India 11th 5year Plan

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EleventhFiveYe

arPlan

2007-1

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V O L U M E I

INCLUSIVE GROWTH

Eleventh Five Year Plan

2007-12

VOLUME

I

Planning CommissionGovernment of India


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Eleventh Five Year Plan(20072012)

Inclusive Growth

Volume I

Planning Commission

Government of India


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1YMCA Library Building, Jai Singh Road, New Delhi 110 001

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1Foreword

Indias commitment to planned economic developmentis a reflection of our societys determination to improvethe economic conditions of our people and an affirmationof the role of the government in bringing about thisoutcome through a variety of social, economic, andinstitutional means. The Eleventh Five Year Plan, whichwas approved by the National Development Council on19 December 2007 reaffirms this commitment. Itprovides a comprehensive strategy for inclusivedevelopment, building on the growing strength of the

economy, while also addressing weaknesses that havesurfaced.The strength of the economy is evident from the

remarkable transition to a high growth path, which hasbeen achieved in recent years. The Tenth Plan period(200203 to 200607) began modestly, but then saw theeconomy accelerating steadily to achieve an averagegrowth rate of 7.7%, for the Plan period as a whole, whichis the highest ever achieved in any Plan period. In thelast four years the growth rate has averaged 8.9% makingIndia one of the fastest growing economies in the world.

The transition to high growth is an impressiveachievement, but we must not forget that growth is notthe only measure of development. Our ultimate objectiveis to achieve broad based improvement in the livingstandards of all our people. Rapid growth is essential forthis outcome because it provides the basis for expandingincomes and employment and also provides the resourcesneeded to finance programmes for social uplift. However,it is not by itself sufficient. We also need to ensure thatgrowth is widely spread so that its benefits, in terms of

Prime Minister

income and employment, are adequately shared by thepoor and weaker sections of our society, especially theScheduled Castes (SCs) and the Scheduled Tribes (STs),Other Backward Classes (OBCs) and minorities. For thisto happen, the growth must be inclusive in the broadestsense. It must occur not just in our major cities but alsoin our villages and small towns. It must be spread acrossall states and not just limited to some. It must generatesufficient volumes of high quality employment to providethe means for uplift of large numbers of our population

from the low income low quality occupations in whichtoo many of them have been traditionally locked.The Eleventh Plan addresses itself to the challenge of

making growth both faster and more inclusive. The rapidgrowth achieved in the past several years demonstratesthat we have learnt how to bring about growth, but wehave yet to achieve comparable success in inclusiveness.Poverty, whether we look at it narrowly in terms of thepopulation below consumption based poverty line ormore broadly in terms of population without access toessential services, is definitely declining but the pace ofdecline is slower than it should be. Our people have a rightto expect that the evidently increased economic capabilitiesof our economy are translated into accelerating progressin these dimensions also. The Eleventh Plan aims atachieving a radical transformation in this aspect of ourdevelopment. It sets a target for 9% growth in the five

year period 200708 to 201112 with acceleration duringthe period to reach 10% by the end of the Plan. It alsoidentifies 26 other measurable indices of performancerelating to poverty, education, health, women and children,


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infrastructure, and environment and sets monitorabletargets in each of these.

Planning in a market economy which is becomingincreasingly integrated with the world is bound to be

different from what it used to be in earlier years. Muchof what used to be done by governments, includingespecially the establishment of production unitsproducing manufactured goods and commercial services,is now being done by the private sector. India is blessedin having a long tradition of private entrepreneurshipand the private sector has responded magnificently tothe new opportunities opened up by economic reforms.However, this does not mean that the role of thegovernment must shrink. On the contrary, the governmentmust play a much larger role in some areas even whileshifting out of others.

The Eleventh Plan outlines the new priorities for thepublic sector. These relate to reviving dynamism inagriculture and building the necessary supportiveinfrastructure in rural areas, expanding access to healthand education, especially in rural areas, undertakingprogrammes for improving living conditions for theweaker sections and for improving their access to economicopportunity. It also includes a major thrust forinfrastructure development in general, which is a criticalconstraint on our development.

