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Twelfth Five Year Plan

(20122017)Faster, More Inclusive and

Sustainable Growth

Volume I

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Twelfth five year plan (2012/2017)/Planning Commission, Government of India.

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Twelfth Five Year Plan

(20122017)Faster, More Inclusive and

Sustainable Growth

Volume I

Planning Commission

Government of India

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izkku eakh

Prime Minister

Foreword

he welth Plan period presents both challenges and opportunities. he Plan commenced at a time when theglobal economy was going through a second inancial crisis, precipitated by the sovereign debt problems o theEurozone which erupted in the last year o the Eleventh Plan. he crisis aected all countries including India.Our growth slowed down to 6.2 percent in 2011-12 and the deceleration continued into the irst year o thewelth Plan, when the economy is estimated to have grown by only 5 percent.

his poses an immediate challenge o bringing the economy back to a higher growth path. Short termdownturns occur in all economies. hey do not necessarily indicate an erosion o longer term potential, butthey do call or urgent corrective action. he welth Plan thereore emphasizes that our irst priority must beto bring the economy back to rapid growth while ensuring that the growth is both inclusive and sustainable.

he potential o the economy to grow much more rapidly is evident rom the Eleventh Plan experience,

which produced an average growth rate o 8 percent or the period 2007-08 to 2011-12. his was lower thanthe Eleventh Plan target o 9 percent, but higher than the enth Plan achievement o 7.6 percent and also thehighest growth rate ever recorded by the Indian economy in any Plan period. he slow down witnessed in theirst year o the Plan is partly due to the global environment, which has aected all countries, but it is also dueto a number o domestic constraints which have arisen. While we cannot do much about the global slowdown,we can address domestic constraints and this must have top priority.

he economy aces macro economic imbalances, because the iscal deicit expanded sharply ater 2008.here has also been a parallel widening o the current account deicit o our balance o payments which isexpected to reach about 5 percent o GDP in 2012-13. his must be contained as quickly as possible. A num-ber o inrastructure projects have run into implementation problems and this, combined with the depressedmood o investors in industrialized countries, has aected animal spirits o investors.

he welth Plan has thereore proposed a two pronged strategy ocusing initially on the need to bring themacro economic imbalances under control and to reverse the slow down, while also pushing or structuralreorms in many areas that are critical or maintaining medium term growth.

he Government has commenced the process o macro-economic rebalancing. It is irmly commit-ted to bringing the iscal deicit under control and a medium term road map or iscal correction has been

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vi Foreword

announced. his aims at reducing the Central government deicit to no more than 3 percent by the end o theplan period in line with the macro-economic projections in the Plan.

he high current account deicit is another macro-economic aspect o imbalance. Our oreign exchangereserves position is strong, but the reserves cannot be a source or inancing prolonged deicits. It is thereoreessential to bring the current account deicit down to more manageable levels. he expansion in the currentaccount deicit was partly on account o the expansion in the iscal deicit and the targeted reduction in theiscal deicit is an important instrument or bringing the current account deicit under control. It is expectedto decline in 2013-14, but it will still be high. However, it will be on a perceptibly downward path, reachingcomortable levels in the next two years.

his poses the challenge o having to ensure inancing o a somewhat elevated deicit or two more years.his must be done through long term capital lows, including especially FDI. Strong signals have been givento assure oreign investors that the government is keen to attract both FDI and Fll lows in order to inance thecurrent account deicit even as we work to reduce the size o the deicit over time. Caps on the permitted level

o FDI in a number o sectors have been relaxed, and a broader review o policies is being undertaken with aview to acilitate an easier low o oreign investment.

he Government has also acted on the supply side to tackle implementation problems holding up largeinrastructure projects. A Cabinet Committee on Investment has been established to deal with situationswhere clearances are unduly delayed and this has succeeded in removing many bottlenecks. his will acceler-ate clearance o projects and help revive the pace o investment which should bring about a reversal o theslowdown.

he welth Plan has set a target o 8 percent growth over the ive year period 2012-13 to 2016-17. Witha growth o only 5 percent in the irst year and perhaps 6.5 percent in the second, it will require a very sharpacceleration in the later years to achieve an average o 8 percent over the entire Plan period. Growth will haveto be pushed to over 9 percent in the last two years. he economy did grow at over 9 percent or ive yearsbeore 2008, but that was at a time when the global economy was booming. o achieve this level over the nexttwo years, given the uncertain prospects o the global economy in the years ahead, poses challenges. he Planthereore emphasizes that returning to 9 percent growth by the end o the Plan period will not be easy.

he Plan document makes it amply clear that a return to high growth will not come rom ollowing a busi-ness as usual approach. It will require policy action on many ronts, by both the central and the state govern-ments. he Plan provides a detailed outline o the key steps needed in each area. Some o the policy changescalled or are diicult, but they are necessary i we want inclusive and sustainable growth. We need to acceler-ate growth in agriculture to continue the trend initiated in the Eleventh Plan. We need much aster growth inmanuacturing to provide employment to our young and increasingly educated population which has highexpectations and aspirations. We need to address the challenge o managing the inrastructure sectors toensure that these sectors expand suiciently to support growth. We also need to ace up to the enormous chal-

lenges posed by urbanization.

In all this, we must keep in mind that growth must not only be rapid, it must be inclusive and sustainable.he beneits o growth must reach the SCs, Ss, OBC, Minorities and other disadvantaged groups in oursociety. All these groups must get a air share o the beneits o growth and must have a stake in the process.he issue o environmental sustainability cannot be ignored. We need a growth process that is consistent withprotecting our environment.

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Foreword vii

One o the problems with our plans in the past has been that they have ocused on outlining an attractiveuture, with not enough ocus on what is needed to achieve it and the consequences o ailing in this regard.Recognizing that outcomes will be the result o actions, the welth Plan, or the irst time, has resorted to

scenarios to indicate the implications o dierent types o behaviour. Our objective should be to achieve thescenario o strong inclusive growth which can yield an average growth rate o around 8 percent o GDP andsigniicant improvements in various inclusiveness indicators. Signiicantly, the Plan warns that i we ail to dowhat is necessary, we may slip into a scenario o Policy logjam which will lead to growth o 5 to 5.4 percent,with a much worse outcome or inclusiveness.

he objectives o the welth Plan are ambitious and achieving them will be diicult. his is a challengeor our democratic system. We have to prove that vigorously competitive politics in a democracy can achievea suicient consensus to be able to implement the diicult but necessary policy choices we ace. his is anational challenge that the entire political and intellectual leadership o our country must come to grips with.It is a challenge or the central government and also or state governments.

One o the important achievements o the past decade is that India has broken out o a long period o rela-tively slow growth to show that it can grow more rapidly. he Eleventh Plan experience has also shown thatthis growth can be much more inclusive than in the past.

I we can continue this perormance or the next twenty years, we will have ensured the re-emergence oIndia as major economic player in the world, and also one committed to its democratic, secular and pluralistictraditions. We will have demonstrated that this ancient land o India can re-emerge as a modem nation, uplit-ing millions out o poverty, empowering each and every citizen, unleashing individual talent and liberatingenterprise, within the ramework o a democratic Constitution and under the Rule o Law. We have a long wayto go, but I believe we have shown that the creative energies o the Indian people can propel the economy or-ward at much aster rates than was thought possible thus ar, and with greater inclusiveness than in the past. Iam conident that the rise o a new India will have beneicial consequences or the whole world. It will inspiremillions around the world, especially in Asia, Arica and Latin America, to seek their own destiny within theramework o a plural, secular and liberal democracy.

(Manmohan Singh)New Delhi10 May, 2013

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Planning Commission

(As on 27th July, 2013)

Dr. Manmohan Singh,Prime Minister

Chairman

Shri Montek Singh Ahluwalia Deputy Chairman

Shri P. Chidambaram,Minister o Finance

Member

Shri Sharad Pawar,Minister o Agriculture andFood Processing Industries

Member

Shri Sushil Kumar Shinde,Minister o Home Aairs

Member

Shri Mallikarjun Kharge,Minister o Railways

Member

Shri Gulam Nabi Azad,Minister o Health & FamilyWelare

Member

Shri Kamal Nath,Minister o Urban Development& Parliamentary Aairs

Member

Shri Kapil Sibal,Minister o Communications &I & Minister o Law & Justice

Member

Shri M.M. Pallam Raju,Minister o Human ResourceDevelopment

Member

Shri Jairam Ramesh,Minister o Rural Development

Member

Shri Rajeev Shukla,Minister o State orParliamentary Aairs andPlanning

Member

Shri B.K. Chaturvedi Member

Dr. Saumitra Chaudhuri Member

Dr. (Ms.) Syeda Hameed Member

Dr. Narendra Jadhav Member

Pro. Abhijit Sen Member

Dr. Mihir Shah Member

Dr. K. Kasturirangan Member

Sh. Arun Maira Member

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Preface

National planning is a process o setting national targets, and preparing programmes and policies that willhelp achieve those targets. he policies and programmes must be consistent with each other, ensure optimal useo national resources both inancial and real, and be based on an understanding o the response o the economy tothese interventions. his exercise has become more complex over time or several reasons. First, the setting otargets is not just a technocratic process. It must relect the aspirations o an increasingly aware public and a vocalcivil society to command the broadest possible social and political support. Second, the strategies outlined by theplan must relect the growing complexity and maturity o the economy, including its growing integration with the

rest o the world, and the changing role o the public and private sectors. Finally, plan strategies are only as goodas our ability to implement them and thereore implementation capability is very important.

he welth Five Year Plan has been ormulated keeping all these actors in mind. Some relections on each othese three aspects are oered in this preace.

