ECONOMIC PLANNING IN INDIA

PART 1

Planningprocess of creating a way to achive desired goal on some scale. As such, it is a fundamental property of intelligent behavior.

A plan can be:Long range, Intermediate range or Short range.

FunctionsHelps to clarify, focus, and research the main objects

Provides a logical framework within a business can develop and pursue business strategies

Offers a benchmark against which performance can be measured

of the planning processPlanning helps: In forecasting the future, Makes the future visible to some extent., It bridges between where we are and where we want to go.

Economic planning:

Use of government to make economic decisions with respect to the use of resources. In communist countries with a state planning apparatus, detailed and rigid planning results in a command economy; land, capital, and the means of production are publicly owned and centrally allocated.

The government makesMicroeconomic decisions Macroeconomic decisions

It include what goods and services to produce, the quantities to produce, the prices to charge, and the wages to pay.

It include the rate of investment and the extent of foreign trade.

What are the Needs for economic planning in INDIA?

Mass poverty and low per capita income

High rate of growth of populatio n.

Industrial growth was negligible.

NeedSocial and economic problems created by partition of country.

Low level of literacy.

Traditional attitudes.

Backward technologies.

Basic objectives for economic planning in india:

Economic growth. Reduction of economic equalities. Balanced regional development. Modernization. Reduction of unemployment.

of planning in India

First attempt to initiate economic planning in India was made by Sir M.Visvesvarayya, in 1934 through his book, Planned Economy for India. In 1938, National Planning Commission was set up under the chairmanship of JL Nehru. Its recommendations could not be implemented because of the beginning of the Second World War and changes in the Indian political situation. In 1944, Bombay Plan was presented by 8 leading industrialists of Bombay. In 1944, Gandhian Plan was given by Shriman Narayan Agarwal. In 1945, Peoples Plan was given by M N Roy. In 1950, Sarvodaya Plan was given by J P Narayan. A few points of this plan were accepted by the Government. Just after attainment of Independence the Prime Minister J. N. Nehru set up the planning commission in 1950 to assess the countrys need of material capital and human resources so as to formulate a plan for their more balance and effective utilisation.

Planning Commission:The Planning Commission was set up on March 15, 1950 under the chairmanship of JL Nehru, by a resolution of Union Cabinet.It is an extra constitutional, non statutory body.

Members of the Planning CommissionPlanning Commission Comprises of 8 members: Prime Minister (Chairman) Four Full time Members (including Deputy Chairman) Minister of Planning Minister of Finance Minister of Defence

Function of Planning Commission:The Planning Commission's functions as outlined by the Government's 1950 resolution are following: To make an assessment of the material, capital and human resources of the country, including technical personnel, and investigate the possibilities of augmenting those resources which are found to be deficient in relation to the nation's requirement. To formulate a plan for the most effective and balanced utilisation of country's resources. To define the stages, on the basis of priority, in which the plan should be carried out and propose the allocation of resources for the due completion of each stage.

To indicate the factors that tend to retard economic development. To determine the nature of the machinery required for securing the successful implementation of each stage of the plan in all its aspects. To appraise from time to time the progress achieved in the execution of each stage of the plan.

Give recommendations related to the prevailing economic conditions, current policies, measures or development programmes.

National Development Council India:

It was set up on August 6, 1952, by a proposal of the Government. All the plans made by the Planning Commission have to be approved by National Development Council first. It was constituted to build co operation between the States and the Planning Commission for economic planning.It is an extra constitutional and extra legal body.PM of India CMs of all States Member of Planning Commission

Members:

Function of National Development Council:

It acts as a kind of bridge between the Union Government, the Planning Commission and the State Governments.

NDC prescribes guidelines for the formulation of National Plan including the assessment of resources for the Plan.NDC considers the National Plan as formulated by the Planning Commission. NDC considers important questions of social and economic policy affecting national development.

State Planning Board India:Apex planning body at State level is generally known as State Planning Body.

Members:

Chief Minister as Chairman, Finance Minister, Planning Ministers of that State and Some technical experts. District Planning Committee is also comprising both official an non official members.

