.]~)

37,2

49.4

68.8

(41.1%LL{44.7%)

(48.9%~

-- --'.--'-- ._._I
a/which India ._
'--'--'\ Sub-Saharan Africa 1_,._ .. ._._ ~

1-2,3--1-10~

r'
I

17.4

T -;S~6-I-:;O7
[[S5;~1-L3:~~).1
i
2.5 I ~.2%). ~.9 ~2.8.%)I
I

11S.2%lj-.1l9.3%) I 1241%l.-.-J28.9%}~

,,_._I.~~~
0,3 . (1,O~~

I
i
If

~~~)
1,2 (1.8%_)
2.8

~3~~) 1.7

(l,9r~.
3.8

West Asia

&. North

Africa

I
1

0.8

5.0

7.1

I'

t- - 1 _'_.

--' -. _. _.

.-L (2.5%U.. (4'O%~_

2.1 (6.6%) 5.5 __ (SpX,)

(/U%)~ 7.4 ~.2%)

.. (4.5%U

(5.0%)-1

' I LatIn Arncrlca & Can'bb ean

II

~J.7 13.3 I , L(8.8%)LJ.~.5%)

I
,

[FiglJres in
Sour!;/?: rhe

parentheses

denotE''; sharp. of world GDP]

World Eccnon,ic Outlook database of the lntcmalional Monetary Fund, This data up to 2010 in most ClISCS (up to 2009 cnd earlier In i:I few) is actui:l1 elata. Thereafter the figures up to 201G arc projections by the IMF. The pl'oJections for India and other countries beyond 201G have been m;Jde intern;:llly in the DP?P Division of the Planning Commission,

1.54
potential

The important
thf! third

point emerging from these projections is that India has the potential
largest GDP in the world rapid growth. in two decades. However, to realise this behind China has grown around 10 per cent per

to become

we must f!nsure sustained

year in real terms for 30 years and is now expected to slow down. India is currently . rapid growth over the next two decades, provided supportive appropriate place. These policies our must promote and support our changes in infrastructure, manag~ment universities, industrial sophistication, management promoting

.Chin;), but the evidence suggests that India has now developed the potentiJI for Sllstaim~d
policies are put in sectors.' Our the and also our partic.ularly many

of cities,

of a whole

range of knowledge

institutions,

will have to change dramatically.

Institutional

c1lZlnges will be necessary. These.

changes tJke time to brinr, about, blJt it is important'to

to occupy its rightful potential in the world.

begin now, if we want thl= cconorny

1.55 strength more

The message inefusive

emerging

from

this

overview

is that growth

the economy faster,

has gained sustainable Pl~m, it

in and
IS

in many dimensions and is therefore growth. to airo at 9 percent target Global

well placed

to achieve

Having achieved 8.2 percent growth for the Twelfth conditions

in the Eleventh

reasonable is a feasible assured

Plan. As pointed

out in Chapter be viewed

II, this as an

from a macro-economic
economic

perspective

but it cannot

outcome.

are very uncertain

and energy prices are

likely to remain

high. To achiElve rapid growth, the economy

will have to overcome

constraints

posed by limited energy supplies,

increase

in water

scarcity, shortages

in

infrastructure, Greater efforts

problems of land acquisition for industrial development

and infrastructure, with rapid growth. education to ensure

and the complex problem

also need

of managing the urban transition

to be made in agriculture,

associated
and

health

inclusion of the most excluded and sometimes 1.56 These difficulties suggest

invisible parts of our population.

that a 9 percent growth target for the next five years is ambitious. But it is hot impossible, if we have the political will to do what is necessary. Economic reforms over the last twenty years have resulted in the citizens of India having
high expectations. The Twelfth Plan has to meet tile <lspirations of millions of young tllen

and women. This cannot be done by following a business-as-Llsual approach. All sections of society - government, farmers, businesses, labour and conc'erned citizens - have to adopt
newer, more effective ways of pursuingtheir
our lofty goals. activities,

so that we can collectively

achieve