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current five year plan of India
1. AN ASSIGNMENT ON CURRENT FIVE YEAR PLAN OF
INDIA
SUBMITED TO: SUBMITTED BY:
Harpreet Singh Mekuanint Abera
Lecturer in Marketing Management Roll No, 130423543
SCHOOL OF MANAGEMENT STUDIES
DEPARTMENT OF MBA, PUNJABI UNIVERISTY, PATIALA
PATIALA, PUNJABI
APRIL, 2014
2. 2
TWELFTH PLAN: AN OVERVIEW
INTRODUCTION
India’s 1.25 billion citizens have higher expectations about their future today, than they have
ever had before. They have seen the economy grow much faster in the past 10 years than it did
earlier, and deliver visible benefits to a large number of people. This has understandably raised
the expectations of all sections, especially those who have benefited less. Indian people are now
much more aware of what is possible, and they will settle for no less. The Twelfth Five Year
Plan must rise to the challenge of meeting these high expectations.
The preparation of a Five Year Plan for the country is an opportunity to step back, take stock of
the ‘big picture’, identify the strengths that can be leveraged to enable the country to move
forward, and the constraints that could hold it back, and on this basis develop a strategic agenda.
THE INITIAL CONDITIONS
Though expectations have mounted, the circumstances in which the Twelfth Plan has
commenced are less favorable than at the start of the Eleventh Plan in 2007–08. At that time, the
economy was growing robustly, the macroeconomic balance was improving and global
economic developments were supportive. The situation today is much more difficult. The global
economy is going through what looks like a prolonged slowdown. The domestic economy has
also run up against several internal constraints. Macro-economic imbalances have surfaced
following the fiscal expansion undertaken after 2008 to give a fiscal stimulus to the economy.
Inflationary pressures have built up. Major investment projects in energy and transport have
slowed down because of a variety of implementation problems. Some changes in tax treatment in
the 2012–13 have caused uncertainty among investors.
3. 3
These developments have produced a reduction in the rate of investment, and a slowing down of
economic growth to 6.5 per cent in 2011–12, which was the last year of the Eleventh Plan. The
growth rate in the first half of 2012–13, which is the first year of the Twelfth Plan, is even lower.
The downturn clearly requires urgent corrective action but it should not lead to unwarranted
pessimism about the medium term. India’s economic fundamentals have been improving in
many dimensions, and this is reflected in the fact that despite the slowdown in 2011–12, the
growth rate of the economy averaged 7.9 per cent in the Eleventh Plan period. This was lower
than the Plan target of 9 per cent, but it was marginally higher than the achievement of 7.6 per
cent in the Tenth Plan. The fact that this growth occurred in a period which saw two global
crises, one in 2008 and another in 2011, is indicative of the resilience which the economy has
developed.
THE POLICY CHALLENGE
The policy challenge in the Twelfth Plan is, therefore, two-fold. The immediate challenge is to
reverse the observed deceleration in growth by reviving investment as quickly as possible. This
calls for urgent action to tackle implementation constraints in infrastructure which are holding up
large projects, combined with action to deal with tax related issues which have created
uncertainty in the investment climate. From a longer term perspective, the Plan must put in place
policies that can leverage the many strengths of the economy to bring it back to real growth
potential. This will take time but the aim should be to get back to 9 per cent growth by the end of
the Twelfth Plan period.
The preparation of a Five Year Plan for the country is an opportunity to step back, take stock of
the ‘big picture’, identify the strengths that can be leveraged to enable the country to move
forward, and the constraints that could hold it back, and on this basis develop a strategic agenda.
In developing such an agenda, the Planning Commission has relied on four key elements.
First, the strategy must be firmly grounded in an understanding of the complexities of the
development challenges that India faces, recognizing the transformation that is taking
place in the economy and in the world. This understanding of the ground reality must be
used to identify the critical leverage points where government action could have the
maximum impact. The focus must be on identifying the strategic leverage points where
4. 4
successful action could trigger many supportive reactions rather than fixing everything
everywhere.