The subject that come under state jurisdiction include such vital sectors of development as:Agricultur e P O W E R

Roads and road transportSmall industries Social services

IrrigationEducation

Formulation of planniningTime period required: 2 or 3 year.

Stage One: It consider the state of economy and rate of growth in the relation to the long term of the economy. The related matters are submitted by the commission to the central cabinet and to the NDC. On their approval,they are published in the form of document and circulated widely. Stage Two: It consist of studies which are intended to lead to a consideration of the physical content of thr plan. While these studies procced, the planning commission constitutes groups for each sector, composed of its own specialists and those of ministers and non official experts, which review the situation in their respective field and make the assumptions to be made in the formulation of plan, and indicate the targets of production to be achived.

Stage Three: While preliminary documents are being debated throughout the country the commission hold detailed discussion with the Union Ministers, State Government and Union territories at the highest level. Stage Four: On the basis of preliminary studies undertaken by the groups and discussions with the various interests, the commission presents the main features of the plan under formulation in the form of draft plan, which is discussed in detail by the cabinet and is placed again before the NDC.

PART 2

First five year plan (1951-1956)

1. The first Indian Prime Minister, Javaharlal Nehru presented the first five-year plan to the Parliament of India on December 8, 1951. 2. The first plan sought to get the country's economy out of the cycle of poverty. 3. The plan addressed, mainly, the agrarian sector, including investments in dams and irrigation. Agricultural sector was hit hardest by partition and needed urgent attention. 4. The total plan budget of 206.8 billion INR (23.6 billion USD in the 1950 exchange rate)

This sum was allocated to seven broad areas: i. irrigation and energy (27.2 percent), ii. agriculture and community development (17.4 percent), iii. transport and communications (24 percent), iv. industry (8.4 percent), v. social services (16.64 percent), vi. land rehabilitation (4.1 percent), vii. and other (2.5 percent).

4. The target growth rate was 2.1 percent annual gross domestic product (GDP) growth; the achieved growth rate was 3.6 percent. 5. The monsoon was good and there were relatively high crop yields, boosting exchange reserves and the per capita income, which increased by 8 percent. 6. Many irrigation projects were initiated during this period, including the Bhakra Dam and Hirakud Dam. 7. The World Health Organization, with the Indian government, addressed children's health and reduced infant mortality, indirectly contributing to population growth.

8. At the end of the plan period in 1956, five Indian Institutes of Technology (IITs) were started as major technical institutions. 9. University Grant Commission was set up to take care of funding and take measures to strengthen the higher education in the country. 10. Contracts were signed to start five steel plants; however these plants did not come into existence until the middle of the next five-year plan

Second five year plan (1956-1961) 1. The second five-year plan focused on industry, especially heavy industry. 2. Total investment of this plan was Rs. 6,750 crore out of which Rs. 3,650 crores were invested in public sector and Rs. 3,100 crores in private sector. 3. Domestic production of industrial products was encouraged, particularly in the development of the public sector. 4. It used the existing art techniques of operation and research as well as the novel applications of statistical models developed at the Indian Statiatical Institute. 5. The plan assumed a closed economy in which the main trading activity would be centered on importing capital goods.

6. Hydroelectric power projects and five steel mills at Bhilai, Durgapur, and Rourkela were established. 7. Coal production was increased. 8. More railway lines were added in the north east. 9. The Atomic Energy Commission was formed in 1957 with Homi J. Bhabha as the first chairman. 10. The Tata Institute of Fundamental Research was established as a research institute. 11. In 1957 a talent search and scholarship program was begun to find talented young students to train for work in nuclear power.

Third five year plan (1961-1966)

1. The third plan stressed on agriculture and improving production of rice. 2. Total outlay of third plan was Rs. 10,400 crores, Rs. 6,300 crore in public sector and Rs. 4,100 crores in private sector. 3. The Sino-Indian war led to inflation and the priority was shifted to price stabilization. 4. Many cement and fertilizer plants were built. 5. Punjab began producing an abundance of wheat. 6. Many primary schools were started in rural areas.