The Multi-Dimensional Nature of Plan Targets

raditionally, public discussion o plan targets has tended to ocus narrowly on targets or GDP growth, lead-ing to the criticism that planners are obsessed with economic growth as an end in itsel. his has never beentrue o Indian plans, and it is certainly not true o the welth Plan. Our plans have consistently emphasisedthat higher rates o growth o GDP are a necessary, but not a suicient condition or raising the living stan-

dards o the population as a whole.

he welth Plan is irmly anchored in this tradition. Rapid growth is viewed as a necessary condition because itensures an expansion in the productive capacity o the economy without which a broad based improvement in liv-ing standards is not possible. However, it recognises that aster growth is not a suicient condition simply becauseone can easily imagine a growth process which may not be suiciently inclusive to ensure a spread o beneits tothe mass o the population. For example, any growth process which ignores agriculture will miss out on opportu-nities to improve incomes or a large part o the population. Hence the welth Plan target o accelerating GDPgrowth is accompanied by a speciic target to accelerate growth o agricultural GDP. he welth Plan aims atcatalyzing a growth process which has the structural characteristics that will promote inclusiveness. he EleventhPlan started the process o accelerating agricultural growth by achieving 3.6 percent growth component with 2.4percent in the enth. he welth Plan aims at accelerating agricultural growth urther to 4 percent.

he proportion o the population depending mainly on agriculture has been alling, but it is still too large,given the shrinking contribution o agriculture as a percentage o GDP. We must thereore plan or a sub-stantial percentage o those currently engaged in agriculture to shit to higher productivity non-agriculturaloccupations. his can only happen i the non-agricultural sector can provide gainul employment not onlyto the growing number o people who will be entering the labour orce, but those moving out o agriculture.o be truly inclusive the growth process must thereore be job creating. A growth based on growth rom

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xii Preface

highly capital intensive sectors areas such as petrochemicals, steel, mining, etc., or one that is dependent onhigh end skills, e.g., sotware development, inormation technology etc. cannot provide a suicient expan-sion in employment to the large numbers o the labour orce with mid level skills who need better employ-

ment opportunities. his calls or robust growth in the manuacturing sector, including especially in smalland medium enterprises. he welth Plan thereore seeks to achieve a aster growth in manuacturing, withparticular emphasis on the medium, small and micro enterprises, which provide the best scope or absorbinglabour currently employed in low productivity occupations.

An employment generating growth process will generate a broad based growth o incomes, but this by itseldoes not assure the achievement o other important targets in terms o access to education, health, sanitationand clean drinking water. hese are not only essential elements o welare, but also or ensuring a healthy andproductive labour orce, which raises medium term growth capacity. he welth Plan places special emphasison expanding access to these services and views it as a critical role o government in the development process.

he private sector now has a demonstrable capability to invest in and stimulate growth in many areas o

the economy and public sector initiatives in these areas are thereore no longer necessary. However, the provi-sion o education, health and essential services or the bulk o the population has to be the responsibility othe State. hus, while the state should withdraw rom areas where the private sector is able to deliver well, thisdoes amount to advocating a reduction in the role o the State: what is needed is a restructuring in the role othe State, reducing its role in some areas but increasing it in others.

he objective o inclusiveness also calls or pro-active intervention to bridge the many divides which seg-ment our society. he Plan must retain its traditional ocus on reducing poverty an area where the resultsin the Eleventh Plan have been heartening. It must also ocus on promoting productive employment to meetthe aspirations o youth. It must ensure uplitment o speciic groups such as the SCs/Ss/OBCs, minori-ties and other marginalised groups that suer rom historical exclusion. It must systematically close the gen-der gap which is a blot on our social structure. It must also ensure balanced development o all the regions.Finally it must ensure that the growth strategy is consistent with sustainability concerns which are now gain-ing importance.

hese multi-dimensional objectives are relected in the adoption o 25 monitorable targets in the welthPlan o which growth o GDP is only one. he other targets cover the many eatures o development whichmeasure inclusiveness and sustainability. Individual states have also been encouraged to set state speciic tar-gets in the same areas.

Participation in Planning

he process o ixing Plan targets and also deining Plan strategies can no longer be viewed as purely techni-cal unctions. here is a widespread desire on the part o many stakeholders to participate in the process.he Planning Commission has thereore consulted widely not only with the Central Ministries and State

Governments, but also with sector experts, economists, sociologists, political scientists and civil society organ-isations. About 146 Working Groups were established under the chairmanship o Secretary o the Ministryconcerned, and included sector experts rom within and outside the Government. heir reports were reviewedby a steering Group chaired by the respective Member o the Planning Commission. Each steering groupincluded representatives o dierent Ministries, non government experts and other stakeholders. he reportso the steering groups were used as inputs into the Plan ormulation, and the reports are also available on thewebsite o the Planning Commission.

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Preface xiii

Regional meetings were held with Chie Ministers o groups o states to get the views o State Governments.hese regional meetings were also used or interacting with the civil society groups. As many as 900 civil soci-ety organisations have been consulted in various ways.

A radical departure rom the past was the use o social media on various aspects o the Plan, and also asa orm o outreach. he Planning Commission organized several events to increase awareness o the plan-ning process amongst the youth. During a Google Hangout, which was widely telecast on television, senioroicials rom the Commission answered a variety o questions taken live rom social media users, on top-ics such as governance, industrialization, agriculture, inrastructure, and even the relevance o the PlanningCommission itsel.

Subsequently, over a thousand young students and proessionals came together in ten locations across thecountry to Hack the welth Plan, and develop creative ways o communicating its message to the public.hese initiatives relect Planning Commissions sincere desire to engage more directly with the stakeholders.More broadly, they are part o an evolution o the Planning Commission itsel, as it strives to become an exer-

cise in persuasion.

The Role of Programmes

raditionally, our Plans have been viewed as synonymous with the collection o government programmesdesigned to promote one or other plan objective. here is much interest in this context in the total size o thePlan, and the allocation o inancial resources to dierent sectors and programmes. here is not enough ocuson the role o policies in achieving plan objectives by inluencing the decisions taken by the households andirms and this issue is discussed in the next section.

he welth Plan relies on an extensive range o government programmes, which cover a wide variety osectors, to help achieve the inclusive and sustainable growth. here are programmes in health, education,drinking water and sanitation, provision o critical inrastructure in rural and urban areas, programmes olivelihood support or the weaker sections and special programmes or the historically disadvantaged sectionso our population, particularly the Scheduled Castes, Scheduled ribes, OBCs, Minorities, and other mar-ginalised groups. Plan programmes can be classiied into three groups. here are central sector programmes,administered directly by agencies o the central government. here are state sector programmes, adminis-tered by state agencies, which orm part o the State Plan. here are also Centrally Sponsored Schemes (CSS),operating in areas that are, constitutionally the domain o the States, but the Central Government providesresources to the states to support these programmes while the programmes themselves are implemented bythe State Government and its agencies.

his public sector component o our development eort, taking the Centre and the States together,amounts to about 12 percent o GDP. About hal o this takes the orm o capital expenditure or investment,with the rest is accounted or salaries or the delivery o services, or pure transers, as in the case o provi-

sion o resources or mid day meals or school children or nutrition or pre school children; scholarships ordisadvantaged groups, pensions or the poor, etc. Economists have traditionally ocused on investment, as akey driver o growth, but once it is recognized that access to essential services such as, health, education, andnutritional support or children are critical contributors to growth in the medium term, it is obvious that noninvestment expenditures in the sectors are critical to achieve access.

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xiv Preface

While these programmes are important, it is important to recognise that merely expanding expenditure inthese programmes will not necessarily achieve the objectives o the Plan. We also need to look beyond expen-ditures, at the outcomes achieved. his calls or rigorous and independent evaluations o the eectiveness o

our programmes in achieving the desired outcomes and an analysis o why they all short. A common expla-nation o why results have allen short o expectations is that the programmes are underunded. his is otentrue but there are also problems because o design laws, and shortcomings in implementation capacity at theground level which needs to be remedied to improve outcomes. Both the Centre and the States should under-take such evaluations systematically, and especially, at the end o each Plan period.

The Role of Policy Restructuring

Along with programmes, the policy content o the Plan deserves much greater attention than it typically gets.In an economy in which the private sector has grown in scale, decisions taken by individuals and irms deter-mine many critical economic outcomes, and the policies which inluence these decisions are thereore impor-tant. his is especially so since private investment by armers, unorganised enterprises and the corporate

sector, accounts or 75 percent o total investment in the economy.

One aspect o policy emphasised in the Prime Ministers Foreword, is the achievement o a sound macro-economic ramework. his essentially boils down to having a reasonable iscal deicit, a inanceable cur-rent account deicit, a moderate rate o inlation and high rates o domestic savings. he welth Plan hascommenced at a time when there are weaknesses in these areas but it outlines a macro economic strategyor correction. Success in these eorts will be critical to creating an environment in which the high levels oinvestment and capital inlows needed or high growth can materialise.

