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Meaning:

The Indian economy on the eve of the 11 th plan was in a much stronger position than it was a few year ago . 10 th plan had achieved annual growth rate of 7.8 percent in GD ! which is the highest growth rate achieved in any plan period. The economy entered the 11th plan period with saving rate at "#.8 per cent of GD and the investment rate at "$.% per cent of GD . &oreign direct investment inflows! e'ports! foreign e'change reserves etc. were increasing and fiscal position was continuously improving . The 11th plan could not have e'pected a (etter start and it was essential to maintain this growth momentu)m. Slogan: Towards faster & more inclusive growth rate

Assumptions of Eleventh Plan:


The o(*ective of %+ per cent growth rate of the 11 th plan was (ased on following assumption: a. capital output ratio will (e #.1: (. )verage rate of investment in this plan will (e ",.7+ of G D. -ut of this! share of pvt. .ector investment will (e 8 per cent of GD and share of pu(lic sector investment will (e 8+ of GD a ma*or role in development process of the economy. d. )verage rate of domestic saving will (e "#.8+ of GD this! the contri(ution of household sector (e #.$+ of GD . e. There will (e improvement in the s0ill population.
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so! for

achieving the growth rate of plan! the private sector will have to play output of

will (e /"+ the

contri(ution sector will (e 7."+ of GD and that of pu(lic sector will

Proposed outlay of 11th five year plan


Items )griculture and allied activities 1ural Development .pecial area programme for /,!"/% roposed outlay 1!",!"81 "!01!0,% ercentage of total outlay ".7 8." 0.7

(ac0ward regions Irrigation and &lood 2ontrol 3nergy Industry and minerals Transport 2ommunication

/!10!"/% 8!$#!1/" 1!$"!,00 $!7/!##" %$!"80

$.8 /".# #./ 1$.7 /.#

.cience! technology and environment 87!%"" 3conomic services ,/!$/" .ocial services 11!0/!"/7 General services and 4iscellaneous #/!/8# ",!##!718 1./ 100 "0." 1.7 /.#

Total

O !ectives and Targets


) ma*or advantage in formulating the 11 th lan is that India5s economic fundamentals have improved enormously and we now have the capacity to ma0e a decisive impact on the 6uality of life of the mass of our people! especially on the poor and the marginali7ed. This o(*ective cannot (e achieved! however! if we simply follow a (usiness as usual approach. 8et alone acceleration! even if the rate of growth in the last few years is to (e sustained! it needs support. 9esides! growth has not (een sufficiently inclusive thus far and this is a significant shortcoming which needs to (e corrected. Traditionally! the rate of growth of GD has (een at the centre of planning and for good reasons. In a low income country! it is only through rapid economic growth that the production (ase of the economy can (e e'panded to sustain a higher standard of living for the people. ) faster growing economy also ma0es it easier to generate the resources needed to finance many of the social development programmes. :owever (oth arguments also highlight the fact that growth is not an end in itself ; it is a means to an end which must (e defined in terms of multi;dimensional economic and social o(*ectives. The 11th lan must! therefore! not only set targets for the rate of growth of GD ! (ut also set monitora(le targets for other dimensions of performance reflecting the inclusiveness of this growth.
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The growth target for the 11th lan must (uild on the average growth of 8+ in the last # years of the 10th 10th lan to 10+ (y the end of the 11th lan. ) feasi(le o(*ective is to accelerate from 8+ growth at the end of the lan! yielding an average GD growth rate of a(out %+ in the 11th lan. )chievement of this target and continued growth rate of 10+ in the 1/th lan would lead to a dou(ling of per capita income over the ne't two lan periods. The structure of growth should also (e such as to promote a wide spread of (enefits. Dou(ling agricultural GD growth to around #+! is particularly important in this conte't. This must (e com(ined with policies to promote rapid growth in non;agricultural employment so as to create 70 million *o( opportunities in the 11th (e reduced (y 10 percentage points (y the end of the ) (asic o(*ective of the 11th lan. If these lan period. o(*ectives are achieved! the percentage of people in poverty could lan must (e to e'tend access to

essential pu(lic services such as health! education! clean drin0ing water! sanitation! etc.! to those who are deprived of them. -ur failure on this count is a ma*or reason for wide;spread dissatisfaction and the feeling of e'clusion from the (enefits of growth. 1ecogni7ing that the provision of good 6uality education is the most important e6uali7er in society! the .arv .hi0sha )(hiyan has tried to universali7e elementary education. The focus must now (e on reducing the drop out rate from $/+ in /00";0# to /0+ and also achieving a significant improvement in the 6uality of education. The literacy rate must (e increased to 8$+ and the gender gap in literacy narrowed to 10 percentage points. 2ompulsions that force a child to wor0 must (e removed so that every child can go to school.