Improved performance in agriculture is necessary if ourgrowth is to be inclusive. The Eleventh Plan adopts a multi-

pronged approach towards this end. It provides for a majorexpansion in the programmes for irrigation and watermanagement. The Rashtriya Krishi Vikas Yojana (RKVY)has been launched to assist the States in development andimplementation of district level agricultural plans, basedon local agro-climatic conditions. As a step towards foodsecurity, which has assumed special relevance in view ofrecent international developments, the National FoodSecurity Mission aims at increasing cereal and pulsesproduction by 20 million tons over a five year period.

There is a massive thrust in the Eleventh Plan onaccess to education and health, which are critical to social

and economic empowerment of the people. In education,the Plan will spend more than double of what was spentin the Tenth Plan, as a proportion of the total budgetarysupport to Central Ministries. We have made goodprogress in providing access to primary education butthere are quality issues that need to be addressed. We mustalso expand access to secondary education in the EleventhPlan. In higher education, the Plan will work towardsincreasing enrolment rates from 11 to 21 percent over a

iv Foreword

ten year period. This will require a massive expansion inour university system. There will also be emphasis oncreating competitive, world class institutions of higherlearning. The National Skill Development Mission will

help in meeting the demands for skills in our growingeconomy as well as in generating high quality employment.Both in higher education and skill development, the privatesector will be encouraged to augment the governmentsefforts appropriately. Given the special focus on educationin the Eleventh Plan, I have no hesitation in calling thisPlan a National Education Plan.

In health, the Plan aims at providing improved broadbased health care in rural areas through the National RuralHealth Mission. The Rashtriya Swasthya Bima Yojana willprovide the much needed insurance cover against illnessto the population below the poverty line. Our initiatives

in implementing a nationwide mid-day meals scheme inschools and improving the implementation of the ICDSwill also improve the health and nutrition status ofour children.

Availability of affordable energy is critical for ourgrowth. With international oil prices rising sharply overthe last couple of years, and coal prices more recently, ourefforts towards energy security have acquired urgency. TheEleventh Plan will work towards policies for variousenergy sectors that are consistent with the optimal useof the different sources of energy. The Plan emphasizesthe need for energy conservation, increasing energy

efficiency, and development of renewable sources of energy.Rational pricing of energy is necessary for a number ofreasons and this requires transmission of permanentchanges in prices to consumers while at the same timeprotecting the vulnerable sections of the society throughappropriate interventions. These are challenges that wewill have to overcome for achieving the targets andobjectives of the Plan.

The very first year of the Eleventh Plan has seen aresurgence of inflation in the last quarter mainly due tothe steep rise in international prices of oil and food-grains. Though these supply side factors are largely

beyond our control, we have launched a determined effortto moderate the inflationary trend while simultaneouslyinsulating the poor to the extent possible throughtargeted food and energy subsidies. These efforts willcontinue and I am confident that we can bring inflationunder control in a manner which does not hurt the longerterm growth prospects of the economy. This poses amajor challenge for short term macroeconomic policiesin the coming months.


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An important aspect of the Eleventh Plan is that mostof the public sector programmes are in areas that arenormally in the domain of State Governments and whereimplementation depends upon the active involvement

of local level bodies including the Panchayati RajInstitutions. More than any other Plan, the Eleventh Planplaces a much greater reliance upon the involvement ofthe Panchayati Raj Institutions.

The higher rate of growth that we have set out forourselves, coupled with our thrust on the growth processbeing inclusive, should ensure that the struggle for the

removal of chronic poverty, ignorance, and disease willregister major gains in the Eleventh Plan. I am confidentthat the Eleventh Plan will achieve its targets and objectivesdespite the challenges we face. This would be a major step

in realizing our vision of a prosperous, inclusive, happy,and caring India where all citizens reap the benefits ofeconomic development and feel empowered.

I congratulate the Deputy Chairman, PlanningCommission and his team for putting together an excellentPlan. I also thank all those from whose advice we havebenefitted in the formulation of the Plan.