In addition to policies or macro-economic stability, policy restructuring is needed in many sectors i weare to make progress towards achieving Plan objectives. he Plan document outlines an ambitious agendaor policy change. his includes policies aimed at supporting the diversiication o agriculture, and greaterinvolvement o the private sector in marketing agricultural produce. It also includes policies related to energypricing, and greater involvement o the private sector in exploration and development o primary energysources. Industrial growth can be greatly helped by policies aimed at improving the ease o doing business,and also, policies that would encourage a low o both risk capital and debt into small and medium industries.Rationalisation o tax policies, including especially, the introduction o GS, is another very important area,as is the rationalisation o subsidy policy to progressively reduce dysunctional subsidies, and make essentialsubsidies better targeted through the use o Aadhar. he Plan emphasises the need to design policies regard-ing the eicient use o water through a combination o regulation and appropriate pricing. hese policies willhave to be supported by well designed public investment to encourage eective conservation o water. Policiesor eective management o urbanisation are increasingly important and this is a new challenge acing theeconomy.

Since the total resources available to the Government is limited, and there are heavy demands on such

resources rom sectors such as health and education, there is an obvious need to leverage private resources toachieve public ends. his is particularly important in the area o inrastructure development where it leads tosome important policy departures. One such departure is the adoption in the Eleventh Plan o Public PrivatePartnership as a strategy or developing inrastructure.

raditionally, inrastructure used to be created by the public sector but increasingly, all over the world,countries have experimented with dierent orms o public private partnership, particularly in situations

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Preface xv

where users are willing to pay a user charge which generates a potential revenue stream. Emphasising PPPswhere possible, does not imply a blind pursuit o PPPs as the only means o implementing inrastructureprojects. Private investors are unlikely to be interested in investing in the remoter or more backward parts

o the country and the development o inrastructure in these parts will have to rely dominantly on publicinvestment. However it is possible to ollow the PPP option or many projects in roads, airports, ports, powergeneration and distribution, etc. he Central Government has evolved procedures and bidding documentswhich seek to achieve the objectives o transparency and robust competitive bidding or PPP projects and hasencouraged state Governments to proceed on the same basis.

Both the Central Government and many State Governments have embarked on ambitious programmeso developing inrastructure through PPPs. As a result, India now has the largest number o PPP projects oall emerging market countries. However, as the number o PPP projects expands, there will be unexpectedproblems in the course o implementation. Both the Centre and the States must evolve mechanisms to moni-tor PPP projects closely to ensure that they come up to the expected standards o service delivery and also toidentiy problems in project implementation so that these can be resolved as speedily as possible in a air and

transparent manner.

Many o the policies on the policy agenda outlined in the Plan lie in the domain o the Central Governmentbut many also lie in the domain o the States. Some, such as the implementation o the GS, which is anextremely important initiative, depend upon joint action, since it involves a constitutional amendment. Statesare likely to dier in the speed at which they implement policy changes recommended in dierent areas sinceaction in some areas may be easier or a particular State than in others. However a substantial eort in thebroad directions indicated in the Plan, will have a signiicant eect on outcomes and experience o success insome States will encourage others to ollow suit.

Implementation is the Key

he success o any Plan depends heavily on the quality o implementation, and it is here that our planningprocess is perhaps the weakest. It is oten said that our plans are very good, but implementation is poor. his isactually a contradiction. Planning can only be called good i it is based on a realistic assessment o what can beimplemented, with concrete proposals to increase implementation capacity as part o the strategy.

As ar as Plan programmes are concerned, it is oten said that the programmes are inadequately unded, andsuch unds as are available are oten not well spent. Some element o under unding is unavoidable becauseresources are calculated on the basis o likely growth o revenue, which depends on the overall growth o theeconomy. When growth alls short o the targets, resources are also likely to be lower than projected. hesolution lies in clearer prioritisation, so that shortalls in resources do not lead to proportional under und-ing o all programmes but rather that the least productive programmes are scaled back. An important pre-condition or implementing this approach is a candid assessment o what are the most eective programmesbased on periodic independent evaluation and constant concurrent evaluation. he role o evaluation needs

to be greatly strengthened in our planning process. he Planning Commission has created a new mechanismwith an Independent Evaluation Oice headed by a Director General at the level o Member o the PlanningCommission.

One reason why implementation is poor is that the capacity to implement is lacking at the operational level.Development programmes, in areas that have constitutionally been devolved to the Panchayati Raj Institutions,or Urban Local Bodies, should be implemented with these institutions playing a major role, both in the design

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xvi Preface

o the programme, and its actual implementation on the ground. Unortunately, although States have gener-ally devolved unctions to the PRI institutions, they have done much less to devolve unds. In many cases,even the devolution o unctionaries to the level needed or eectiveness has not really taken place. he PRIs

also lack the capacity to design, implement, and monitor programmes. his is true not only or the Panchayatsin rural areas, but also or urban local bodies, as revealed by the experience o the JNNURM. he welth Plan,thereore, provides or a portion o the unds in many programmes to be used to build implementation capac-ity. A new Centrally Sponsored Scheme or strengthening the capacity o the Panchayats, the Rajiv GandhiPanchayat Shashaktikaran Abhiyan has also been introduced.

A major new initiative taken in the welth Plan, to improve implementation o the Centrally SponsoredSchemes is to rationalise the number o the CSS, reducing them rom 142 to 66, and also permitting greaterlexibility in the guidelines. Recognising the act that one size its all national guidelines do not take intoaccount the characteristics o dierent States, which justiies a dierentiated approach, a new system has beenintroduced with two major changes. First, each state will be able to propose modiications in the nationalguidelines to suit the particular circumstances o the state. Second, each state will be allowed ull lexibility

or ten percent o its allocation under each scheme, which can be used or projects, which depart even romthe modiied state speciic guidelines. he only requirement will be that the project must be within the broadobjectives o the scheme. his is designed to encourage innovation at the state level.

Problems o implementation also arise in implementing the policy agenda o the Plan. Progress in this areoten suers rom a lack o understanding o the need or policy change and the pressure o vested interests.And yet, eective implementation o these policy changes is critical to achieve the productivity increases whichare essential or achieving high growth. he mid term review o the welth Plan should ocus speciically onthe success achieved in this dimension. An assessment should be made o success achieved by the Centre, inimplementing the policy restructuring envisaged with a parallel exercise or each State.

Scenario Analysis

An important innovation in the welth Plan is the recourse to scenario analysis. Instead o adopting a set onotional targets, and outlining what is necessary to achieve them, the Plan outlines three scenarios. he irst isthe scenario in which we are able to achieve highly substantial implementation o the programmes and policiesoutlined in the Plan. his is a scenario o strong inclusive growth, which would yield an average growth rateo around 8 percent in the Plan period, and would also be suiciently inclusive to show signiicant progress ineach o the 25 monitorable indicators, which relect the multi-dimensionality o targets that have been ixedor the welth Plan. his is clearly the outcome we should aim at.

However, the Plan also notes, that although technically easible, Scenario 1 is by no means an assured out-come. Success will depend on our ability to und Plan programmes on the scale envisaged, while maintain-ing macro economic stability, and also implementing the broad ranging policy changes, which are needed toachieve higher levels o productivity and the investment needed. I this agenda is only partially implemented

the economy will progress as in Scenario 2, with growth around 6.0 percent and much low levels o inclu-siveness. he Plan also indicates the consequences o ailing to make any signiicant progress by outlininga Scenario 3 called Policy Logjam. In this case, the growth rate could all to around 5 percent with very littleprogress on the inclusiveness agenda.

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xvii

he requirements or achieving the welth Plans Scenario-1 are extremely demanding, especially at a timewhen the external environment is highly uncertain. However, these diiculties aecting the irst two years othe Plan should be viewed as a short term impediment. With determined eort to correct macro-economic

imbalances, and to achieve eective implementation o both the programmes and sectoral policies outlinedin the Plan, there is a good chance o bringing the economy back to an 8 percent growth path, which is war-ranted by the underlying undamentals. As the Plan points out, it is diicult, but not impossible. With a strongnational eort, we should be able to put the economy on a path which achieves the transition we all want.