It is also time to (ridge the large gaps in health status indicators which currently place India (elow some of the world5s poorest countries. The 11th lan must ensure su(stantial improvement in health indicators such as maternal mortality! infant mortality! total fertility rate! and malnutrition particularly among children and set monitora(le targets for these areas. .uccess in this area involves convergence of multiple efforts in many sectors other than health and family welfare. .upply of safe drin0ing water and access to sanitation to all must (e a top priority. In addition! we must address the lac0 of education! especially in women! which has severely limited our a(ility to improve nutrition and control neo;natal diseases. The 11th lan must also pay special attention to gender e6uity and help create an ena(ling environment for the social! economic and political empowerment of women. The shameful practice of female foeticide! which is reflected in low and falling se' ratio for age group 0;, must (e stopped. The lan must focus on ways of improving women5s socioeconomic status (y mainstreaming gender e6uity concerns in all sectoral policies and programmes. .pecial efforts must (e made to ensure that the (enefits of government schemes accrue in appropriate proportions to women and girls. rotection of the environment is e'tremely important for our well;(eing! (ut it is even more so for future generations who will (ear the (runt of environmental degradation.

The 11th

lan must aim at significant

improvements in this area. &orest cover must (e increased (y $ percentage points. Determined steps must (e ta0en at the level of state government to improve air 6uality in all ma*or cities to meet <:- standards. )s our rivers and water (odies are seriously threatened (y unrestricted discharge of effluents and sewage! ur(an waste water must (e fully treated. This essential re6uirement to clean up our rivers should receive priority attention from state governments especially in areas of large ur(an and industrial concentration. 4oreover! appropriate policies must (e designed and implemented to increase energy efficiency (y /0 percentage points and thus limit the harmful effect of car(on com(ustion on the environment.

Policies for "aster and More #nclusive $rowth


The )pproach aper has identified areas where new policy initiatives are needed to achieve the %+ growth target and its desired sectoral composition. These will (e spelt out in greater detail in the lan. .ome critical issues! however! can (e identified at this stage.

#nvestment %e&uirements
-ne set of issues concerns the aggregate resource re6uirement. )n average growth rate of %+ over the 11th /7.8+ in the 10th lan to "$.1+ in the 11th lan period will re6uire an increase in domestic investment rates from lan. :alf of this increase is e'pected to come from private investment in agricultural farms! small and medium enterprises! and in the corporate sector. The rest will come from pu(lic investment! with a focus on critical infrastructure sectors. rivate investment has (een (uoyant in the last two years and this (uoyancy can (e e'pected to continue as long as GD growth prospects remain favoura(le. .teps must nevertheless (e ta0en to continuously improve the investment climate. The central government has already done much in this area to encourage private investment! (oth domestic and foreign! (y creating a competitive environment which encourages entrepreneurship. These policies have yielded positive results and must continue to (e strengthened. It is particularly important to ta0e steps to encourage entrepreneurship and e'pansion among small and medium enterprises. .tate governments have a ma*or role to play in this conte't (y improving the investment climate. 4any state governments are ta0ing steps in this direction (ut much more can (e done! such as streamlining of multiple ta'es and reduction of the rigours of the Inspector 1a*.
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Pu lic #nvestment and the Plan si'e


The )pproach paper draws attention to the need for increases in pu(lic investment in several areas. These would have to come from acom(ination of investment underta0en through the lan (udgets of the central and the state governments and lan si7e will need to ma0e increased investment (y the pu(lic sector! financed (y internal and e'tra (udgetary resources. The provision for the addition to the pu(lic investment financed through (udgets of the central and state governments and also the planned e'pansion in pu(lic services! much of which is not investment (ut revenue e'penditure. Given the constraints on the fiscal deficit imposed (y the &194 legislation! achievement of the desired lan si7e will depend critically upon achieving an increase in ta' revenues as a proportion of GD and a fall in non; lan e'penditure as a percentage of GD . Determined action on (oth fronts should ma0e it possi(le to achieve a level of G9. for the lan =2entre plus .tates com(ined> which! e'pressed as a ratio of GD ! is /.$ percentage points of GD higher than in the 10th lan. The increase in ta' revenues depends critically upon achievement of the growth targets and good revenue (uoyancy. &ortunately the e'perience in recent years holds great promise for revenue (uoyancy (oth for the central government and the state governments. 3ffective control on non; lan e'penditure in practice means control of su(sidies! especially untargeted su(sidies that are not aimed at the poor and vulnera(le sections.

Policies Towards Agriculture


The o(*ective of dou(ling the growth rate of agricultural GD to # percent per annum is critical to ensure the inclusiveness of growth. This however poses ma*or policy challenges in the immediate future. It is necessary to adopt regionspecific strategies focusing on the scope for increasing yields with 0nown technologies and the scope for via(le diversification! 0eeping in mind mar0eting constraints. It is necessary to improve the functioning of the agricultural development administration! especially the e'tension system which is the 0ey to (ridging the 0nowledge gap. articular attention must to (e given to water management pro(lems in the dryland rain fed areas. Implementation of a region;specific strategy depends critically upon state level agencies. The central government can at (est help (y providing financial assistance and policy guidance. These issues have (een comprehensively e'amined (y the ?ational &armers 2ommission which has su(mitted its reports containing several recommendations. The ?D2 2ommittee on )griculture is e'pected to su(mit its report in Decem(er /00,. The 11th lan will draw on these reports to shape a credi(le strategy for agriculture clearly defining the relative roles of the 2entre.