Second, progress will be achieved through a combination of government action in both
policies and public programs, and the efforts of many private actors that are important in
the economy. Much of the inclusive growth we hope to achieve depends on investment in
the private sector which accounts for over 70 per cent of total investment. This includes
not only the organized corporate sector, but also Micro, Small and Medium Enterprises
(MSMEs), individual farmers and myriads of small businessmen who add to Gross
Domestic Product (GDP) and create jobs. The dynamism of this segment, and its ability
to seize economic opportunities, is critical for inclusive growth and the Plan must address
the constraints faced by all these private actors in achieving better results.
Third, the outlay on government program has to increase in many areas but this must be
accompanied by improved implementation. For this, it is necessary to focus on capacity
building and governance reforms, including system change that will increase
accountability in the public sector. The Twelfth Plan must back this focus by making
specific allocations to improve the ability of government to work better.
Finally, the planning process must serve as a way of getting different stakeholders to
work together to achieve broad consensus on key issues. These stakeholders include
(i) Different levels of the government sector: Centre, States and Panchayati Raj
Institutions (PRIs)/Urban Local Bodies (ULBs);
(ii) The private sector, both big companies and small businesses, whose investments
will drive our growth and
(iii) Citizens’ groups and the voluntary sector, which bring the key element of
people’s participation and can greatly help, improve the quality of government
action.
The Planning Commission has consulted widely over the past two years with other Ministries,
with State Governments, with experts and also with Civil Society Organizations (CSOs). As
many as 900 CSOs have been consulted through workshops and other. Several expert groups
were set up to advice on various aspects of the economy and their reports are important inputs.
These include the High Level Expert Group (HLEG) on Health, the HLEG on Transport, the
Expert Group on Infrastructure Financing, the Expert Group on the Low Carbon Economy, the
5. 5
Expert Group on Venture Capital and Angel Investors, and the Expert Group on Management of
Public Enterprises.
VISION AND ASPIRATIONS
The broad vision and aspirations which the Twelfth Plan seeks to fulfill are reflected in the
subtitle: ‘Faster, Sustainable, and More Inclusive Growth’. The simultaneous achievement of
each of these elements is critical for the success of the Plan.
THE NEED FOR FASTER GROWTH
Planners are sometimes criticized for focusing too much on GDP growth, when the real objective
should be to achieve an improved quality of life of the people across both economic and non-
economic dimensions. The Twelfth Plan fully recognizes that the objective of development is
broad-based improvement in the economic and social conditions of Indian people. However,
rapid growth of GDP is an essential requirement for achieving this objective. There are two
reasons why GDP growth is important for the inclusiveness objective. First, rapid growth of
GDP produces a larger expansion in total income and production which, if the growth process is
sufficiently inclusive, it will directly raise living standards of a large section of the people in the
country by providing them with employment and other income enhancing activities. Our focus
should not be just on GDP growth itself, but on achieving a growth process that is as inclusive as
possible. For example, rapid growth which involves faster growth in agriculture, and especially
in rain-fed areas where most of the poor live, will be much more inclusive than a GDP growth
that is driven entirely by mining or extraction of minerals for exports. Similarly, rapid growth
which is based on faster growth for the manufacturing sector as a whole, including MSME, will
generate a much broader spread of employment and income earning opportunities and is
therefore more inclusive than a growth which is largely driven by extractive industries.
The second reason why rapid growth is important for inclusiveness is that it generates higher
revenues, which help to finance critical programmes of inclusiveness. There are many such
programmes which either deliver benefits directly to the poor and the excluded groups, or
increase their ability to access employment and income opportunities generated by the growth
process. Examples of such programmes are the Mahatma Gandhi National Rural Employment
Guarantee Act (MGNREGA), Sarva Siksha Abhiyan (SSA), Mid Day Meals (MDMs), Pradhan
6. 6
Mantri Gram Sadak Yojana (PMGSY), Integrated Child Development Services (ICDS), National
Rural Health Mission (NRHM), and so on. This is also relevant for the sustainability objective
since programmes aimed at making development more sustainable also involve additional costs.