New Delhi25 June 2008 (Manmohan Singh)

Foreword v


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Dr. Manmohan Singh ChairmanPrime Minister

Shri Montek Singh Ahluwalia Deputy Chairman

Shri Pranab Mukherjee Member

Minister of External Affairs

Shri Arjun Singh Member

Minister of Human Resource Development

Shri P. Chidambaram MemberMinister of Finance

Shri Sharad Pawar MemberMinister of Agriculture, Consumer Affairs,Food & Public Distribution

Shri Lalu Prasad MemberMinister of Railways

Shri V. Narayanasamy Member

Minister of State (Planning)

Dr. Kirit S. Parikh Member

Prof. Abhijit Sen Member

Dr. V.L. Chopra Member

Dr. Bhalchandra Mungekar Member

Dr. (Ms.) Syeda Hameed Member

Shri B.N. Yugandhar Member

Shri Anwarul Hoda Member

Shri B.K. Chaturvedi Member

1Planning Commission

(As on 25thJune 2008)


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1Preface

The Eleventh Plan began in very favourable circumstanceswith the economy having grown at the rate of 7.7% per

year in the Tenth Plan period. However, far too many ofour people still lack the basic requirements for a decentliving in terms of nutrition standards, access to educationand basic health, and also to other public services suchas water supply and sewerage. Disadvantaged groups,especially the Scheduled Castes and Scheduled Tribes andthe minorities have benefited less than they should have.Regional imbalances have emerged across and evenwithin states.

The Eleventh Plan seeks to remedy these deficiencies

by seeking to accelerate the pace of growth while alsomaking it more inclusive. The growth objective is to achievean average growth rate of 9% per annum for the Planperiod. The objective of inclusiveness is reflected in theadoption of 26 other monitorable targets at the nationallevel relating to (i) income and poverty, (ii) education,(iii) health, (iv) women and children, (v) infrastructure, and(vi) environment. Some of these national targets have alsobeen disaggregated into 13 state level targets and it isexpected that the state governments design policies andprogrammes to achieve them.

THE MACROECONOMIC PERSPECTIVEThe macroeconomic requirements for 9% growth arechallenging but not impossible. The average investmentrate must rise from 32% in the Tenth Plan to around37% in the Eleventh Plan period, reaching 39% at theend of the period. This increase is entirely feasible. Privateinvestment, which has been buoyant in the Tenth Plan, isexpected to provide the bulk of the increased investmentaccounting for 78% of the total, about the same as in the

Tenth Plan. The share of public investment in totalinvestment has been declining over successive Plan periodsfrom 34.7% in the Eighth Plan to 29% in the Ninth Planand 22% in the Tenth Plan. In the Eleventh Plan its shareis expected to stabilize at the level in the Tenth Planimplying that the volume of public investment mustincrease in line with private investment. This is necessaryif we are to achieve the expansion in social sector investmentand in infrastructure which is necessary for ensuringfaster and more inclusive growth.

These rates of investment will be supported by abuoyant domestic savings rate of 34.8% and a relatively

manageable current account deficit of around 2% of GDP.The household sector is the main contributor to thedomestic savings, but the public sector is also expectedto contribute positively to savings reflecting a significantturnaround compared with past experience. The projectedcurrent account deficit could easily be higher because ofthe likely continuance of high oil prices but even so, itshould remain sustainable given the likely availability offoreign inflows.

The strategy for achieving faster growth with greaterinclusiveness involves several interrelated components.These are: (i) a continuation of the policies of economic

reform which have created a buoyant and competitiveprivate sector capable of benefiting from the opportunitiesprovided by greater integration with the world, (ii) a revivalin agricultural growth which is the most important singlefactor affecting rural prosperity, (iii) improved access toessential services in health and education (including skilldevelopment) especially for the poor, which is essentialto ensure inclusiveness and also to support rapid growth,(iv) a special thrust on infrastructure development which


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is a critical area for accelerating growth, (v) environmentalsustainability which is becoming increasingly important,(vi) special attention to the needs of disadvantagedgroups, and (vii) good governance at all levels, Central,

state, and local.As in most market economies, the dominant impulse

for growth will come from the private sector. India isfortunate in having a strong private sector capabilityranging from agriculture, which is entirely dependent onprivate farmers, most of whom have modest land holdings,through small and medium entrepreneurs in industry andservices to larger domestic corporate entities, many ofwhich benefit from FDI to varying degrees. The EleventhPlan must ensure a policy environment that is supportiveof this vibrant and globalized private sector which hasan important contribution to make in Indias future

development.Emphasizing the importance of the private sector is

not to downplay the role of the government. On thecontrary, apart from the usual role of government inproviding a stable macroeconomic policy, the EleventhPlan envisages a very large role for public policy in anumber of sectors.