Promoting Access to (ealth and Education


)chieving the 11th lan targets for health and

education re6uires a greatly e'panded role for the state in these areas. This is (ecause access to essential pu(lic services such as health! education! clean drin0ing water! and sanitation is not an automatic outcome of rising incomes. It calls for deli(erate pu(lic intervention to ensure delivery of these services. It is in this conte't that the ?ational 1ural :ealth 4ission has (een launched in order to improve the access and availa(ility of 6uality health care! sanitation! and nutrition. )chievement of these targets also re6uires a conscious effort in capacity mo(ili7ation of the state at various levels to provide such services through pu(lic action. This can (e supplemented wherever possi(le (y private effort (ut there can (e no dou(t that even after allowing for the scope for e'panded supply (y the private sector! the (ul0 of the responsi(ility will fall on the pu(lic sector. &or this reason! plan e'penditure in education and health will have to increase su(stantially. :owever! mere increases in e'penditure will not suffice unless accounta(ility is also improved. &or locally delivered services! such as elementary education and health! more active supervision (y the 1Is can ma0e a difference. &or secondary and higher education! as well as for tertiary health care! other methods of monitoring performance and enforcing accounta(ility are necessary. 9oth the 2entre and the .tates have to cooperate in finding ways to improve monitoring and enforce accounta(ility.

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)eveloping #nfrastructure
The (iggest constraint on rapid growth in the years ahead will (e the lac0 of physical infrastructure and its poorer 6uality compared with our competitors in other developing countries. The deficiencies in our roads! ports! railways! airports! electric power system and also various types of ur(an infrastructure must (e overcome during the11th lan period if the industrial sector is to achieve the targeted growth of 10+. 9oth the 2entre and the states have responsi(ility in this area as different types of infrastructure fall under different *urisdictions. ) start has (een made in the 10th lan to address these gaps in infrastructure! (ut much more needs to (e done. u(lic investment in this area must (e increased. :owever! the total resources re6uired to correct the infrastructure deficit e'ceed the capacity of the pu(lic sector. The strategy for infrastructure development must therefore encourage pu(lic private partnerships wherever possi(le. :owever the principles which ensure that cost. strategy must (e (ased on s are seen to(e in the pu(lic

interest in the sense of achieving additional supply at reasona(le s must serve to put private resources into pu(lic pro*ects and not the other way around.

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%ural #nfrastructure
The development of rural infrastructure is crucial for ensuring inclusiveness and for giving a new deal to rural areas. The 9harat ?irman rogramme has made a good start in the 10th lan and will continue into the 11th lan. The programmes must (e ade6uately funded and vigorously implemented so that every village has road connectivity! drin0ing water! rural housing and rural telecom connectivity. :omestead sites must (e provided to all (y /01/.The implementation of the ?ational 1ural 3mployment Guarantee rogrammed and the 9ac0ward 1egions Grant &und provides two additional sources of funding infrastructure development in the most (ac0ward districts of our country. The implementation of the ?ational 1ural 3mployment Guarantee rogrammed and the 9ac0ward 1egions Grant &und provides two additional sources of funding infrastructure development in the most (ac0ward districts of our country.

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Approach of Eleventh "ive *ear Plan


The Indian economy on the eve of 3leventh lan has

strong fundamentals where we now have the capacity to ma0e a decisive impact on the 6uality of life of the mass of our people! especially the poor. The 3leventh lan has an opportunity to restructure policies to achieve a new vision of growth that is much (roader (ased and inclusive! (ringing a(out a faster reduction in poverty and helping in (ridging the divides.The ?ational Development 2ouncil in its meeting held on %th Decem(er! /00, has approved the approach paper to the 3leventh Inclusive Growth@. The under:, A )verage inclusive growth rate of %+ along with #.1+ growth rate in )griculture! 10.$+ growth rate in Industry and %.%+ growth rate in .ervice sector and to dou(le per capita income (y /01,;17. A roviding essential pu(lic services such as education! health! maternal and child;care! clean drin0ing water and (asic sanitation facilities to all especially in rural areas. A )ccelerated agricultural growth through strengthening e'tension and technology transfer! improved credit flows diversification into horticulture and floriculture. along with road approach and o !ectives of +ational Plan are as lan @Towards &aster and 4ore

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A &or faster growth of manufacturing! infrastructure consisting of roads! railways! ports! airports! communication and electric power is to (e su(stantially rectified through pu(lic private participation. A &or promoting industrial growth! creation of investment friendly climate in the states along with encouragement to &DI! focused infrastructure development for .pecial 3conomic Bones =.3Bs> and .pecial 3conomic 1egions =.31s> and greater fle'i(ility in la(our laws. A Cnder 9harat ?irman! a time (ound programme =/00$;0%>! infrastructure gaps in the area of irrigation! rural roads! rural housing rural water supply! rural electrification and rural telecommunication connectivity are to (e addressed. A 9ridging divides for .2s! .Ts and other left (ehind. A Gender (alancing for minimi7ing gaps in all social indicators (y focusing on three areas namely violence against women! economic empowerment and women health. A Decentrali7ed planning through greater involvement of 1Is. The )pproach paper specifies not only a growth target (ut also a num(er of 6uantifia(le and monitora(le .ocio;3conomic targets relating to employment generation! school drop out rates! infants mortality! maternal mortality etc.