9. Panchayat elections were started and the states were given more development responsibilities. 10. The government also targeted to achieve national income by 5% per year. 11. To provide employment opportunities for every citizen of the country 12. To establish equality among all the people of the country 13. State electricity boards and state secondary education boards were formed. 14. State road transportation corporations were formed and local road building became a state responsibility

ACHIEVEMENTS: i. Decentralization ii. Organizations formed o Panchayat o Zila Parishads iii. Laid emphasis on o oil conservation o Irrigation o Afforestation o dry farming iv. Many fertilizer and cement plants were built v. Green Revolution

Fourth five year plan (1969-1974)

1. The Indira Gandhi government nationalized 14 major Indian banks and the Green Revolution in India advanced agriculture. 2. Total outlay of this plan was Rs. 24,882 crores out of which Rs. 15,902 crores were for public sector and Rs. 8,980. Crores for private sector. 3. Problem during this was the situation in East Pakistan (now independent Bangladesh). It was becoming dire as the IndoPakistani War of 1971 and Bangladesh Liberation War took place. Funds earmarked for the industrial development had to be used for the war effort.

4. The objective of the government was to reduce social, regional and economic disparities. 5. Ihe Indira Gandhi government planned to enhance the agricultural productivity. 6. They wanted to check rural and urban unemployment and encourage self-employment. 7. The major objective of Indira Gandhis government was to reform and restructure governments expenditure agenda( defense became one major expense), to facilitated growth in exports, to alter the socio economic structure of the society 8. India also performed the Smiling Buddha underground nuclear test in 1974, partially in response to the United States deployment of the Seventh Fleet in the Bay of Bengal to warn India against attacking West Pakistan and widening the war.

ACHIEVEMENTS:i.

ii. iii. iv.

Great advancement has been made with regard to India's national income considered as one of the emerging powers served as a stepping stone for the economic growth Food grains production increased

Fifth five year plan (1974-1979)

1. Stress was laid on employment, poverty alleviation, and justice. 2. Total outlay of plan was Rs. 69,300 crores. Public sector outlay was Rs. 42,300 crores and Rs. 27,000 crores were means for private sector. 3. The plan also focused on self-reliance in agricultural production and defense. 4. Electricity Supply Act was enacted in 1975, which enabled the Central Government to enter into power generation and transmission In 1978 the newly elected Morarji Desai government rejected the plan.

5. The objective of the plant to improve productivity level,

initiate modernization for economic and technological selfreliance, to develop indigenous energy sources, promote improved quality of life, to initiate Family Planning .

ACHIEVEMENTSi.ii. iii. iv.

v.vi. vii.

Speedy industrial development Emphasis on the information technology sector self sufficiency in food science and technology also made a significant advance several successful programs on improvement of public health government in the Indian healthcare sector Government investments in the Indian healthcare sector

Sixth five year plan (1980-1985)

1. When Rajiv Gandhi was elected as the prime minister, the young prime minister aimed for rapid industrial development, especially in the area of information technology. Some opposed his plan specially the communist groups, this slowed down the pace of progress. 2. Total outlay of sixth plan was fixed at Rs. 1.72.210 crores, Rs. 97,500 crores for public sector and Rs. 74,710 crores for private sector. 3. The Indian national highway system was introduced for the first time,many roads were widened to accommodate increasing traffic.

4. Tourism also expanded. 5. The sixth plan marked beginning of economic liberalization. Price controls were eliminated and ration shops were closed. This led to an increase in food prices and an increased cost of living. 6. Family planning also was expanded to prevent overpopulation. More prosperous areas of India adopted family planning more rapidly than less prosperous areas, which continued to have a high birth rate.