New Delhi (Montek Singh Ahluwalia)

10th May 2013 Deputy Chairman

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Contents

List of Figures xxiList of Tables xxii

List of Boxes xxivList of Acronyms xxvList of Annexures xxxiv

1. welth Plan: An Overview 1

2. Macroeconomic Framework 37

3. Financing the Plan 70

4. Sustainable Development 112

5. Water 144

6. Land Issues 191

7. Environment, Forestry and Wildlie 202

8. Science and echnology 235

9. Innovation 278

10. Governance 286

11. Regional Equality 302

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Figures

2.1 Systems Analysis or welth Plan Scenarios 402.2 Investment RateRatio to GDP at Current PricesOver the Years 432.3. Domestic Savings RateRatio to GDPOver the Years 482.4 Annualised Reduction in Poverty Ratio between 199394, 200405 and 200910 or

Alternate Measures o PL in Percentage Points

68

2.5 Annualised Rate o Decline as Proportion o the Initial Ratio in that Expenditure Class 683.1 Central Subsidies as Per Cent to GDP 763.2 Private Sector Investment in Inrastructure (Per Cent Share) 863.3 Investment in Inrastructure as a Per Cent o GDP 874.1 Policy Alternatives or Sustainable Growth 1134.2 Iron and Steel Industry 1234.3 Cement Industry: Historical rends o otal Energy (in PJ) and Speciic Energy

Consumption (GJ/tonne)124

4.4 Modal share o reight transport in India 1314.5 Passenger ransport Activity and Emissions in 2007 1324.6 Sector-wise Electricity Consumption in India 1355.1 Incomplete MMI Projects across Plan Periods 147

5.2 Increasing Gap between Irrigation Potential Created and Utilised 1495.3 Groundwater Abstraction rends in Selected Countries (in km3/year) 1555.4 Water Saving Potential in Industry 1687.1 Sanctioned Outlay vs Actual Expenditure in the Eleventh Plan (`Crore) 2077.2 Sector-wise Allocations/Expenditure during the Eleventh Plan (`Crore) 2087.3 Strategies or the welth Plan 2127.4 Rationalisation o Schemes rom the Eleventh to the welth Five Year Plan 2167.5 Global emperature RiseEect o Increase in GHG Concentration 22211.1 Convergence o GDP Growth Rates during Successive Plans 30411.2 rends in Inter-State Inequality 30611.3 Inter-State Income Inequalities (Bases on States GSDP Per Capita on Current Price) 30711.4 Growth during 200110 and Income in 2001 308

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Tables

2.1 Annual Growth Rate o GDP by Industry o Origin at Constant (200405) Prices 42

2.2 Investment and Consumption Expenditure as Proportion o GDP at Constant 200405Prices

44

2.3 Domestic Savings and Components hereo in Per Cent o GDP at Current Prices 49

2.4 External PaymentsCurrent and Capital Account 522.5 Fiscal Position o Centre and States and Subsidy Quanta 54

2.6 General Government Balance and Government Debt as Per Cent o GDP 55

2.7 rends in Global GDP Growth 59

2.8 Decile-wise annual growth in MPCEURP at constant prices (200405) 69

3.1 Projected vis--vis Realised Financing Pattern o the Plan Outlay o the Centre 71

3.2 NPRE and Its Components 72

3.3 Gross Fiscal Deicit 72

3.4 Eleventh Plan Resources o States and Us 73

3.5 Projection o the welth Plan Resources o the Centre 76

3.6 Resources o the Centre in Eleventh and welth Plan 77

3.7 welth Plan Resources o States and Us 77

3.8 Eleventh Plan Realisation and welth Plan Projection o Resources o States and Us 783.9 Overall Financing Pattern: Eleventh and welth Plans 79

3.10 Plan Resources as Per Cent o GDP 79

3.11 Public Sector Allocation or welth Plan 81

3.12 GBS Allocation in Eleventh and welth Plans 81

3.13 Allocation o Centres GBS by Major SectorsEleventh Plan Realisation and welth PlanProjection

82

3.14 Projected CA to States/Us Plan or welth Plan 83

3.15 Sector-Wise Investments: enth Plan and Eleventh Plan 85

3.16 Investment during the Eleventh Plan as Percentage o GDP 87

3.17 Projected Investment in Inrastructurewelth Plan 893.18 Source-Wise Projected Investment 90

3.19 Likely Sources o Debt 91

4.1 Sector-wise Annual Energy Consumption o Designated Consumers 125

4.2 Initial Estimate o Energy Consumption and Energy Reduction argets 126

4.3 Cap-and-rade vs Carbon ax 128

4.4 Coverage o Green Building Rating System up to October 2012 137

5.1 op 10 Groundwater-Abstracting Countries as o 2010 155

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Tables xxiii

5.2 Physical and Financial Progress in Watershed Projects o DOLR 159

5.3 Nagpurs Water Highway: Losing as It ravels 162

5.4 Sanitation Facilities in Urban India 163

5.5 Waste reatment Capacity in Indian Cities 163

5.6 Sector-wise allocation o JNNURM Funds (as on 21.9.2011) 100th CSMC 165

5.7 Potential Water Saving rom Various Measures in Industry 169

7.1 hematic Schemes under Implementation at the End o the Eleventh Plan 206

7.2 Categories along with indicators selected or Planning Commissions EPI 219

7.3 Dierent Levels o Global Mean emperature Increase above Pre-industrial Levels 222

7.4 Policy Interventions Optimal or Various echnologies 232

8.1 Plan Outlays and Expenditure o Central Scientiic Ministries/Departments/Agencies DuringEleventh Five Year Plan and Indicative Outlay or welth Five Year Plan

273

10.1 Year-Wise Damage Caused Due to Floods, Cyclonic Storms, Landslides and so on duringLast 10 Years in India

300

10.2 Gross Budgetary Support or the welth Five Year Plan 30111.1 Comparative Growth Rates in GSDP or Selected Low-Income States 304

11.2 Growth Rates in SDP in Dierent States 305

11.3 Convergence o GDP Growth Rates in Successive Plans 306

11.4 Disparity in PCI (Per Capita NSDP) at 200405 Prices 307

11.5 Disparities in Human Development Indicators 309

11.6 Human Development Index (19992000 and 200708) 310

11.7 Weighted Coeicient o Variation in District-level Domestic Product 311

11.8 Ratio o Per Capita GDDP in Richest District to Poorest District 311

11.9 Index o Inrastructure 314

11.10 Rank Correlation between Inrastructure Index, Poverty Ratio and Per Capita Income oStates

315

11.11 State-wise and Sector-wise Growth Rates or the welth Five Year Plan (20122017) 31611.12 Financial ransers under Normal Central Assistance (Plan) and hirteenth Finance

Commission317

11.13 Criteria and Weights or ax Devolution 318

11.14 Criteria and Weights under Gadgil-Mukherjee Formula 318

11.15 Statewise Central Releases under Important Flagship Schemes as Per Cent o otal 319

11.16 Eleventh Plan Expenditure 321

11.17 otal Plan Expenditure by the Centre and States o NE, Including NEC 331

11.18 Growth Rate in SDP in the NE States 332

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Boxes

1.1 Prime Minister Dr Manmohan Singh at the 57th NDC 61.2 Eleventh Plan Achievements on Inclusive Growth 93.1 Inrastrcuture Debt Fund 923.2 Model Concession Agreements or PPP 92

3.3 Model Bidding Documents or PPP Projects 933.4 Guidelines and Manuals 933.5 Global Ranking in PPP 943.6 Hyderabad Metro Rail Project 953.7 India Front-Runner in the PPP Race: ADB 984.1 welve Focus Areas or the welth Plan 1184.2 Importance o Clean Coal echnology: Ultra-super Critical Power Plants 1195.1 IIM Lucknow Evaluates AIBP or Planning Commission 1485.2 Participatory Groundwater Management in India 1565.3 Bengaluru: he Best? 1645.4 A Wave o Change in iruchirapally 1645.5 Water Use Eiciency in UK Industry 1697.1 Vision 202

7.2 Waste Disposal in PPP Mode 2047.3 Monitorable argets or the welth Plan 2097.4 Goals 2107.5 ribal Families Jointly Manage YepuruForests, Nellore District, Andhra Pradesh or One

and Hal Decade, or Sustainable Livelihood220

7.6 Bundelkhand Model or Farmland Productivity Enhancement in Rain-ed Areas o theCountry through Water Harvesting

221

7.7 Suggested Re-organisation o the National Action Plan or Climate Change 2297.8 Framework or Understanding Finance Strategies 2318.1 Discovery o Higgs BosonIndian Contribution 2428.2 Signiicant Achievements/Development o DS during Eleventh Plan Period 2448.3 Leveraging International Collaboration or Strengthening National Programmes Journey

From StanordIndia Biodesign ProgrammeA Novel Collaborative echnology Innovationto Launching National Biodesign Alliance

249

8.4 Signiicant Achievements/Development o DB during the Eleventh Plan Period 2508.5 Signiicant Achievements/Development o MoES/ESSO during the Eleventh Plan Period 2548.6 Signiicant Achievements o DSIR/CSIR during the Eleventh Plan Period 2598.7 Signiicant Achievements/Development o DOS during the Eleventh Plan Period 2648.8 Signiicant Achievements/Development o DAE during the Eleventh Plan Period 26911.1 From the Report o the welth Plan Working Group on Special Area Programmes 328

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Acronyms

AAGR Average Annual Growth RateAAI Airport Authority o IndiaAAS Agromet Advisory ServicesACA Additional Central Assistance

AcSIR Academy o Scientiic andInnovative ResearchACREC-MC Advanced Centre or reatment,

Research and Education in Cancerat ata Memorial Centre

ACWADAM Advanced Centre or WaterResources Development andManagement

ADB Asian Development Bank AHWR Advanced Heavy Water ReactorAIBP Accelerated Irrigation Beneit

ProgrammeAIIMS All India Institute or Medical

SciencesALICE A Large Ion Collider ExperimentALM Airborne Laser errain MapperAMA Aquier Management AssociationAMIs Airport Meteorological

InstrumentsANUSA Anna University SatelliteAPFAMGS Andhra Pradesh Farmers

Managed Groundwater SystemAPM Administered Pricing MechanismAPPRC Action Plan or Preparation o