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Sectoral Policies for the 11th Plan


The transition towards faster and more inclusive growth calls for significant new initiatives in many sectors. In some we need to (uild on policies that are wor0ing well (ut need further strengthening in critical areas to (uild the additional momentum needed. In others we need a more comprehensive restructuring since it is evident that (usiness as usual will not do. The crisis of stagnation in agriculture needs urgent attention. This sector still provides livelihood to nearly ,0 percent of our people and remains vital for food security. To ensure a (etter life for women and men engaged in agriculture! it is necessary to dou(le the growth rate achieved in 10th lan and put agriculture on a growth path of around # percent. To do this and at the same time maintain prices and profita(ility! a corresponding increase in demand for agricultural output matched with the supply side response (ased on productivity improvements is re6uired. )s pointed out (y the ?ational 2ommission on &armers! we need a new deal that re(uilds hope a(out farming. )part from larger pu(lic resources that this re6uires! state level policy ma0ers need to identify critical areas of support and reform that will instill confidence in farmers to underta0e more investment.

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-a. Increasing Demand for Agricultural Output In recent years our farmers have (een hesitant in e'panding production (ecause a> per capita domestic food consumption has stagnated in recent years and (> world prices turned wea0 for many crops. 2onse6uently agricultural product prices received have failed to 0eep pace with overall inflation and production costs! thus reducing farm profita(ility. Darious models suggest that even with 8 to % percent GD growth a #+ growth in agriculture will not (e sustaina(le from the demand side unless agricultural e'ports pic0 up or consumption (y the poor grows (eyond what is li0ely as a result of GD growth alone. This means that! although more rapid agricultural growth is the 0ey to more inclusive growth! this in itself re6uires that other initiatives (e in place to ensure that the poor are a(le to improve their nutrition and contri(ute to growth of agricultural demand. Guarantee The recently introduced ?ational 1ural 3mployment rogramme! will help increase incomes of the poor directly

and reduce e'penses incurred on distress migration. The emphasis on e'panding access and improving 6uality of pu(lic sector schools and health facilities may also help (y reducing the need to pay privately for these services.1 Improved rural connectivity envisaged through the 9harat ?irman programme can also trigger growth of an integrated national mar0et where rural people are more a(le to meet each others5 demand. In its sheer si7e and scope! the (road (ased e'pansion of such rural;rural trade is li0ely to (e much more important in the initial years than other efforts to create demand support such as promoting agricultural e'ports or support to domestic processing for agricultural diversification. -ver time! importance of diversification is li0ely to grow as infrastructure is put in place! with added advantage of (eing a(le to attract private corporate investment into rural areas.
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- . Strategy to Increase Supply The supply side challenge of dou(ling agricultural growth is even more formida(le. ?o dramatic technological (rea0through compara(le to the first green revolution is presently in sight. )nd yet the target re6uires that we achieve higher agricultural growth than has ever (een attained in the past! starting at a point where agricultural pricecost ratios are lower than in earlier periods of relatively rapid growth. 4oreover! the world oil price scenario could turn price;cost ratios further adverse since higher oil prices not only increase costs of production (ut also push farm output prices further (elow consumer prices (y increasing transport margins. Ta0ing all the a(ove into account! the 11 th lan strategy to raise

agricultural output will (e (ased on the following elements: Dou(le the rate of growth of irrigated areaE Improve water management! rain water harvesting and watershed developmentE 1eclaim degraded land and focus on soil 6ualityE 9ridge the 0nowledge gap through effective e'tensionE Diversify into high value outputs such as fruits! vegeta(les! flowers! her(s and spices! medicinal plants! (am(oo! (io; diesel etc.! (ut with ade6uate measures to ensure food securityE romote animal hus(andry and fisheryE rovide easy access to credit at afforda(le ratesE

Improve the incentive structure and functioning of mar0etsE


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1efocus on land reforms issues.

-i. Water Management and Irrigation <ater is a critical input for agriculture and this calls for more effective utili7ation of e'isting irrigation potential! e'pansion of irrigation where it is possi(le at an economic cost and (etter water management in rainfed areas where assured irrigation is not possi(le. This is clearly an area where past policies have (een inade6uate. erformance in e'panding irrigation has (een disappointing with resources (eing spread thinly over many pro*ects and a large num(er of irrigation pro*ects remaining under construction for many years. )t the same time! flood forecasting! control and management are also vitally important for many parts of the country. The 9harat ?irman programme envisages creation of 10 million hectares additional assured irrigation during the # years period =/00$;/00%>. To achieve this! the pace of potential creation will have to increase from 1.#/ million hectares per year in recent years to /.$ million hectares per year. -f the new potential envisaged under 9harat ?irman! a(out half is planned for /007;08 and /008;0% that is first / years of the 11th lan. )ssuming the same rate continues thereafter! a total of a(out 11 million hectares of new potential can (e e'pected in the 11th lan consisting of $.$ million hectares in ma*or F medium irrigation! ".$ million hectares through minor irrigation and a(out /.0 million hectares through ground water development. In addition! another "; # million hectares of land is to (e restored through moderni7ation of ma*or! medium! and minor pro*ects and restoration of tan0s.