GROWTH PROSPECTS
The Approach Paper to the Twelfth Plan, approved by the National Development Council (NDC)
in 2011, had set a target of 9 per cent average growth of GDP over the Plan period. That was
before the Eurozone crisis in that year triggered a sharp downturn in global economic prospects,
and also before the extent of the slowdown in the domestic economy was known. A realistic
assessment of the growth prospects of the economy in the Twelfth Plan period is given in the
following. It concludes that the current slowdown in GDP growth can be reversed through strong
corrective action, including especially an expansion in investment with a corresponding increase
in savings to keep inflationary pressures under control. However, while our full growth potential
remains around 9 per cent, acceleration to this level can only occur in a phased manner,
especially since the global economy is expected to remain weak for the first half of the Plan
period. Taking account of all these factors, the Twelfth Plan should work towards bringing GDP
growth back to an inclusive 9 per cent in the last two years of the Plan, which will yield an
average growth rate of about 8.2 per cent in the Plan period. The outcome is conditional on many
policy actions as is described in scenario one.
Within the aggregate GDP growth target, two sub-targets are especially important for
inclusiveness. These are a growth rate of 4 per cent for the agricultural sector over the Twelfth
Plan period and around 10 per cent in the last two years of the Plan for the manufacturing sector.
Table No.1
Five year plan Period Target growth rate
of GDP (%)
Achievement
(%)
Model
First plan 1951-56 2.1 3.6 Herod Domor Model
Second plan 1956-61 4.5 4.21 Prof P.C. Mahalanobis
7. 7
Third plan 1961-66 5.6 2.72 Sukhomy Chakraborty
and Prof. Saddy
Fourth plan 1969-74 5.7 2.05 Ashok Rudra and Alon S.
Manney
Fifth plan 1974-79 4.4 4.83 Investment model of
planning commission
Sixth plan 1980-85 5.2 5.54 Based on investment
Yojana
Seventh plan 1985-90 5.0 6.02 Pranab Mukharji
Eight plan 1992-97 5.6 6.68 John W. Miller Model
Ninth Plan 1997-02 6.5 5.55 Planning commission
Tenth plan 2002-07 8.0 7.8 Planning commission
Eleventh plan 2007-12 9.0 7.9 Prof. C. Rangarajan
Twelfth plan 2012-17 9.0 - Planning Commission
Table No. 2
Five year
plan
% outlay on
agriculture
Theme or title Agricultural
growth rate
Industrial
growth rate
I 31 Agriculture 5.2 6.5 (7)
II 20 Rapid Industrialization 3.9 7.3 (10.5)
III 21 Self sustaining growth -2.0 8.2 (11)
IV 23 Growth with stability and
progress towards self reliance
2.8 4.2 (12)
8. 8
V 22 Poverty eradication and
attainment of self reliance
5.4 6.2 (8)
VI 24 Achieving economic and
technological self sufficiency
6.3 6.4 (8)
VII 22 Growth, Modernization, Self-
Reliance and Social Justice.
3.5 8.5 (8.7)
VIII 21 Development of Human
Resource
3.4 7.4 (7.3)
IX 20.5 Growth with social justice and
equity
2.5 5 (8.2)
X 20 Growth with equity and
distributive justice
2.4 8.74 (8.90)
XI 18.5 Towards faster and more
inclusive growth
3.7 6.66
XII 3.6 Faster, more inclusive and
sustainable growth
- -
TWELFTH FIVE YEAR PLAN: GROWTH RATE TARGETS
Table No. 3
S/N Sectors 11th FYP (achieved) (in %) 12th FYP (in %)
1 Agriculture, Forestry & Fishing 3.7 4.0
2 Mining & Quarrying 4.7 8.0
3 Manufacturing 7.7 9.8
4 Elect. Gas & Water Supply 6.4 8.5
5 Construction 7.8 10.0
6 Trade, Hotels & Restaurant +
Transport, Storage &
Communication
9.9 11.0
7
9. 9
8 Financing, Insurance, Real Estate &
Business services
10.7 10.0
9 Community, Social & Personal
Services
9.4 8.0
10 Total GDP 8.2 9.0
11 Industry 7.4 9.6
12 Services 10.0 10.0
Source: 12th
plan Approach paper, Planning Commission of India.