Regulations, CBRs (Conduct o

Business Regulations) and CriteriaARC Administrative ReormsCommission

ARGs Automatic Rain GaugesASCI Administrative Sta College o

India

ASEAN Association o Southeast AsianNations

AF AHWR hermal Hydraulics estFacility

AWSs Automatic Weather StationsAYUSH Ayurveda, Yoga & Naturopathy,Unani, Siddha and Homoeopath

BADP Border Area DevelopmentProgramme

BARC Bhabha Atomic Research CentreBC Ratio Beneit-Cost RatioBCM Billion Cubic MetreBCR Balance rom Current RevenuesBCRLIP Biodiversity Conservation & Rural

Livelihood Improvement ProjectBE Budget Estimates/Budgeted

Expenditure

BEE Bureau o Energy Eiciency BEL Bharat Electronics LimitedBIMARU Bihar, Madhya Pradesh, Rajasthan

and Uttar PradeshBIPP Biotechnology Industry

Partnership ProgrammeBIRAC Biotechnology Industry Research

Assistance CouncilBIRD Building Industrial R&D and

Common Research FacilitiesBLY Bachat Lamp YojanaBMCs Biodiversity Management

CommitteesBOD Bio-chemical Oxygen Demand/Biological Oxygen Demand

BO Build-Operate-ranserBRAI Biotechnology Regulatory

Authority o India

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xxvi Acronyms

BRGF Backward Regions Grant FundBRLF Bharat Rural Livelihoods

Foundation

BRNS Board o Research in NuclearSciences

BSI Botanical Survey o IndiaBIA Broad-based rade and

Investment AgreementCA Cascade Associations/Central

AssistanceCAAQMS Continuous Ambient Air Quality

Monitoring StationsCAGR Compound Annual Growth RateCAMPA Compensatory Aorestation

Fund Management and Planning

AuthorityCA Centre or Atmospheric

echnologyCBD Convention on Biological

DiversityCBDR Common But Dierentiated

ResponsibilityCBF Central Board o Forestry CBIPM Capacity Building or Industrial

Pollution Management projectCBS Core Banking SolutionsCCAS Climate Change Assessment

StudiesCCCR Centre or Climate Change

ResearchCCI Cabinet Committee on

InrastructureCCL Climate Change Levy CDM Clean Development MechanismCDMA Code Division Multiple AccessCECA Comprehensive Economic

Cooperation AgreementCEL Central Electronics LtdCEMS Continuous Emission Monitoring

System

CEPA Comprehensive EconomicPartnership Agreement

CER Certiied Emission ReductionCERC Central Electricity Regulatory

CommissionCERN European Organization or

Nuclear Research

CEPs Continuous Eluent reatmentPlants

CFLs Compact Fluorescent Lamps

CF Cluster Facilitation eamsCGP Cluster o Gram PanchayatsCHR Compact High emperature

ReactorCICC Cable-In-Conduit-ConductorCICs Cluster Innovation CentresCIES Convention on International

rade Endangered Species oFauna and Flora

CKMN Centre or KnowledgeManagement o Nano Science andechnology

CMIE Centre or Monitoring o IndianEconomy

CMS Compact Muon SolenoidCO2 Carbon DioxideCO2 eq Carbon Dioxide equivalentCoE Centres o ExcellenceCPCB Central Pollution Control BoardCPSE Central Public Sector EnterprisesCPSMS Central Plan Schemes Monitoring

SystemCRZ Coastal Regulation ZoneCS Central SectorCSIR Council o Scientiic and

Industrial ResearchCSIR-CSMCRI Central Salt and Marine

Chemicals Research InstituteCSOs Civil Society OrganisationsCSR Corporate Social Responsibility CSS Centrally Sponsored SchemeCSRI Council or Science and

echnology or Rural IndiaCURIE Consolidation o University

Research, Innovation andExcellence

CVD Chemical Vapour Deposition

CWG Common Wealth GamesDAE Department o Atomic Energy DAE-SRC Department o Atomic Energy

Science Research CouncilDBFO Design, Build, Finance, Operate

and ranserDB Department o Biotechnology

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Acronyms xxvii

DCs Designated ConsumersDFCCIL Dedicated Freight Corridor

Corporation o India Limited

DFIs Development Finance InstitutionsDIE District Institute o Education and

rainingDIPP Department o Industrial Policy

and PromotionDMS Disaster Management SupportDO Dissolved OxygenDOCS Distributed Organic Chemical

SynthesisDOM Dissolved Organic MatterDOS Department o SpaceDRDO Deence Research and

Development OrganisationDSSCs Dye Sensitised Solar CellsDS Department o Science &

echnologyDAA Double axation Avoidance

AgreementDWRs Doppler Weather RadarsEAPs External Aided ProjectsEBR Extra-Budgetary ResourcesECB European Central Bank/External

Commercial BorrowingsECBC Energy Conservation Building

CodesECVs Essential Climate VariablesEEFP Energy Eiciency Financing

PlatormEER Energy Eiciency RatioEEZ Exclusive Economic ZoneEI Empowered InstitutionEIA Environment Impact AssessmentEIP Eco-Industrial Park EMP Environmental Management PlanEMPOWER Encouraging and Motivating

Pursuit o World ClassExploratory Research

ENVIS Environmental InormationSystem

Eos Earth ObservationsEPC Engineering, Procurement and

ConstructionEPI Environmental Perormance

IndexEPO European Patent Oice

ERI Ecosystem Research InstituteESSO Earth System Science

Organisation

EWS Economically Weaker SectionFAIR Facility or Anti-proton and Ion

ResearchFBR Fast Breeder ReactorFC Finance CommissionFDI Foreign Direct InvestmentFEEED Framework or Energy Eicient

Economic DevelopmentFIIs Foreign Institutional InvestorsFIS Fund or Improvement o S&

InrastructureFMS Focus Market Scheme

FMF Fuelling Machine est Facility FRA Forest Rights ActFRBMA Fiscal Responsibility and Budget

Management ActFSI Forest Survey o IndiaFC Forest and ree CoverFE Full-ime EquivalentFP Foreign rade Policy FYP Five Year PlanGA Geographic AreaGAP-1 Ganga Action Plan-1GBPIHED G.B. Pant Institute or Himalayan

Environment and DevelopmentGBS Gross Budgetary SupportGCNEP Global Centre or Nuclear Energy

PartnershipGDCF Gross Domestic Capital

FormationGDDP Gross District Domestic ProductGDP Gross Domestic ProductGFCF Gross Fixed Capital FormationGHG Greenhouse GasGHG-IMS GHG Inventory Management

SystemGHGs Green House Gases

GIM National Mission or a GreenIndia

GIS Geographic Inormation SystemGISA Geo Imaging SatelliteGLP Good Laboratory PracticeGM Genetic Modiication/Genetically

ModiiedGMP Genetically Modiied Products

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xxviii Acronyms

GNSS Global Navigation Satellite SystemGOI Government o IndiaGPS Global Positioning System

GRIHA Green Rating or IntegratedHabitat Assessment

GSDP Gross State Domestic ProductGSLV Geosynchronous Satellite Launch

VehicleGSO Geostationary Earth OrbitGS Goods and Services axHADP Hill Areas Development

ProgrammeHAGAR High Altitude Gamma Ray HBNI Homi Bhabha National InstituteHCR Head Count Ratio

HDI Human Development IndexHDN Hemolytic Disease o the New

bornHDRs Human Development ReportsHFRR High Flux Research ReactorHLEC High Level Expert CommitteeHLEG High Level Expert GroupHLNRA High-Level Natural Background

Radiation AreasHRD Human Resource DevelopmentHUD Head Up Display HVAC Heating, Ventilation and Air

ConditioningIAP Integrated Action PlanIARCI International Advanced Research

Centre or Powder Metallurgy andNew Materials

IBIN Indian Bio-resource InormationSystem

IBIS Indian Biodiversity InormationSystem

IBP India Biodiversity PortalICAR Indian Council o Agricultural

ResearchICDS Integrated Child Development

ServicesICFRE Indian Council o Forestry

Research and EducationICMR Indian Council o Medical

ResearchIC Inormation and Communication

echnology

ICS International Centre orheoretical Sciences

ICZM Integrated Coastal Zone

ManagementIDFs Inrastructure Development

FundsIDWH Integrated Development o

Wildlie HabitatsIEA International Energy Agency IEBR Internal & Extra Budgetary

ResourcesIEO Independent Evaluation OiceIEP Integrated Energy Policy IERMON Indian Environmental Radiation

Monitoring Network

IFMS Intensiication o ForestManagement Scheme

IGBC Indian Green Building CouncilIGCAR Indira Gandhi Centre or Atomic

ResearchIGVdb Indian Genome Variation

databaseIICs Inter-Institutional CentresIID Integrated Inrastructure

DevelopmentIIFCL India Inrastructure Finance

Company LimitedIIIF India Inclusive Innovation FundsIIPDF India Inrastructure Project

Development FundIIS Indian Institute o Space Science

and echnologyII Indian Institute o echnology IMD India Meteorological DepartmentIMF International Monetary FundIMR Inant Mortality RateINCCA Indian Network or Climate

Change AssessmentIndia-WRIS India-Water Resource

Inormation System

INGO Indian Geographical OrganisationINO India-based Neutrino Observatory INSA Indian National Satellite SystemIOCoML Indian Ocean Census o Marine