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-ii. Reclaim Degraded Land and focus on soil quality Due to e'pansion of ur(an areas net sown area has reduced significantly in recent years. <hile conversion of agricultural to non;agricultural land is an unavoida(le concomitant of the development process! we need to ensure that this does not put undue pressure on agriculture or lead to inefficient land;use! for e'ample loss of water (odies andspeculative land purchase that reduces cultivation without any productive use for several years. 3'isting regulatory procedures need to (e ree'amined since delay in converting land from farmuse to more productive non;farm use does have costs. 9ut this must go hand;in;hand with the creation of a new regulatory framewor0 governing such conversion! (ased transparently on principles of sound land;use planning. -iii. Bridging the Kno ledge !ap The ?ational 2ommission on &armers =?2&> has drawn attention to the 0nowledge deficit that e'ists at present and e'plains much of the difference (etween yields reali7ed in e'periments and what farmers actually get. -ne reason for this is the virtual collapse of e'tension services in most states! with "0; #0+ of positions remaining vacant. &armers are not fully aware of the adverse conse6uences of un(alanced fertili7er use or of (enefits of micronutrient application and soil testing to determine optimal nutrient re6uirements is hardly practised on a regular (asis even (y .tate )griculture Departments. .imilarly! although many new varieties of seeds and pesticides have entered the mar0et during the last decade and farmers are using these! they do not appear to have significantly higher productivity and there are fre6uent complaints a(out 6uality.
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-v. Animal "us#andry and $ishery The livestoc0 and fisheries sectors together account for a(out "0+ of the value of the output of )griculture F )llied .ector and provide full time and part time employment to $.$+ of the total wor0ing population! the ma*ority of whom are women. The 11th lan must evolve via(le strategies for these sectors to e'pand rapidly. India continues to (e the largest producer of mil0 in the world with a total production of %1 million tonnes in /00$;0, and the contri(ution of mil0 was higher than paddy! wheat! and sugarcane in the year /00";0#. Get the per capita availa(ility of mil0 at /"1 gm. per day during /00";0# is still very low compared to nutritional re6uirement suggesting scope for further e'pansion. 4atters are even worse regarding meat! with a(attoir conditions pathetic and utili7ation of (y;products inefficient. oultry development in the country has shown (etter progress over the years! primarily (ecause research and development schemes of the government have (een complemented with effective management and mar0eting (y an organi7ed private sector. The fisheries sector has also performed well (ut vast potential e'ists! particularly in inland fishery. The setting up of the ?ational &isheries 9oard should (ring (etter technical focus.

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-vi. Access to %redit and Ris& Management' )ccess to financial resources ena(les the poor to e'ploit investment opportunities! reduces their vulnera(ility to shoc0s! and promotes economic growth. 9ut lac0 of credit at reasona(le rates is a persistent pro(lem! in large part! reflecting the collapse of the cooperative credit system. The failure of the organi7ed credit system in e'tending credit has led to e'cessive dependence on informal sources usually at e'or(itant interest rates. This is at the root of farmer distress reflected in e'cessive inde(tedness. There are of course some recent positive developments! for e'ample! the acceptance (y the government of the Daidyanathan 2ommittee report on co;operatives and the success of commercial (an0s to almost dou(le the flow of agricultural credit after /00". ?onetheless! pro(lems still persist. Implementation of the Daidyanathan report has (een slow (ecause of the reluctance of states to cede control over cooperatives. ro(lems of the long;term credit structure have hardly (een addressed! and the large increase in commercial (an0 credit does not appear to have significantly improved access in either regions with poor (an0ing support or for smallH marginal farmers and tenants.

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-vii. Land Reforms' 8and relations can have a ma*or impact on agricultural productivity and production. Ine6uality in land distri(ution and insecurity of tenure etc.! are often at the (ottom of many forms of social discrimination and domination (ased on gender! caste! minority! and tri(al affiliations. The ?ational 2ommission on &armers has placed the unfinished agenda in land reform first in its list of five factors central to the present agrarian crisis! and states Ithe first and foremost tas0 of the ?ational olicy for &armers should (e in the area of land reform with particular reference to tenancy laws! distri(ution of ceiling surplus land! attention to common property and wasteland resources and the consolidation of holdings. &ollowing the conferment of land rights to women under the :indu .uccession )mendment )ct =/00$>! the provision of appropriate support services to women farmers has (ecome urgent. Joint attas are essential for women to get access to credit. )lso! there should (e stringent restrictions on the diversion of prime farmland for non;farm purposes.K &ollowing the conferment of land rights to women under the :indu .uccession )mendment )ct =/00$>! the provision of appropriate support services to women farmers has (ecome urgent. Joint attas are essential for women to get access to credit. )lso! there should (e stringent restrictions on the diversion of prime farmland for non;farm purposes.K