Seventh five year plan (1985-1989)1. The Seventh plan lay stress on improving the productivity level of industries by up gradation of technology 2. Total outlay of this plan was Rs.3,48,148 crores; Rs. 1,80,000 crores were for public sector and Rs. 1,68,148 crores for private sector.. 3. The objectives of the 7th Five year plan have been enlisted below: i. Anti-poverty program ii. Improved facilities for education to girls iii. Communications iv. Emergence of informatics, and hooking up of telecommunications with computers v. Transport vi. inland waterways, product pipelines, civil aviation, coastal shipping

4. Based on a 15-year period of striving towards steady growth, the 7th Plan was focused on achieving the pre-requisites of selfsustaining growth by the year 2000. 5. The Plan expected a growth in labor force of 39 million people and employment was expected to grow at the rate of 4 percent per year. 6. Some of the expected outcomes of the Seventh Five Year Plan were: Balance of Payments (estimates): Export - Rs. 33 thousand crore, Imports (Rs.54 thousand crore) Trade Balance (Rs.21 thousand crore) Merchandise exports (estimates): Rs. 60,653 crore Merchandise imports (estimates): Rs. 95,437 crore

Achievements

Social Justice Removal of oppression of the weak Using modern technology Agricultural development Anti-poverty programs Full supply of food, clothing, and shelter Increasing productivity of small and large scale farmers Making India an Independent Economy

1.

2.

3. 4.

Planning Commission approved the approach to 8th Five year plan(1990-95) on September 1, 1989, under the chairmanship of Mr. Rajiv Gandhi (6% GDP target) But after the General election, the National Front headed by V.P Singh came to power. NDC then approved new 8th Plan (GDP growth 5.5%) Following the collapse of National Front Government new Govt. headed by Chandrashekar was set.

5. Before a final decision about eight five year plan, Chandra Shekar Government collapsed, making way for another general election in May-June1991. 6. After the formation of a new Congress (I) government at the centre, Headed by P.V.Narasimha Rao, on June 21, 1991, fresh discussions were held. 7. On July 19, PM Narasimha Rao announced in Parliament that the 8th Plan would start from April 1, 1992, taking the earlier two plans as Annual Plans. 8. Between 1990 and 1992, there were only Annual Plans due to political instability.

9. Investment in these two plans had been Rs.61,518 and Rs. 72,316 crores respectively. 10. In 1991, India faced crisis in Foreign Exchange reserves. Thus, under pressure. 12. At that time Dr. Manmohan Singh launched India's free market reforms it brought the nearly bankrupt nation back from the edge. It was the beginning of privatization and liberalization in India.

Eighth five year plan(1992-1997)

1. Modernization of industries was a major highlight of the Eighth Plan. 2. Total of plan was fixed at Rs. 7,98,000 crores 45.2% for public sector and 54.8% for private sector. 3. The gradual opening of the Indian economy was undertaken to correct the burgeoning deficit and foreign debt. 4. India became a member of the World Trade Organization. This plan can be termed as Rao and Manmohan model of Economic development.

The major objectives included: i. containing population growth, ii. poverty reduction, iii. employment generation, iv. strengthening the infrastructure, v. Institutional building, vi. Human Resource development, vii. Involvement of Panchayat raj, Nagarapalikas, N.G.OSand Decentralization and peoples participation. viii. Energy was given priority with 26.6% of the outlay.

ACHIEVEMENTSi. ii. iii. iv. v.

Rise in the employment level Poverty reduction Self-reliance on domestic resources Self-sufficiency in agricultural production An average annual growth rate of 6.7% against the target 5.6% was achieved.

Ninth five year Plan (1997 2002) 1. Ninth Five Year Plan of India had the main aim of attaining objectives like speedy industrialization, human development, fullscale employment, poverty reduction, and self-reliance on domestic resources. 2. The main objectives of the Ninth Five Year Plan India were: i. to prioritize agricultural sector and emphasize on the rural development ii. to generate adequate employment opportunities and promote poverty reduction iii. to stabilize the prices in order to accelerate the growth rate of the economy iv. to ensure food and nutritional security

4.

to provide for the basic infrastructural facilities like education for all, safe drinking water, primary health care, transport, energy to check the growing population increase to encourage social issues like women empowerment, conservation of certain benefits for the Special Groups of the society to create a liberal market for increase in private investments During the Ninth Plan period, the growth rate was 5.35%, a percentage point lower than the target GDP growth of 6.5%

ACHIEVEMENTSi.

ii.iii.

