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Wednesday, January 2, 2008

India's Eleventh Five-Year Plan approved, thrust on agriculture, infrastructure

India’s Rs 36.44 trillion (US$ 910 billion) Eleventh Five-Year Plan, which promises to accelerate economic growth and make it more inclusive, was approved by the National Development Council (NDC) in New Delhi on December 19. The chief thrust of the plan, that will run from 2007-08 to 2011-12, will be agriculture, education and infrastructure -- all areas that remain a concern in a rapidly growing economy.

‘Towards Faster and More Inclusive Growth’ is the central theme of the plan that seeks to lower poverty by 10%, generate 70 million new jobs, and reduce unemployment to less than 5%.

As many as 27 detailed national targets have been set in the plan, ranging from enhancing incomes and reducing poverty, to education, literacy, health, infant mortality, maternal mortality and child development.

Indian Prime Minister Dr Manmohan Singh, who led the day-long deliberations, also proposed several taskforces and expert groups to deal with areas like irrigation, agriculture, industry and infrastructure.

Chief ministers and lieutenant governors of the states, and key ministers of the central government discussed the finer points before giving their approval to the plan.

"I am happy that the NDC has blessed the Eleventh Five-Year Plan," a visibly pleased Deputy Chairman of the Planning Commission Montek Singh Ahluwalia said after the plan was announced. The Indian Cabinet approved the plan document last month.

In his opening remarks at the deliberations, the Indian prime minister said India could not only sustain its high growth momentum but also push it to 10% with the right policies and dedication. "Our economy has demonstrated resilience in meeting the challenges posed by globalisation. In the last two decades, our industry -- both large and small -- has restructured and become globally competitive," he said.

Pointing out that too many people in the country lacked access to basic services like health and education, the prime minister added: "We need a growth process that will achieve a rapid reduction in poverty, accelerate the pace of both industrialisation and employment-generation, reduce the rural-urban divide, and bring measurable benefits to SC/STs, minorities and other excluded groups."

"Development is a process that should not divide but should unite," the prime minister said, stressing that the Centre and states should work with a new sense of direction and focus. Attributing the rural-urban divide to poor performance in the agriculture sector, he said: "We are faced with a peculiar puzzle whereby on the one side the growth rate is accelerated to more than 9%, but on the other side the share of agriculture in our GDP has dropped to below 20% without any appreciable shift in the proportion of population dependent on agriculture." Singh stressed that it was essential to improve basic facilities and infrastructure in rural areas to mitigate impoverishment and prevent large-scale migration.

The prime minister also asked for several taskforces within the plan panel, which he chairs, in areas like irrigation, agriculture, hill states, and quick clearances for industrial and infrastructure projects.

While the emphasis in agriculture is on ensuring food security and a district-specific agricultural plan, in the case of infrastructure the emphasis is on public-private partnerships.

The Planning Commission estimates that the country will need investments of up to $ 500 billion during the plan period to meet its infrastructure deficit.

The 54th NDC meeting was held against the backdrop of the Indian economy registering a growth of over 7.5% during the current Tenth Five-Year Plan, with the target of scaling it up to over 9% in the next five years.

Earlier, Ahluwalia said the central government may soon change the guidelines of its flagship social welfare programmes, including the National Rural Employment Guarantee Act (NREGA), to better suit the needs of individual states. "I understand states have genuine problems. But they need to come out with specific proposals," Ahluwalia said.

Present guidelines under the NREGA prohibit the construction of permanent assets like hospitals and check-dams. "In spite of funds being available, such restrictions constrain states from spending the money," Sompal, Vice-Chairman, Planning Board, Madhya Pradesh, said. Sompal added that the states have demanded an increase in the 100 days job guarantee to at least 150 days every year to each rural household that needs work.

Commenting on the plan document, Sompal said: "The plan document has failed to resolve the issue of increasing rural unemployment."

"According to the 61st round of the NSSO (National Sample Survey Organisation) survey, rural unemployment rose by 3.69% per annum. During the first three years of the Tenth Plan, the employment elasticity of GDP growth was 0.16%. Thus, the addition to the workforce was 1.2% per annum while the rate of growth of the workforce was around 2.5%. Thus, unemployment added every year is between 1% and 1.5%. This means the fruits of reform have not reached the grassroots level of society," he said.


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