LieIP Intellectual property IPR Intellectual Property Rights

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Acronyms xxix

IR Internal ResourcesIRNSS Indian Regional Navigational

Satellite System

IRS Indian Remote SensingISRO Indian Space Research

OrganisationI Income axIER International hermonuclear

Experimental ReactorIES I enabled servicesIIs Industrial raining InstitutesIUCs Inter-University CentresJFM Joint Forest ManagementJNCASR Jawaharlal Nehru Centre or

Advanced Scientiic Research

JNNSM Jawaharlal Nehru National SolarMission

JNNURM Jawaharlal Nehru National UrbanRenewal Mission

JNP Jawaharlal Nehru Port rustKNN Kanpur Nagar NigamKYC Know Your CustomerLAC Latin America and the CaribbeanLCA Light Combat AircratLDCs Less Developed CountriesLED Light Emitting DiodeLEHIPA Linear Proton AcceleratorLHC Large Hadron ColliderLIGO Laser Intererometer Gravitational

Wave ObservatoryLNG Liqueied Natural GasLPG Ligueied Petroleum GasLROs Longer-erm Reinancing

OperationsLD Low emperature hermal

DesalinationLWE Let Wing ExtremismLWR Light Water ReactorMCAs Model Concession AgreementsMCR Miscellaneous Capital Receipts

MDMs Mid Day MealsMFA Multiibre AgreementMFP/NFP Minor Forest Produce/Non

imber Forest ProduceMGNREGA Mahatma Gandhi National Rural

Employment Guarantee ActMHRD Ministry o Human Resource

Development

MIS Micro Irrigation SystemsMLD Million litres per day MLFPS Market-Linked Focus Product

SchemeMMR Maternal Mortality RateMNCs Multinational CompaniesMoEF Ministry o Environment and

ForestsMoES Ministry o Earth SciencesMoP Ministry o PowerMoRD Ministry o Rural DevelopmentMoU Memorandum o UnderstandingMoUD Ministry o Urban DevelopmentMOX Mixed oxideMPLADs Member o Parliaments Local

Area Development ProgrammeMSME Micro, Small and Medium

EnterprisesMt Million onnesMEE Market ransormation or

Energy EiciencyMtoe/MOE Million onnes o Oil EquivalentMPA Million onnes Per AnnumMs Metric onnesMW Mega WattNAAQS National Ambient Air Quality

StandardsNABL National Accreditation Board or

esting LaboratoriesNAEB National Aorestation and Eco

Development BoardNAP National Action Plan/National

Aorestation ProgrammeNAP National Agricultural Policy NAPCC National Action Plan on Climate

ChangeNASSCOM National Association o Sotware

and Services CompaniesNACOMS National CommunicationsNAMO National Atlas and hematic

OrganisationNBC National Building CodeNCA Normal Central AssistanceNCAD National Civil Aircrat

DevelopmentNCDMA National CDM AuthorityNCEF National Clean Energy FundNCS National Centre or Seismology

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xxx Acronyms

NCSM National Council o ScienceMuseums

NDC National Development Council

NDEM National Database or Emergency Management

NE North EastNEAMA National Environment

Assessment and MonitoringAuthority

NEC North Eastern CouncilNECA National Elephant Conservation

AuthorityNEERI National Environmental

Engineering Research InstituteNEFC National Environment and

Forestry CouncilNeGAP National e-Governance Assistance

ProgrammeNELP New Exploration Licensing Policy NEMP National Environmental

Monitoring ProgrammeNEP National Electricity Policy NEPA National Environment Protection

AuthorityNERF National Environment

Restoration FundNFHS National Family Health Survey NGIS National Geographic Inormation

SystemsNGOs Non-Governmental OrganisationsNGRBA National Ganga River Basin

AuthorityNG National Green ribunalNHDP National Highway Development

ProjectsNHM National Health MissionNIF National Innovation FoundationNIMS National Inventory Management

SystemNISER National Institute o Science

Education ResearchNIs National Institutes o echnologyNKN National Knowledge Network NLCP National Lake Conservation PlanNLDCs Non-Least Developed CountriesNLSRC National Lie Sciences Resource

Centre

NMEEE National Mission on EnhancedEnergy Eiciency

NMILI New Millennium Indian

echnology Leadership InitiativeNMNH National Museum o Natural

HistoryNNRMS National Natural Resources

Management SystemNOx Nitrogen OxidesNPA Non-Perorming AssetsNPCA National Plan or Conservation o

Aquatic EcosystemsNPRE Non Plan Revenue ExpenditureNRAA National Rained Area Authority NRCD National River Conservation

DirectorateNRCP National River Conservation PlanNRDMS Natural Resources Data

Management SystemNREGA National Rural Employment

Guarantee ActNRHM National Rural Health MissionNRLM National Rural Livelihoods

MissionNSAP National Social Assistance

ProgrammeNSDI National Spatial Data

InrastructureNSDP Net State Domestic ProductNSERB National Science and Engineering

Research BoardNSS National Service SchemeNSSO National Sample Survey OiceNUIS National Urban Inormation

SystemNWC National Water CommissionNWCP National Wetland Conservation

ProgrammeNWFL National Water Framework Law NWM National Water Mission

NWP National Water Policy/NumericalWeather Prediction

NWR-IC National Water Resources Inormation Centre

O&M Operation & MaintenanceOBCs Other Backward ClassesOCM Ocean Colour Monitor

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Acronyms xxxi

ODS Oxide Dispersion StrengthenedOWat Oice o Water, RegulatorOMCs Oil Marketing Companies

OOS Ocean Observation SystemOSDD Open Source Drug Discovery PACE Patent Acquisition and

Collaborative Research andechnology Development

PAs Protected AreasPA Perorm, Achieve and rade/

Perorm-Achieve-radePCI Per Capita IncomePCs Patent Cooperation reatiesPDS Public Distribution SystemPEO Programme Evaluation

OrganisationPESA Panchayats (Extension to the

Scheduled Areas) Act 1996PE Potential Evapo-ranspirationPFBR Prototype Fast Breeder ReactorPFZs Potential Fishing ZonesPHWR Pressurised Heavy Water ReactorPIM Participatory Irrigation

ManagementPMGSY Pradhan Mantri Grameen Sadak

YojanaPMN Polymetallic Manganese NodulePPC Portland Pozzolana CementPPP PublicPrivate PartnershipPPPAC PublicPrivate Partnership

Appraisal CommitteePPPPs PeoplePublicPrivate

PartnershipsPRIs Panchayati Raj InstitutionsPRISM Promoting Innovations in

Individuals, Start-ups and MSMEsPSEs Public Sector EnterprisesPSLV Polar Satellite Launch VehiclePSUs Public Sector UndertakingsPAs Preerential rade Agreements

PUFAs Pooly Unsaturated Fatty AcidsPURSE Promotion o University Research

and Scientiic ExcellenceR&D Research and DevelopmentR&R Resettlement & RehabilitationRBI Reserve Bank o IndiaRDF Reuse Derived Fuel

RE Revised EstimatesREC Renewable Energy CertiicateREDD+ Reduced Emissions rom

Deorestation and ForestDegradation

RF Radio Frequency RFD Results Framework DocumentRFP Model Request or ProposalRFQ Request or QualiicationRISK Research Initiative to Scale New

KnowledgebaseRKVY Rashtriya Krishi Vikas YojanaRLV Reusable launch vehicleRO Reverse OsmosisROV Remotely Operated Vehicle

RRCA Raja Ramanna Centre orAdvanced echnology

RRI Raman Research InstituteRRR Repair, Renovation and

RestorationRS Restricted ServiceRSBY Rashtriya Swasthya Bima YojanaRSDP Remote Sensing Data Policy RSPM Respirable Suspended Particulate

MatterRSVY Rashtriya Sam Vikas YojanaRE Right to EducationS& Science and echnology SAARC South Asian Association or

Regional CorporationSACEP South Asia Co-operative

Environment ProgrammeSACU Southern Arican Customs UnionSAFA South Asia Free rade AreaSAPCC State Action Plans on Climatic

ChangeSBIRI Small Business Innovative

Research InitiativeSC State Water Regulatory and

Development Council/Super

CriticalSCA Special Central AssistanceSCI Science Citation IndexSCs Scheduled CastesSDP State Domestic ProductSDRs Special Drawing RightsSEC Speciic Energy Consumption

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xxxii Acronyms

SEEP Super-Eicient EquipmentProgramme

SEFC State Environment and Forest

CouncilSEWA Sel Employed Womens

AssociationSEZs Special Economic ZonesSGDP State Gross Domestic ProductSGSY Swaranjayanti Gram Swarojgar

YojanaSHGs Sel Help GroupsSIROs Scientiic & Industrial Research

OrganisationsSIS-DP Space-based Inormation Support

or Decentralised Planning

SIWEA State Independent Water ExpertAuthority

SKA Square Kilometre Array SMC Soil Moisture ConservationSMEs Small and Medium Scale

EnterprisesSMS Short Message ServiceSNP Satellite Navigation ProgrammeSol Survey o IndiaSOEF Solar est Facility SOx Sulphur OxidesSPA Special Plan AssistanceSPCAs Society or Prevention o Cruelty

to AnimalsSPM Suspended Particulate MatterSPS Standard Positioning ServiceSPV Solar PhotovoltaicSSA Sarva Shiksha Abhiyan/Sub-