TARGETS (in %) for broad macro Economic parameters
Table No. 4
Serial .No. Economic Parameters 11th
Plan 12th
Plan
1 Investment rate (GCF) 36.4 38.7
2 Fixed Investment of which 30.9 33.5
1. Household sector 11.6 12.0
2. Pvt. Corporate sector 11.0 12.4
3. Public Sector 8.3 9.1
3 Savings rate of which 34.0 36.2
1. Household sector 23.2 24.0
2. Pvt. Corporate Sector 8.2 8.5
3. Public savings of which 2.5 3.7
A. Govt. Admin. -1.3 -0.5
B. Public Enterprises 3.8 4.0
4. Current Account Balance of which -2.4 -2.5
1. Trade Balance -5.0 -4.5
10. 10
2. Capital Account Balance 3.8 5.0
5. WPI inflation rate 6.0 4.5-5.0
SOME CONCEPTS NEEDED
1. Gross Budgetary Support (GBS)
The Gross Budgetary Support (GBS) is an important component of the Central Plan of
the Government of India.
The Government's support to the Central plan is called the Gross Budgetary Support. The
GBS includes the tax receipts and other sources of revenue raised by the. The share of the
GBS in Central Plan has been rising since 2008-09.
2. Central Plan
It consists of the Government's budget support to the Plan and the internal and extra
budgetary resources raised by public enterprises.
3. Fiscal Deficit
The fiscal deficit is the difference between the government's total expenditure and its
total receipts (excluding borrowing).
The fiscal deficit can be financed by borrowing from the Reserve Bank of India (which is
also called deficit financing or money creation) and market borrowing (from the money
market, which is mainly from banks).
4. Internal and Exter Budgetary Resource
IEBR is an important part of the Central plan of the Government of India and constitutes
the resources raised by the PSUs through profits, loans and equity.
11. 11
Expenditure is not same as Payments in Accounting. We can make expenditure even
without paying for the goods and/or services we use i.e., on credit basis.
5. Revenue Deficit
It refers to the excess of revenue expenditure over revenue receipts.
Revenue Expenditure: It is meant for the normal running of government departments and
various services, interest charges on debt incurred by the government and subsidies.
Broadly speaking, expenditure which does not result in creation of assets is treated as
revenue expenditure. All grants given to state governments and other parties are also
treated as revenue expenditure even though some of the grants may be for creation of
assets.
PROJECTION OF CENTRE’S RESOURCES FOR 12th FIVE YEAR PLAN
(Values in Rs. Lakh Crore & in parenthesis as % of GDP)
Table No. 5
S/N Description 2011-12
base year
2012-13 2013-14 2014-15 2015-16 2016-17 12th
Plan
Total
1 Tax Revenue
net to centre
6.6 4 (7.40) 8.37 (8.14) 10.04 (8.53) 11.75
(8.72)
13.63
(8.83)
15.74
(8.91)
59.55
(8.68)
2 Non tax
revenue
1.25 (1.40) 1.12 (1.10) 1.28 (1.09) 1.46
(1.09)
1.51
(0.98)
1.5
(0.88)
6.94
(1.01)
3 Non debt
capital
receipts
0.55 (0.60) 0.56 (0.54) 0.54 (0.46) 0.551
(0.41)
0.559
(0.36)
0.567
(0.32)
2.78
(0.41)
4 Fiscal deficit 4.128 (4.60) 4.216 (4.10) 4.120 (4.35) 4.04
(3.30)
4.63
(3.30)
5.30
(3.0)
22.31
(3.25)
5 Aggregate
resources(1+
2+3+4+5)
12.57(14.00) 14.27 (13.88) 15.99(13.59) 17.81
(13.21)
20.43
(13.18)
23.17
(13.11)
91.60
(13.34)
12. 12
6 Non plan
expenditure
8.16 (9.09) 9.21 (8.96) 10.16(8.63) 11.09
(8.23)
12.08
(7.83)
13.00
(7.36)
55.56
(8.09)
7 Gross
budgetary
support for
plan
4.41 (4.92) 5.06 (4.92) 5.83 (4.95) 6.71
(4.98)
8.25
(5.35)
10.16
(5.75)
36.03
(5.25)
7a Central
Assistance
to states or
union
territories
1.06 (1.18) 1.21 (1.18) 1.40 (1.19) 1.61
(1.20)
1.91
(1.25)
2.30
(1.30)
8.45
(1.23)
7b Central Plan 3.35 (3.74) 3.84 (3.74) 4.43 (3.76) 5.10
(3,78)
6.33
(4.10)
7.86
(4.45)
27.57
(4.02)
8 IEBR 2.56 (2.86) 2.93 (2.86) 3.35 (2.85) 3.83
(2.84)
4.38
(2.84)
5.00
(2.83)
19.52
(2.84)
9 Plan
resources
for centre
5.92 (6.60) 6.78 (6.59) 7.78 (6.61) 8.93
(6.63)
10.71
(6.94)
12.87
(7.28)
47.09
(6.86)
10 Gross
domestic
product
89.80 102.83 117.74 134.81 154.36 176.74 686.49
Source: 12th
plan Approach paper, Planning Commission of India.