A combined effort of public, private, and all levels of government ensured the growth of India's economy. Service sector showed fast growth rate

Target1. First Plan (1951-56) 2. Second Plan (1956-61) 3. Third Plan (1961-66) 2.1 4.5 5.6

Actual3.61 4.27 2.84

4. Fourth Plan (1969-74)5. Fifth Plan (1974-79) 6. Sixth Plan (1980-85) 7. Seventh Plan (1985-90) 8. Eighth Plan (1992-97) 9. Ninth Plan (1997-2002) 10.Tenth Plan (2002-2007)

5.74.4 5.2 5.0 5.6 7.0 8.7

3.304.80 5.66 6.01 6.78 6.0 7.153

PART 3

TENTH FIVE YEAR PLAN The Tenth Five Year Plan has commenced on April 1, 2002 and will end on March 31, 2007. The plan has been prepared against a backdrop of high expectations arising from some aspect of the recent performance, Gross domestic production growth has improved from an average of about 5.7 per cent in 1990 to an average of about 6.5 per cent in the eighth and Ninth Plan-periods. Today, India is one of the ten fastest growing developing countries. The incidence of poverty has continued to decline, even if not as much as was targeted. Population growth has decelerated below 2 per cent for the first time in four decades. Literacy has increased from 52 per cent in 1991 to 65 per cent in 2001. Sectors such as software services and IT enabled services have emerged as new sources of strength, creating confidence about Indias potential to be competitive in the world economy.

Objects of the Plan The following are the main objects of the Tenth Plan: Increasing the Employment Opportunities - Attention shall be paid towards the multiplying of the employment opportunities and efforts shall be made to bring the situation of total employment till the year 2012. Check upon Population Increase - In this Plan, efforts shall have to be made to check the increase in population. Expansion of Education - In this Plan, emphasis shall be given for making of primary education as compulsory and total eradication of illiteracy in the age-group of 15-35 years, in the society. Clean Drinking Water and Primary Health - In this plan, more attention shall be paid to the provision of clean drinking water and the expansion of primary health services. The system of taking the garbage on heads has to be totally abolished.

Agricultural Development and Expansion In order to achieve the self-sufficiency in food grains, greater emphasis shall be given to the agricultural development and diversification. Eradicating the Poverty - The main aim of this Plan shall be to eradicate the poverty. Stability in Prices - In this Plan, efforts shall be made to accelerate the economic development by keeping the prices stable and under control. Development of Weaker Sections of Society - In order to develop scheduled castes, scheduled tribes, backward castes, minority communities and physically weak and handicapped women and children, new educational and employment opportunities shall be provided in this Plan.

Objectives 8% GDP growth for 2002 to 2007. Deduction of poverty ratio to 20% by 2007 and 10% by 2012. Increase employment opportunities. Universal access to primary education by 2007. The reduction in the decadal rate of population growth between 2001 and 2012 to 16.2%. Increase in literacy 72% by 2007 and 80% by 2012. Reduction of infant mortality rate to 45% per 1000 live births by 2007 and 20% by 2012. Reduction of maternal mortality ratio to 20% per 1000 live births by 2007 and 10% by 2012. Increase in forest and tree cover to25% by 2007 and 33% by 2012 All villages must have to access potable drinking water by 2012 Cleaning of all major polluted rivers by 2007.

Some important facts Reduce the number of central level of employees. Changes in small scale industries policy. Reduce expenditure on subsidies and administration. External saving rate 1.6% . Liberalize Agriculture, Trade, Agri Industry and export.

Disinvestment target 78,000 crore Rs. by 2007.Public sector expenditure is 15,92,300 crore Rs. Reform of labour law.

Minimum Agenda

Reduction of Centrally sponsored scheme (CSS). Expansion of project based support to the State Adoption of Core-Plan concept at both level. Emphasis on partial completed projects. Greater decentralization of PSU-Public Sector undertakings. Reduction in subsidies in a time bound manner. Selected fiscal target to be achieved at both level. Accelerating tax reform. Legal and procedural changes. Reforms and strengthening of judicial systems and procedures. Adoption of a model blue-print for administrative reforms.