Saharan AricaSSI Small Scale IndustriesS Solar hermalSI echnology and InnovationSPs Sewage reatment PlantsSs Scheduled ribesBM est blanket module

CC richy City CorporationCIS IFR Centre or Interdisciplinary

SciencesDB echnology Development BoardDDP echnology Development and

Demonstration ProgrammeDEM ime Domain Electromagnetic

ECHVILS echnology Enabled VillagesEM ransmission Electron

Microscope

ePP echnopreneur PromotionProgramme

FP otal Factor Productivity HSI ranslational Health Science and

echnology InstituteIFAC echnology Inormation,

Forecasting and AssessmentCouncil

IFR ata Institute o FundamentalResearch

K raditional KnowledgeKDL raditional Knowledge Digital

LibraryLP ari Liberalization ProgrammeM hirty Metre elescopeQM otal Quality ManagementRGs ele-metred Automatic Rain

GaugesRIPS rade-Related Aspects o

Intellectual Property RightsC elemetry, racking and

CommandU-Excel Unit or ExcellenceUGC-DAE University Grants Commission-

Department o Atomic EnergyUHC Universal Health CareUID Unique IdentiicationUIDSSM Urban Inrastructure

Development Scheme or Smalland Medium owns

UK United KingdomULBs Urban Local BodiesUMPPs Ultra Mega Power ProjectsUN United NationsUNCED United Nations Conerence on

Environment and DevelopmentUNDP United Nations Development

ProgrammeUNEP United Nations Environment

ProgrammeUNFCCC United Nations Framework

Convention on Climate ChangeUSC Ultra Super CriticalUSOF Universal Services Obligation Fund

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Acronyms xxxiii

USPO United States Patent andrademark Oice

Us Union erritories

UVI Ultraviolet Imaging elescopeVA Value Added axVGF Viability Gap FundingVOL Vinati Organics LimitedVP Vigyan PrasarVSA Very Small Aperture erminalVSF Viability Support FundingVSS Van Samrakshana SamithiWALMIs Water and Land Management

InstitutesWASSAN Watershed Support Services and

Activities Network

WAVE Womens Action or VillageEmpowerment

WBCSD World Business Council or

Sustainable DevelopmentWGDP Western Ghat Development

ProgrammeWHO World Health OrganisationWMC Waste Minimization CirclesWRIS Water Resources Inormation

SystemWO World rade OrganisationWUAs Water Users AssociationsWUGs Water Users GroupsZBB Zero based budgetingZSI Zoological Survey o India

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Annexures

2.1 PovertyMeasures and Changes herein 673.1 Sectoral Allocation or Public Sectors ResourcesEleventh Plan (200712) Realisation

and welth Plan (201217) Projections99

3.2 Budget Support, IEBR and Outlay or Central Ministry/DepartmentEleventh Plan

(200712) Realisation and welth Plan (201217) Projections

100

3.3 Proposed Sectoral Allocations or States and Union erritories in the welth Plan 1034.1 Estimated Energy Savings due to Electrical Appliances Programme in the welth Plan 1404.2 Co-Beneits Framework or Low Carbon Strategies 1415.1 Plan-wise Expenditure on Irrigation and Flood Control 1815.2 Plan-wise Prolieration o Schemes in MMI Sector 1815.3 Spillover o Major, Medium and ERM Projects into the welth Plan 1825.4 CLA/Grant and Irrigation Potential Created through AIBP, 19962012 1825.5 Plan-Wise Irrigation Potential Created and Utilised 1835.6 Physical and Financial Achievements o CAD Programme 1845.7 Water Use Eiciency o Completed Major/Medium Irrigation Projects Based on Field

Measurements o Losses185

5.8 Water Data Base Development and Management in the welth Plan 186

8.1 National argets or S& Sector or the welth Plan 274

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INTRODUCTION1.1. Indias 1.25 billion citizens have higher expecta-tions about their uture today, than they have everhad beore. hey have seen the economy grow muchaster in the past 10 years than it did earlier, anddeliver visible beneits to a large number o people.his has understandably raised the expectations oall sections, especially those who have beneited less.Our people are now much more aware o what ispossible, and they will settle or no less. he welthFive Year Plan must rise to the challenge o meetingthese high expectations.

The Initial Conditions

1.2. hough expectations have mounted, the cir-cumstances in which the welth Plan has com-menced are less avourable than at the start o theEleventh Plan in 200708. At that time, the economywas growing robustly, the macroeconomic balancewas improving and global economic developmentswere supportive. he situation today is much morediicult. he global economy is going throughwhat looks like a prolonged slowdown. he domes-tic economy has also run up against several inter-nal constraints. Macro-economic imbalances havesuraced ollowing the iscal expansion undertaken

ater 2008 to give a iscal stimulus to the economy.Inlationary pressures have built up. Major invest-ment projects in energy and transport have sloweddown because o a variety o implementation prob-lems. Some changes in tax treatment in the 201213have caused uncertainty among investors.

1Twelfth Plan: An Overview

1.3. hese developments have produced a reductionin the rate o investment, and a slowing down o eco-

nomic growth to 6.2 per cent in 201112, which wasthe last year o the Eleventh Plan. he growth rate inthe irst hal o 201213, which is the irst year o thewelth Plan, is even lower. he downturn clearlyrequires urgent corrective action but it should notlead to unwarranted pessimism about the mediumterm. Indias economic undamentals have beenimproving in many dimensions, and this is relectedin the act that despite the slowdown in 201112,the growth rate o the economy averaged 8 per centin the Eleventh Plan period. his was lower thanthe Plan target o 9 per cent, but it was better than

the achievement o 7.8 per cent in the enth Plan.he act that this growth occurred in a period whichsaw two global crises, one in 2008 and another in2011, is indicative o the resilience which the econ-omy has developed.

The Policy Challenge1.4. he policy challenge in the welth Plan is,thereore, two-old. he immediate challenge is toreverse the observed deceleration in growth by reviv-ing investment as quickly as possible. his calls orurgent action to tackle implementation constraints

in inrastructure which are holding up large proj-ects, combined with action to deal with tax relatedissues which have created uncertainty in the invest-ment climate. From a longer term perspective, thePlan must put in place policies that can leverage themany strengths o the economy to bring it back to its

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real growth potential. his will take time but the aimshould be to get back to 9 per cent growth by the endo the welth Plan period.

1.5. he preparation o a Five Year Plan or thecountry is an opportunity to step back, take stocko the big picture, identiy the strengths that canbe leveraged to enable the country to move orward,and the constraints that could hold it back, and onthis basis develop a strategic agenda. In developingsuch an agenda, the Planning Commission has reliedon our key elements.

First, the strategy must be irmly grounded in anunderstanding o the complexities o the develop-

ment challenges that India aces, recognising thetransormation that is taking place in the econ-omy and in the world. his understanding o theground reality must be used to identiy the criticalleverage points where government action couldhave the maximum impact. he ocus must be onidentiying the strategic leverage points where suc-cessul action could trigger many supportive reac-tions rather than ixing everything everywhere.

Second, progress will be achieved through a com-bination o government action in both policiesand public programmes, and the eorts o manyprivate actors that are important in the economy.Much o the inclusive growth we hope to achievedepends on investment in the private sector whichaccounts or over 70 per cent o total invest-ment. his includes not only the organised cor-porate sector, but also Micro, Small and MediumEnterprises (MSMEs), individual armers andmyriads o small businessmen who add to GrossDomestic Product (GDP) and create jobs. hedynamism o this segment, and its ability to seizeeconomic opportunities, is critical or inclusivegrowth and the Plan must address the constraintsaced by all these private actors in achieving better

results. hird, the outlay on government programmes

has to increase in many areas but this must beaccompanied by improved implementation. Forthis, it is necessary to ocus on capacity buildingand governance reorms, including system changethat will increase accountability in the public sec-

tor. he welth Plan must back this ocus by

making speciic allocations to improve the abilityo government to work better.

Finally, the planning process must serve as a way

o getting dierent stakeholders to work togetherto achieve broad consensus on key issues. hese

stakeholders include (i) dierent levels o the gov-ernment sector: Centre, States and Panchayati RajInstitutions (PRIs)/Urban Local Bodies (ULBs);

(ii) the private sector, both big companies andsmall businesses, whose investments will drive our

growth and (iii) citizens groups and the voluntarysector, who bring the key element o peoples par-ticipation and can greatly help improve the qual-

ity o government action.

1.6. he Planning Commission has consulted widelyover the past two years with other Ministries, with

State Governments, with experts and also withCivil Society Organisations (CSOs). As many as900 CSOs have been consulted through workshops

and other ora. Several expert groups were set up toadvice on various aspects o the economy and their

reports are important inputs. hese include the HighLevel Expert Group (HLEG) on Health, the HLEGon ransport, the Expert Group on InrastructureFinancing, the Expert Group on the Low CarbonEconomy, the Expert Group on Venture Capital

and Angel Investors, and the Expert Group onManagement o Public Enterprises.

1.7. his Chapter is not an executive summary.Rather it provides an overview o the basic rationale

o the Plan and the key areas o intervention. heChapter is organised as ollows:

Section 1.2 presents the basic vision and aspira-tions which drive the Plan and which are cap-

tured in the sub-title Faster, sustainable and MoreInclusive Growth.