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-c. Agricultural Research .ince the green revolution in the si'ties there has (een no ma*or technological innovation which could give fresh impetus to agricultural productivity. The a(sence of productive technology which also reduces ris0s is particularly serious for rain fed! dry land situations. In the longer run! growth in agricultural productivity can (e sustained only through continuous technological progress. This calls for a well considered strategy for prioriti7ed (asic research! which is now all the more urgent in view of mounting pressure on scarce natural resources! climate change and also the shrin0ing availa(ility of spill;overs from international pu(lic research. &or ushering in a second green revolution! a strategy that frees us from the past (inds is called for. The strategy should (e operationali7ed in the form of challenge programmes in which central institutes and the state agricultural universities wor0 with organic integration. /0/ #ndustrial $rowth There is considera(le evidence that the industrial sector has gained in strength in many ways over the past fifteen years as a conse6uence of li(erali7ing industrial controls and the gradual integration with the world economy. )utomo(ile components! pharmaceuticals! special chemicals! te'tiles have shown a mar0ed increase in glo(al competitiveness. The surge in industrial production in /00$;0, and /00,;07 provides further evidence in support of this assessment. :owever! there are numerous constraints that limit industrial performance! particularly

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of la(our;intensive manufactures! and these need to (e addressed urgently.

Indian manufacturing is highly dualistic! with the organi7ed sector producing ,7+ of manufacturing value added (ut employing only 1/+ of all wor0ers in manufacturing. Cnfortunately! although employment in the unorgani7ed manufacturing sector has e'panded! it has not increased at all in organi7ed manufacturing after mid;1%%0s. )t the same time! la(our productivity has hardly increased in unorgani7ed manufacturing while organi7ed manufacturing has increased this at a(out 10+ per annum (y increased use of capital (ut with fewer employees. ) clear priority for the 11th lan is to encourage the organi7ed sectors to employ more la(our and! simultaneously! to improve la(our productivity in the unorgani7ed sectors. -a. (romoting Industrial !ro th The 11th lan should aim at raising the rate of growth of the industrial sector to 10+ and manufacturing growth to 1/+ per annum. The most critical short;term (arriers to growth of the manufacturing sector are a(sence of world;class infrastructure =power in particular>! shortage of s0illed manpower! inspector ra* and lac0 of la(our fle'i(ility. The 11th lan should place special emphasis on infrastructure and s0ill formation and these are discussed separately later in this paper )t the same time it will ensure that the industrial growth allows women to participate as e6uals (y providing amenities li0e crLches! toilets! maternity (enefits! and also hostels for wor0ing women.

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-d. (u#lic Sector u(lic .ector 3nterprises have made a ma*or contri(ution to the economic growth of the country (y creating a diversified industrial (ase.They have also (een ma*or providers of organi7ed sector employment. .ome of the 2entral years and recently some more have turned the corner. In /00#;0$! the num(er of profit ma0ing 2 .3s increased to 1#" from 11% in /00/;0"! and aggregate profits rose to 1s.7#!#"/ crore from 1s.#"!"1, crore. In fact! latest data from the )nnual .urvey of Industries suggests that manufacturing .3s =including those in the states sector> have outperformed private organi7ed manufacturing in total productivity growth after the mid; 1%%0s. ) part of this is dueto the oil sector performance (ut the evidence of superior performance persists even if this sector is e'cluded! much of it occurring through downsi7ing. Cnfortunately! however! .3s have not performed as well on investment though they have accumulated huge reserves! and the management culture appears to have (ecome even more ris0;averse with a mar0ed preference towards reducing de(t. Cnfortunately! however! .3s have not performed as well on investment though they have accumulated huge reserves! and the management culture appears to have (ecome even more ris0;averse with a mar0ed preference towards reducing de(t.
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u(lic .ector

3nterprises =2 .3s> have had strong financial results over many

The Services Sector: The services sector accounts for $# per cent of GD and is currently the fastest;growing sector of the economy! growing at % per cent per annum since the mid;1%%0s. The sector has the uni6ue opportunity to grow due to its la(our cost advantage reflecting one of the lowest salary and wage levels in the world! coupled with a rising share of wor0ing age population. The 11th lan must! therefore! put special focus on this sector so that its potential to create employment and growth is fully reali7ed.

(rofessional Ser)ices
- . %onstruction* "ousing and Real +state -c. ,ourism 1etail ,rade and Organi-ed Retail -e. +ntertainment and Media Ser)ices

#nfrastructure )evelopment
Infrastructure inade6uacies in (oth rural and ur(an areas are a ma*or factor constraining India5s growth and this was pointed out in the 4id Term )ppraisal of the 10th 2ommittee on Infrastructure under the chairmanship of the lan. ) rime

4inister was also esta(lished to define an agenda for action in this area. The 2ommittee has identified an am(itious programme for infrastructure development which will cover the entire 11th period. MRoads *Railways
26

lan

*Ports *Airports

Strategic #nitiatives for #nclusive


)evelopment )long with sectoral policies aimed atimproving livelihood support and increasing employment! a strategy of inclusiveness also calls for new emphasis on education! health! and other (asic pu(lic facilities. Inade6uate access to these essential services directly limits the welfare of large sections of our population! and also denies them the opportunity to share fully in the (enefits of growth.

