What Next for

Faster, More Inclusive and Sustainable Growth

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 Twelfth Plan Strategy
There are Short Term and Medium Term Challenges

Short Term : Reverse the current growth slowdown :

5.5 percent in 2012-13,
Aim for 6.5 to 7 percent in 2013-14

Longer Term : Get back to high growth. This requires

accelerating from 5.5% in 2012-13 to over 9% in last two
years

This is very difficult, especially given the global situation

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Growth must not only be rapid, but also more
inclusive
Inclusiveness is a multi-dimensional concept :
Reduce poverty
Improve regional equality across states and within states
Improve conditions for SCs, STs, OBCs, Minorities
Generate attractive employment opportunities for youth
Close gender gaps
Twelfth Plan lists 25 monitorable indicators

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 25 Monitorable Targets, e.g.
Average GDP Growth of 8 percent
Agriculture Growth of 4 percent
Reducing head-count poverty by 10 percentage point
Generating 50 million work opportunities
Eliminating gender and social gap in education
Reducing IMR to 25, MMR to 100 and TFR to 2.1
Enhance infrastructure investment to 9% of GDP
Achieve universal road connectivity and access to power for all
villages
Access to banking services for 90 percent households
Major welfare benefits and subsidies via Aadhaar
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 Strategy for Achieving Inclusiveness
There are two routes to inclusiveness
through higher growth which expands income and
employment opportunities
through government pro-poor programmes which target poorer
groups
Both are important. Twelfth Plan combines the pro-poor
programme approach with efforts to get a growth pattern which is
faster and inherently more inclusive
Two routes are mutually reinforcing
High growth generates more revenues, to finance inclusiveness
programmes
Many inclusiveness programmes (health and education)
contribute to growth
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 Macro-Economic Challenges in Achieving
High Growth
Must increase the rate of investment, especially in infrastructure
Domestic savings must increase even more to reduce the
investment saving gap which is necessary to keep the Current
Account Deficit under control
Government dis-savings must be eliminated. This means fiscal
deficit must be reduced
Growth of subsidies has to be contained
75% of the investment in the economy is private investment
(household plus corporate)
Both the Centre and the States have to create an eco-system that
encourages private investment
Infrastructure, especially quality of power, and availability of
skills is critical
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 Effectiveness of Plan Programmes
Twelfth Plan sets ambitious targets for Flagship Programmes in
areas of Health, Education, Rural infrastructure, Livelihood
Development etc.
Too much focus on the level of expenditure in these programmes.
Not enough on effectiveness in terms of end results
Implementation in the field is the responsibility of State
Government agencies. However, programme guidelines are set by
the Central Government
There are demands for greater flexibility from states. We are
responding as follows :
Guidelines are being made more flexible to meet the
requirements of individual States
10% flexi-fund within each scheme for innovations
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 Energy
8 percent GDP growth requires 6 percent growth in energy supply
from all sources
Our fossil fuel resources are limited, and our import dependence is
already high
Enhanced Energy Efficiency in all sectors
We need to push push for renewable Energy: Wind, Solar and
Storage Hydro
Difficult Policy Issues:
Coal vs. Forest Cover
Petroleum Price Distortions
Natural Gas Exploration Framework
All Energy Prices: Coal, Petroleum product, Natural Gas and
Electric power are currently under priced. Fuel adjustment is
needed
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 Water
Management of water resource is a major challenge.
Estimates of water availability have been optimistic
Twelfth Plan proposes modified AIBP and expanded
Watershed Management Programme
Water sector needs better Regulatory Framework
New Groundwater Law
Water Regulatory Authorities in each state
National Water Framework Law
Agriculture accounts for 80% of water use at present, must
shift to more water efficient agriculture practices
Manage urban and industrial water demand through water
recycling and rationalise user charges
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 Alternative Scenarios
12th Plan goal of 8% inclusivve growth is not a foregone
conclusion
Depends on difficult policy decisions to be taken by Centre
and States
For the first time Plan presents three scenarios
Strong Inclusive Growth 8%
Insufficient Action 6 to 6.5%
Policy logjam 5 to 5.5%
Anything much less than 8% will not satisfy aspirations of
the people
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Thank You