Section 1.3 ocuses on the development o capabil-itiesboth human and institutionalto achievethe vision.

Section 1.4 ocuses on the challenge o managingour national resources rationally; a critical area

or planning i we want growth to be sustainable. Section 1.5 deals with Indias engagement with the

world in the welth Plan and beyond.

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Section 1.6 presents a summary o some o themajor policy initiatives that taken together wouldcontribute a strategy or achieving aster, more

inclusive and sustainable growth.

VISION AND ASPIRATIONS1.8. he broad vision and aspirations which thewelth Plan seeks to ulil are relected in the subti-tle: Faster, Sustainable, and More Inclusive Growth.he simultaneous achievement o each o these ele-ments is critical or the success o the Plan.

The Need for Faster Growth1.9. Planners are sometimes criticised or ocusingtoo much on GDP growth, when the real objective

should be to achieve an improved quality o lie othe people across both economic and non-economicdimensions. he welth Plan ully recognisesthat the objective o development is broad-basedimprovement in the economic and social conditionso our people. However, rapid growth o GDP is anessential requirement or achieving this objective.

1.10. here are two reasons why GDP growth isimportant or the inclusiveness objective. First, rapidgrowth o GDP produces a larger expansion in totalincome and production which, i the growth processis suiciently inclusive, will directly raise living stan-

dards o a large section o our people by providingthem with employment and other income enhanc-ing activities. Our ocus should not be just on GDPgrowth itsel, but on achieving a growth processthat is as inclusive as possible. For example, rapidgrowth which involves aster growth in agriculture,and especially in rain-ed areas where most o thepoor live, will be much more inclusive than a GDPgrowth that is driven entirely by mining or extrac-tion o minerals or exports. Similarly, rapid growthwhich is based on aster growth or the manuactur-ing sector as a whole, including MSME, will generate

a much broader spread o employment and incomeearning opportunities and is thereore more inclu-sive than a growth which is largely driven by extrac-tive industries.

1.11. he second reason why rapid growth is impor-tant or inclusiveness is that it generates higher rev-enues, which help to inance critical programmes

o inclusiveness. here are many such programmeswhich either deliver beneits directly to the poorand the excluded groups, or increase their ability to

access employment and income opportunities gener-ated by the growth process. Examples o such pro-grammes are the Mahatma Gandhi National RuralEmployment Guarantee Act (MGNREGA), SarvaSiksha 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.his is also relevant or the sustainability objectivesince programmes aimed at making developmentmore sustainable also involve additional costs.

Growth Prospects1.12. he Approach Paper to the welth Plan,approved by the National Development Council(NDC) in 2011, had set a target o 9 per cent aver-age growth o GDP over the Plan period. hat wasbeore the Eurozone crisis in that year triggered asharp downturn in global economic prospects, andalso beore the extent o the slowdown in the domes-tic economy was known. A realistic assessment othe growth prospects o the economy in the welthPlan period is given in Chapter 2. It concludesthat the current slowdown in GDP growth can bereversed through strong corrective action, includ-

ing especially an expansion in investment with acorresponding increase in savings to keep inlation-ary pressures under control. However, while our ullgrowth potential remains around 9 per cent, accel-eration to this level can only occur in a phased man-ner, especially since the global economy is expectedto remain weak or the irst hal o the Plan period.aking account o all these actors, the welth Planshould work towards bringing GDP growth back toan inclusive 9 per cent in the last two years o thePlan, which will yield an average growth rate o about8 per cent over the entire Plan period. he outcome

is conditional on many policy actions as is describedin scenario one.

1.13. Within the aggregate GDP growth target, twosub-targets are especially important or inclusive-ness. hese are a growth rate o 4 per cent or theagricultural sector over the welth Plan period andaround 10 per cent in the last two years o the Plan

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4 Twelfth Five Year Plan

or the manuacturing sector. he policies neededto achieve these sectoral targets are summarised inSection 1.6.

1.14. he welth Plans strategy or growth dependscrucially on productivity gains as one o the keydrivers o growth. Productivity is the additionalcontribution to growth ater taking account o theeect o capital accumulation and growth in labour.hese traditional sources o growth are not likelyto be enough or India in the coming years and wemust thereore ocus much more on productiv-ity improvements among all constituents: big busi-nesses, MSMEs, armers and even government. hiscan be done by improving the business regulatory

environment, strengthening the governance capac-ity o States, investing more in inrastructure ratherthan subsidies, and by using Science and echnology(S&) to drive innovation.

Alternative Scenarios1.15. he projection o 8 per cent growth in thewelth Plan period should not be viewed as a busi-ness as usual outcome that can be realised with rela-tively little eort. It is in act a projection o what ispossible i we take early steps to reverse the currentslowdown and also take other policy actions needed

to address other key constraints that will otherwiseprevent the economy rom returning to a highergrowth path. Failure to act irmly on these policieswill lead to lower growth and also poorer outcomeson inclusiveness.

1.16. o illustrate the consequences o inactionon key growth promoting policies, the PlanningCommission has undertaken a systematic processo scenario planning based on diverse views anddisciplines to understand the interplay o the prin-cipal orces, internal and external, shaping Indias

progress. his analysis suggests three alternative sce-narios o how Indias economy might develop titled,Strong Inclusive Growth, Insuicient Action andPolicy Logjam.

1.17. he irst scenario Strong Inclusive Growth,describes the conditions that will emerge i a

well-designed strategy is implemented, intervening atthe key leverage points in the system. his in eect is thescenario underpinning the welth Plan growth pro-

jections o 8 per cent, starting rom below 6 per centin the irst year to reach 9 per cent in the last two years.he second scenario Insuicient Action describesthe consequences o hal hearted action in which thedirection o policy is endorsed, but suicient actionis not taken. he growth in this scenario declines toaround 6 per cent to 6.5 per cent. he third scenarioPolicy Logjam, projects the consequences o PolicyInaction persisting too long. he growth rate in thisscenario can drit down to 5 per cent to 5.5 per cent.

1.18. he scenarios are discussed in greater detail

in Chapter 2 and presented in another documentcomplementing the Plan. Public discussion o thesescenarios could help to generate a discourse goingbeyond the parameters o the welth Five Year Planand assist in building a national consensus aboutthe policies that are necessary i Indias uture is tounold as we want. It is important to emphasise thatthe scenarios are not presented an alternative optionorm which we can choose. In act, the only scenariothat will meet the aspiration o the people is scenarioone. he other scenarios are only presented to illus-trate the consequences o inaction.

1.19. Ours is a diverse society and also an argumen-tative one. We are suspicious when decisions thataect us are not taken transparently and we resenttoo much centralisation o decision-making. But weall believe in democracy, we respect the views o oth-ers and, although we may disagree, we admire andlearn rom those who work together to oer anyvision o a better India. We need to do more to builda greater consensus around a common national goal.

1.20. he welth Plan should aim at a growth pro-cess that preserves emphasis on inclusion and sus-

tainability while minimising downside eects ongrowth. Plans are traditionally viewed as being aboutwhat governments should do, but that is a narrowview since most investment today is private, andmuch o that is corporate. he welth Plan mustprovide a competitive environment in which the pri-vate sector, including the corporate sector but also

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Twelfth Plan: An Overview 5

all Indians, both as individuals and in the collective,are enable to reach their ull potential. he objectivemust be to stimulate new entrepreneurship while

enabling existing MSMEs, including in agriculture,to invest more and grow aster. For this, we need tomeet their needs or inrastructure and or easier,cheaper and aster access to capital.

1.21. India is ortunate that it is richly endowed inentrepreneurial talent. At a rough estimate, the num-ber o non-agricultural establishments in the countryincreases by about 8 million every 10 years. Whilemany o these enterprises are very small, and relectbasic survival strategies, many are not. he pastdecade has shown the dynamism that is possible in

this sector under the right circumstances. Many othe leading corporates today belonged to the MSMEcategory at the turn o the century. In this context,the welth Plans overarching priority on develop-ing human capital can, with the proper prioritisationo inrastructure and with innovative use o technol-ogy and inance, unleash a truly inclusive growthstory.

1.22. his inclusive strategy involves a much greaterrole o the States, and closer coordination betweenthe Centre and the States, than would be needed or a

purely corporate-led growth strategy. his is becausemost o the policy measures and institutional sup-port required or small and medium entrepreneur-led growth lie in the domain o State Governmentsand local bodies. he Centres contributions wouldlie mainly in creating the appropriate macroeco-nomic ramework, inancial sector policies andnational level inrastructure.

The Meaning of Inclusiveness1.23. Inclusiveness means many dierent things andeach aspect o inclusiveness poses its own challengesor policy.

Inclusiveness as Poverty Reduction

1.24. Distributional concerns have traditionally beenviewed as ensuring an adequate low o beneits to thepoor and the most marginalised. his must remainan important policy ocus in the welth Plan. It is

worth noting that the record in this dimension oinclusiveness is encouraging. he percentage o thepopulation below the oicial poverty line has been

alling but even as that happens, the numbers belowthe poverty line remain large. According to the latestoicial estimates o poverty based on the endulkarCommittee poverty line, as many as 29.8 per cent othe population, that is, 350 million people were belowthe poverty line in 200910. Questions have beenraised about the appropriatene