1hild +urture: Starting %ight )ny strategy for removing disparities! (ridging divides! and ensuring the well;(eing of our people! must (egin (y respecting the rights of our child population. 1ights (ased development of children must (e at the centre of the 11th that our children disease or despair. lan. <e must ensure do not lose their childhood (ecause of wor0!

Empowerment through Education


-a. +lementary +ducation' Sar)a Shi&sha A#hiyan .SSA/ - . Secondary +ducation -c. ,echnical01ocational +ducation and S&ill De)elopment -d. "igher and ,echnical +ducation
27

-e. Adult Literacy (rogrammes -f. ,he %utting +dge' Science and ,echnology

A 1omprehensive Strategy for 2etter (ealth


The 10th lan aimed at providing essential primary health care! particularly to the underprivileged and underserved segments of our population. It also sought to devolve responsi(ilities and funds for health care to 1Is. :owever! progress towards these o(*ectives has (een slow and the targets on 441 F I41 have (een missed. )ccessi(ility remains a ma*or issue especially in areas where ha(itations are scattered and women F children continue to die en route to hospitals. 1ural health care in most states is mar0ed (y a(senteeism of doctorsHhealth providers! low levels of s0ills! shortage of medicines! inade6uate supervisionHmonitoring and callous attitudes. There are neither rewards for service providers nor punishments for defaulters. )s a result! health outcomes in India are adverse compared to (ordering countries li0e .ri 8an0a as well as countries of .outh 3ast )sia li0e 2hina and Dietnam: -a. 2ational Rural "ealth Miss - . Disa#ility and Mental "ealth -c. $inancing "ealth Ser)ices -d. %lean Water for All -e. Sanitation

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2ridging )ivides: #ncluding the E3cluded


The strategy of inclusive growth proposed in this paper can command (road (ased support only if growth is seen to demonstra(ly (ridge divides and avoid e'clusion or marginali7ation of large segments of our population. These divides manifest themselves in various forms: (etween the haves and the have;notsE (etween rural and ur(an areasE (etween the employed and the underHunemployedE communitiesE and (etween finally different states! districts .uch and (etween genders. mar0ed

ine6ualities are a matter of concern and! in some cases even shame. The 11th lan must ensure that the growth process helps to (ridge these divides.

$rowth and Poverty:


) (asic and long standing concern has (een will growth (ypass the poor! e'cluding them from its (enefitsN There is an e'tensive literature on the effects of growth on poverty and the general conclusion has (een that the proportion of the poor has declined over time (ut not fast enough. Cntil recently! the availa(le official data indicated that the percentage of the population in poverty had declined from ",+ in 1%%";%# to /,+ in 1%%%; /000! though the lanning 2ommission even then had noted that the 1%%%;/000 data were collected with a different methodology and give estimates of poverty which are not strictly compara(le to 1%%"; %# estimates. This compara(ility issue su(se6uently (ecame a
29

matter of academic research. <hile there were differences on the e'tent of poverty reduction there was (road consensus that the official estimates had overstated poverty reduction.

Employment
3mployment is an area which shows up where our growth process is failing on inclusiveness. The num(er of wor0ers is growing! particularly in non;agricultural employment! (ut wea0nesses appear in unemployment! the 6uality of employment! and in large and increasing differentials in productivity and wages. Data from the latest ?.. round for /00#;0$! the 3conomic 2ensus /00$ and the )nnual .urvey of Industry reveal the following: =i> 3mployment growth accelerated to /.,+ during 1%%%;/00$ outpacing population growth. 9ut the average daily status unemployment rate! which had increased from ,.1+ in 1%%";%# to 7."+ in 1%%%;00! increased further to 8."+ in /00#;0$. This was (ecause the wor0ing age population grew faster than total population =ii> and la(our force participation rates increased! particularly among women. )gricultural employment has increased at less than 1+ per annum! slower than population growth and much slower than growth in nonagricultural employment. This is the e'pected trend in long;term development (ut a matter of concern is that this has also (een associated with a sharp increase in unemployment =from %.$+ in 1%%";%# to 1$."+ in /00#;0$> among agricultural la(our households which represent the poorest groups. )lso! although real wages of these wor0ers continue to rise! growth has decelerated strongly! almost certainly reflecting the poor performance in agriculture. There are also transition pro(lems in changing employment
30