Some suggestions for the Tenth Plan

The Tenth Plan has suggested the following: Funds to Gram Sabha should be extended only when the people contribute a substantial amount, say, 25 per cent in normal blocks and 15 per cent in tribal/poor blocks. Employment programs should be replaced by food for work programs to be run only in areas of distress. In all areas, the focus should be one undertaking productive works and their maintenance, such as rural roads, watershed development, rejuvenation of tanks, forestation and irrigation. Rural development funds should be used to enhancing the budgetary allocation of successful rural development schemes that are being run by state government, or for meeting the state contribution for donor assisted programmers for poverty alleviation.

Special efforts should be made to strengthen the economy of the marginal and small farmers, forest produce gatherers, artisans, unskilled workers etc. The poor should not merely benefit from growth generated elsewhere, they should contribute to growth. Special efforts must be made to encourage development of small industry and other industries suited for rural areas to provide non farm employment in rural areas.

PART 4

Planning Commission Comprises of 8 members: Prime Minister (Chairman) Mr. Manmohan Singh Four Full time Members (including Deputy Chairman) Mr. Montek Singh Ahluvalia Minister of Planning - Mr. Manmohan Singh Minister of Finance Mr. Pranab Mukherji Minister of Defence - Mr.A.K. Antony

PM of India CMs of all States Member of Planning Commission

CHAIRMAN

DEPUTY CHAIRMAN

On the eve of the 11th Plan, our economy is in a much stronger position than it was a few Years ago. After slowing down to an average growth rate of about 5.5% in the 9th Plan period (1997 - 98 to 2001 - 02), it has accelerated significantly in recent Years. The average growth rate in the last four Years of 10th Plan period (2003 - 04 to 2006 07) is likely to be a little over 8%, making the growth rate 7.2% for the entire 10th Plan period. Though, this is below the 10th Plan target of 8%, it is the highest growth rate achieved in any plan period.

SI. No. 1.

Macroeconomic Indicators

10th Plan 11th (Actual)* (Average) 9.0 4.1 10.5 9.9 35.1 10.2 24.9 32.3 22.0 6.1 3.0 1.2

Plan

Growth rate of GDP (%); of 7.2 which; a. Agriculture b. Industry c. Services 1.7 8.3 9.0 27.8 6.7 21.1

2.

Investment rate (% of GDP) a. Public b. Private

3.

Domestic Savings rate (% of 28.2 GDP) of which a. Household b. Corporate c. PSEs d. Government 22.8 4.5 4.2 -3.2

4. Current account balance (% of GDP) 5. Government revenue balance (% of GDP) 6. Government Fiscal balance (% of GDP)

0.2

-2.8

-4.4 -0.2 -8.0 -6.0

GDP growth rate is actual up to 2005 - 06 and as estimated by the EAC to PM for 2006 - 07. Savings rate, investment rate and CAB are actual up to 2004 - 05. Government Fiscal Balance and Revenue Balance are Based on Actuals (3 Years for Centre and 2 Years for states) and for remaining Years RE / BE / Projected.

Income & Poverty in India : Accelerate growth rate of GDP from 8% to10% and then maintain at 10% in the 12th Plan in order to double per capita income by 2016 17. Increase agricultural GDP growth rate to 4% per Year to ensure a broader spread of benefits Create 70 million new work opportunities. Reduce educated unemployment to below 5%. Raise real wage rate of unskilled workers by 20 percent. Reduce the headcount ratio of consumption poverty by 10 percentage points.

Reduce dropout rates of children from elementary school from 52.2% in 2003 - 04 to 20% by 2011 - 12. Develop minimum standards of educational attainment in elementary school, and by regular testing monitor effectiveness of education to ensure quality. Increase literacy rate for persons of age 7 Years or more to 85%. Lower gender gap in literacy to 10 percentage points. Increase the percentage of each cohort going t6 higher education from the present 10% to 15% by the end of the 11th Plan.

