As the Indian economy is in the final year of the Eleventh Plan with much of the latter part of the five-year period being spent in absorbing the aftershock of the global financial turbulence and the concomitant slowdown of the world economy, the contours and contents of the 12th Plan (2012-17) came under preliminary study at the full-meeting of the Planning Commission late last week.

The brief meeting of a few hours on April 21 presided over by the Prime Minister as Chairman of the Plan panel with all full members and also ex-officio members of key ministries being present here saw some ‘revealing presentations' of the real sectors of the economy.

The Prime Minister, Dr Manmohan Singh, aptly summed up the whole proceedings in his wrap-up address when he drew the attention that working under the important constraint of functioning “within the overall target of fiscal consolidation, the Planning Commission and the Finance Ministry together must come up with a realistic assessment of Plan size for the Centre and the States.”

That is the remit set by the Chairman, particularly when inflationary pressures do not show any let-up and pursuit of growth would only overheat the economy, policy analysts said here.

Sectoral challenges

Official sources told Business Line here that the Plan panel, on its part, pitched for “faster, more inclusive and sustainable growth” as its basic objective for the Twelfth Plan. It also pinpointed energy, water and environment as presenting “major sectoral challenges” and raised the valid query as to how we could address them “without sacrificing growth.”

Even as the Plan panel claimed progress on inclusiveness encompassing agricultural growth, poverty reduction, health, education and uplift of scheduled castes/tribes, it did concede that progress on inclusiveness was less “less than expected”.

Hence, its diagnosis that for growth to be more inclusive in the 12th Plan, it plumped for among others, better performance in agriculture, faster creation of jobs, especially in manufacturing, stronger efforts at health, education and skill development, improved effectiveness of programmes directly aimed at the poor and special programmes for socially vulnerable groups”.

In agriculture, the target should be at least four per cent even as cereals are on target for 1.5 per cent to two per cent growth. It batted for farmers who need “better functioning markets for both output and input, besides better rural infrastructure, including storage and food processing”.

For manufacturing, it said the performance remains weak and must perforce grow at 11-12 per cent a year to create additional three million jobs a year, even as growth of manufacturing in the current Plan is about 8 per cent. It sought Indian industry help to foster greater domestic value addition and more technological depth to cater to growing domestic demands and improve trade balance. It also called for toning up foreign direct investment and trade policies to attract quality investment in critical domains.

Sovereign debt

Importantly, the Plan panel, while pointing out that inflation had accelerated in the last two years, also noted that the current international environment remains uncertain with global pressure on food, oil and other commodity prices remaining unrelenting. Moreover, financial conditions and exchange rates too are likely to be volatile due to sovereign debt related problems in Europe/US and the effect of the extraordinary monetary easing in the US.

Analysts said that since Dr Manmohan Singh underlined the need to keep in view “sustainability of growth and low carbon issues” while setting the policy parameters for the quinquennium beginning from April 1, 2012, the planners and policy-makers would have to be hard-nosed in designing the Approach document for the overall approval of the National Development Council meeting of the Plan panel with State Chief Ministers sometime in July.

> geeyes@thehindu.co.in

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