patterns! and these are pro(a(ly (eing e'acer(ated (y our landholding structures and (y (arriers of caste and gender. These pro(lems need to (e addressed in the 11th &ive Gear lan. =iii> ?on;agricultural employment e'panded ro(ustly at an annual rate of #.7+ during 1%%%;/00$ (ut this growth was entirely in the unorgani7ed sector and mainly in low productivity self; employment. 3mployment in the organi7ed sectors actually declined despite fairly healthy GD growth. =iv> .ome young wor0ers in the 0nowledge economy (enefit from high wage rates (ut ?.. earnings data show negligi(le growth of average real wage rates in non;agricultural employment during 1%%%;/00$. <omen and less educated wor0ers did worse than others and si7ea(le increases in earnings were confined mainly to those who were graduates at least. )ccording to the )nnual .urvey of Industries! real wages stagnated or declined even for wor0ers in organi7ed industry although managerial and technical staff did secure large increase =v> The wage share in our organi7ed industrial sector has halved after the 1%80s and is now among the lowest in the world. -ne reason for this is increasing capital intensity of the organi7ed sector! another is outsourcing. )n issue for policy research is why! despite our factor endowment! organi7ed sector has (een choosing to replace la(our with capital at this scale and whether there are policy distortions that encourage this which should (e corrected.

31

Evaluation of Eleventh Plan


In 11th plan! a huge amount of ",! ##!718 corers were proposed to (e spent in pu(lic sector to achieve faster and more growth during the period /007;1/. the assessment of this plan is discussed (elow:

Achievements of Eleventh Plan


$rowth in national income and per capita income: In year /007;08! national income increased (y %.1+ and per capita income increase (y 7.,+. in year /008;0%! due to glo(al slowdown! growth rate in national income raised (y 8+ and per capita income came down to ,.7+ and $./+ respectively. In /00%;10 raised (y 8+ and per capita increased (y ,.,+ /010;11 national income raised 8.#+ and per capita 7.1+./011;1/ national income increased ,.%+ and per capita income increased $.,+. Sectoral $rowth: /007;08! growth rate in agriculture sector was #.$+!in industrial sector and service sector 10.,+./008; 0%!growth rate in all sector came down! its agriculture sector was 1.,+ ! industrial sector /.8+ and service sector %.,+. In /00%;10! growth agriculture 0.#!industrial sector 8+ and service sector 10.1+.In /010;11! growth rate in agriculture sector 7+! in industrial sector 8./+and in service sector %."+.
32

In /011;1/! growth rate of agriculture sec. was /.$+! in industrial sec. ".%+ and service sec. the growth rate was %.#+. $rowth in saving and investment rate: 9oth saving rate have increased. It is a positive sign for the economy as it will help the economy to maintain its growth rate.In year /00,;07! saving rate was "#.8+and investment rate was "$.%+.In /010;11 saving and investment rate was "/."+ and "$.1+respectively. #ncrease in E3ports: 3'port have witnessed significant growth during plans. In /007;08 in dollar terms!growth rate of e'portwas /8.%+.(ut due to glo(al slowndown and conse6uent wea0 glo(al demand !groeth rate of e'port came down in /008;0% and /00%; 10.In /010;11and /011;1/ growth rate in e'port was "$.1+and /8.7+respectively. $rowth in foreign E3change %eserves : In the first year of plan! there was huge inflow of foreign investment and fore' reserves reached at pea0 level. )t the end of /007;08 fore' reserve were "11.% (illon C. dollars. Due to glo(al financial crisis and outflow of foreign portfolio investment !our fore' reserves came down to /7%.71 (illon C. dollar in march!/010.)t the end of /011;1/ fore' reserves again increased to C. O/%".1# (illon. Employent $eneration: 4G?13G) has (een e'tended to all ,#0 districts of India.During /011;1/! employment of /11.#/ crore person days covering #.%% crore households was generated under 4G?13G) .9ut still!the pro(lem of unemployment has not (een solved to desired level. #nfrastructure infrastructure development.
33

)evelopment: !9harat ?irman

&or programme

developing has (een

rural very

successful. In /010;11!7.$+ of GD

was spent on infrastructure

$rowth in social services: Government has (een launched various social schemes li0e indira Gandhi ?ational -ld age pension ! )am )dmi 9ima Go*na ! 1ashtriya .wasthya 9ima Go*ana !etc.

Special

"ocus

on

4ea5er

Sections

-2-?28C.I-?..
Despite special programmers5 for the development of the wea0er sections there are many groups in our society that do not (enefit ade6uately from development. The 11th lan must pay special attention to the needs and re6uirements of the .2s! .Ts and minorities and other e'cluded groups to (ring them at par with the rest of society. The central and the state governments5 implementation of the special plan for .2s and .Ts 8eaves much to (e desired. These two strategic policy initiatives to remove socioeconomic disparities should receive special attention in the 11th lan. The 1$ point programme for the welfare of minorities circulated to all state governments must (e implemented with serious concerted effort. The strategy for faster and more inclusive growth outlined in this )pproach aper presents formida(le challenges and re6uires determined action (y (oth the 2entre and the states. )chieving these targets will not (e an easy tas0! (ut it is definitely feasi(le. The 0nowledge that the economy is in many ways (etter placed today than it has ever (een should help us achieve such am(itious targets.

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