Reduce infant mortality rate (IMR) to 28 and maternal mortality ratio (MMR) to 1 per 1000 live births. Reduce Total Fertility Rate to 2.1. Provide clean drinking water for all by 2009 and ensure that there are no slip backs by the end of the 11th Plan. Reduce malnutrition among children of age group 0 - 3 to half its present level. Reduce anaemia among women and girls by 50% by the end of the 11th Plan.

Raise the sex ratio for age group 0 - 6 to 935 by 2011 - 12 and to 950 by 2016 - 17. Ensure that at least 33 percent of the direct and indirect beneficiaries of all government schemes are Women and Girl Children. Ensure that all children enjoy a safe childhood, without any compulsion to work.

Ensure Electricity connection to all villages and BPL households by 2009 and round - the clock power by the end of the Plan. Ensure all - weather road connection to all habitation with population 1000 and above (500 in hilly and tribal areas) by 2009, and ensure coverage of all significant habitation by 2015. Connect every village by telephone by November 2007 and provide broadband connectivity to all villages by 2012. Provide homestead sites to all by 2012 and step up the pace of house construction for rural poor to cover all the poor by 2016 - 17.

Increase forest and tree cover by 5 percentage points. Attain WHO standards of air quality in all major cities by 2011 - 12. Treat all urban waste water by 2011 - 12 to clean river waters. Increase energy efficiency by 20 percentage points by 2016 - 17.

It was developed in the context of four important dimensions: Quality of life, generation of productive employment, regional balance and selfreliance.

The 11th plan visualizes "Faster and more inclusive growth" as its objective. This, by itself is a welcome development that after period of a decade and half of reforms initiated in 1991, it is being realized that the reform process has widened disparities between the rich and the poor, it has slowed down reduction of poverty to a modest figure of 0.74 percent for a period 1993-94 and 2004-05, it has resulted in a rise of unemployment from about 6 percent in 1993-94 to 7.32 percent in 1999-2000 and further to 8.3 percent in 2004-05

Eleventh Plan has a fixed target of pushing up overall GDP growth to an average rate of 9 percent this will be achieved by boosting growth of agriculture to about 4 percent after a disappointing growth of 2.1 percent during the 10th Plan. Obviously, in industry and services, the 11th plan intends to improve growth rates only marginally, it is only by doubling growth rate in agriculture that its target of 9 percent growth is likely to be achievied. This implies that the success of the 11th Plan will be determined by the success in achieving growth target in agriculture, more so, when agriculture still continues to provide livelihood to 58 percent of our population. To that extent, the strategy indicates that the concept of 'inclusive growth' is part of Eleventh Plan framework.

The Approach to the Eleventh Five-Year Plan is as "The People's Plan This plan has been prepared after painstaking efforts to connect with civil society and to understand the concerns of the people at grassroots level. The Planning Commission has two alternative targets for economic growth in the Twelfth Plan. The first being a repetition of the previous Plan target of 9% growth, that is yet to be achieved. The second is, however an even higher target of 9.5% average growth for the Twelfth Five Year Plan. Numerous macroeconomic techniques have been used to examine the feasibility of these targets in terms of internal consistencies and intersectoral balances. The sectoral growth rates broadly consistent with the 9% and 9.5% alternatives are presented in the table below. The 9% target requires a significant acceleration in growth in agriculture, electricity, gas, water supply and also manufacturing.

Agricultural growth has always been an important component for inclusiveness in India, and recent experience suggests that high GDP growth without such agricultural growth is likely to lead to accelerating inflation in the country, which would jeopardise the larger growth process. However, even if such agricultural growth is achieved, it is unlikely that the agricultural sector will absorb additional workers. Thus, the main onus for providing additional jobs to the growing labour force will rest on manufacturing and construction and on the services sectors.

The target set for the mining sector, mainly reflecting additional production of coal and natural gas, is also very demanding, but is necessary to meet the primary energy requirements without resorting to excessive imports. As shown in the table below, taking the growth rate to 9.5% would require much faster growth in the manufacturing, as well as in electricity, gas and water supply sectors. The feasibility of achieving such large acceleration in key sectoral performance needs to be considered carefully before the growth targets for the Twelfth Plan are fixed. This is particularly true for the energy sector where supply constraints could be severe.