Excerpts of Study materials on FYP: Twelfth Plan (2012-17)

Twelfth Plan (2012-17)

Visions and Aspirations:
The broad vision and aspirations which the Twelfth Plan seeks to fulfil 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
The Twelfth Plan fully recognizes that the objective of development is broad-based improvement in the economic and social conditions of our 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, will directly raise living standards of a large section of our people by providing them with employment and other income enhancing activities. 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 such as Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), Sarva Siksha Abhiyan (SSA), Mid Day Meals (MDMs), Pradhan Mantri Gram Sadak Yojana (PMGSY), Integrated Child Development Services (ICDS), National Rural Health Mission (NRHM), and so on 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.
Growth Prospects
The Approach Paper to the Twelfth Plan 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. Taking account of all these factors, the Twelfth Plan had set a target for an average growth rate of about 8.2 per cent in the Plan period. Two sub-targets of growth rates are: 4 per cent for the agricultural sector and 10 per cent for the manufacturing sector.
The Twelfth Plan’s strategy for growth depends crucially on productivity gains as one of the key drivers of growth. These traditional sources of growth are not likely to be enough for India in the coming years and we must therefore focus much more on productivity improvements among all constituents: big businesses, MSMEs, farmers and even government. This can be done by improving the business regulatory environment, strengthening the governance capacity of States, investing more in infrastructure rather than subsidies, and by using Science and Technology (S&T) to drive innovation.
The Twelfth Plan should aim at a growth process that preserves emphasis on inclusion and sustainability while minimising downside effects on growth. This inclusive strategy involves a much greater role of the States, and closer coordination between the Centre and the States. This is because most of the policy measures and institutional support required for small and medium entrepreneur led growth lie in the domain of State Governments and local bodies. The Centre’s contributions would lie mainly in creating the appropriate macroeconomic framework, financial sector policies and national level infrastructure.
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(From my forthcoming book on IAS General Studies Manual being published by Access Publishing India Pvt. Ltd., New Delhi).