13. 13
CONCLUSION
12th
plan envisage globalization of Secondary Education by 2017.
In 11th
plan, the total public spending on health (combined of state and centre) was less than 1%
of GDP. 12th
plan aims to increase it to 2.5% of GDP by the end of 12th
plan.
India has evolved National Action Plan for Climate Change with eight component mission. 12th
plan considers it for implementation to achieve target of 20% to 25%reduction in emission
intensity of GDP over 2005 levels by 2020.
IMR (infant mortality rate) was 47 in 2010 and 12th
plan aims to bring it down to 25 per 1000
live birth by the end of plan period.
12th
plan aims to bring down MMR (maternal mortality rate) to 1 per 1000 live birth by the end
of plan period.
Not even single Indian university figures in list of top 200 universities in the world.12th
plan
aims to get 5 Indian universities in the list.
Even after 65 years of Independence, we have 45% of households do not have electricity
connections.
11th
plan added 55,000 MW of generation capacity which was short of target set and 12th
plan
envisages to add 88,000 MW by the end of plan period.
12th
plan envisages to add 30,000 MW of renewable energy capacity.
14. 14
12th
plan envisages to electrify all the villages and to reduce AT & C losses to 20% by the end of
12th
plan.
The total investment in infrastructure in 12th
plan is estimated to be Rs. 55.7 lakh crore, which
works out to be $1trillion at prevailing exchange rates.
The share of private investment in total investment in infrastructure rose from 22% in Tenth Plan
to 36.6% in 11th
Plan. it will have to increase to 48% in 12th
plan to meet infrastructure
investment target.
More than 40% of household avail no banking facility at all in country. Insurance premium
account for less than 1% of GDP, which is just one third of international average.
We have capacity to treat only 30% of human waste we generate.
Just two cities, Delhi and Mumbai, which generate 17% of country’s urban sewage, have about
40% of total installed capacity.
12th
plan envisages that no water scheme in urban Indian will be sanctioned without integrated
scheme for sewage treatment
Every state in 12th
plan must have an average growth rate preferably higher than achieved in 11th
plan.
Head count ratio of consumption poverty is to be reduced by 10% points over the preceding
estimates by the end of this plan.
Generate 50 million new job opportunities in non-farm sector and provide skill certification to
equivalent no. during 12th
plan period.
Mean year of schooling to increase to 7 years by the end of 12th
plan.
Enhanced access to higher education by creation of 2 million additional seats cohort aligned to
the skill needs of economy.
Eliminate gender and social gap in school enrolment by the end of 12th
plan.
15. 15
References
• Approach Paper 12th
Five Year Plan, Planning Commission, Government of India
• Banking, Public Finance and International Trade by D.M. Mithani, 2008 edition,
Himalaya Publishing House, New Delhi.
• Facts of Indian Economy, 2012, Unique Publishers, New Delhi.
• Indian Economy At a Glance, 2012,
New Vishal Learning Media, New Delhi.
• Lucent’s General Knowledge Book, 2011.
• Modern Economic Theory by K.K. Dewitt, 2010 edition, S. Chand & Sons Publishers,
New Delhi.
• Pratiyogita Darpan, Indian Economy 2012, Upkar Prakashan, Agra.
• 12th
Five Year Plan Draft, Planning Commission, Government of India.
http://www.simplydecoded.com/2012/10/13/summary-of-approved-12th-five-year-plan/
http://www.thehindubusinessline.com/opinion/the-growth-euphoria-is-over/article4241907.ece