AGRICULTUREANDRURALDEVELOPMENTOne of the most disappointing features of the Ninth Planwas the deceleration in agricultural growth which set inafter the mid 1990s with GDP in agriculture growing at

only around 2% per annum after growing at 3.6% perannum between 1980 and 1996. Reversing thisdeceleration to achieve a growth target of 4% per annumin agricultural GDP is a key element of the Eleventh Planstrategy for inclusive growth.

In the medium term, the focus has to be on improvingyields with existing technology and there is considerablescope for doing so because yields obtained in the field inlarge parts of the country are much lower than what isachievable with existing technology, provided cultivationpractices are improved and critical inputs made available.Timely availability of water is the most critical element

in raising yields and the Plan therefore emphasizesexpansion of irrigation where possible and alsoimprovement of existing irrigation systems. Whereirrigation is not possibleand this covers 60% of the landareathe solution lies in improving management ofwater resources through watershed development, coveringrain water harvesting in farm ponds and tanks, andmethods of ground water recharge. A major expansionin the Accelerated Irrigation Benefit Programme and a

renewed thrust at watershed development has beenplanned. The National Rainfed Area Authority, which wasestablished in 2006 and is now fully operational, is expectedto help converge different programmes in rainfed areas

to achieve better water management in rainfed areas.On the output side, it is necessary to emphasize

measures to ensure food security while also diversifyinginto non-foodgrain crops and promoting animalhusbandry and fishery. The new National Food SecurityMission, aims at increasing cereal and pulses productionby 20 million tonnes by concentrating on those areaswhich have the greatest potential for increase in yieldswith given technology. The National HorticultureMission which provides support for diversification hasbeen expanded. A new Rashtriya Krishi Vikas Yojana(RKVY), has been introduced which provides additional

financial resource to state governments to financeagriculture development programmes emerging fromdistrict level agricultural plans which take into accountdistrict specific agro-climatic constraints.

The strategy can be aided by the National RuralEmployment Guarantee (NREG) Act which has put inplace a historic rights-based employment guarantee whichprovides income support to the weaker sections of ruralsociety. It can also serve the larger objective of enhancingagricultural productivity because the first priorityunder NREG is being given to projects aimed at waterconservation. Effective convergence of resources available

under NREG, with a large strategy for water management,will be crucial.

EDUCATIONANDSKILLDEVELOPMENTAn educated labour force is critical for achieving fastergrowth and education is also the key to ensuring greaterinclusivity. The Eleventh Plan will build on ongoing effortsto strengthen elementary education. The infrastructurefor primary schools has been almost completed underthe Sarva Siksha Abhiyan and it is now necessary to focusour efforts on issues of quality and the expansion ofinfrastructure for secondary education. This involves

upgradation of upper primary schools to secondaryschools, expansion of intake capacity in existing secondaryschools, and establishment of high quality model schoolsto serve as examples of excellence in secondary schooling.The quality of education in public schools suffers froma variety of problems including widespread teacherabsenteeism, inadequate teacher training, outdatedpedagogy, and insufficient accountability. These problemsneed to be addressed urgently by state governments and

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by the PRIs if we are to provide equality of opportunityfor our weaker sections especially in the rural areas.

Higher education will be a key driver in an increasinglyglobalized and knowledge-driven world and we need to

increase the enrolment rate in higher education fromaround 11% at present to 21% over a ten annum period.This will require a massive expansion in the university systemwhich must be combined with efforts to create competitiveworld class institutions of higher education. Given thescarcity of resources, private sector initiatives in highereducation and various forms of publicprivate partnerships(PPPs) must be encouraged.

Apart from formal education, there is need to expandthe skill capabilities in the labour force as a preconditionfor embarking on a labour intensive growth process. Atpresent, only 20% of those entering the workforce get

some kind of formal training. This proportion must begreatly increased. The Plan proposes a National SkillDevelopment Mission to expand and restructure thepublic sector skill development efforts and also to supportprivate skill development initiatives in several highgrowth sectors of the economy.

HEALTHANDNUTRITIONWe have made progress in several areas related to healthas evidenced by the success in eliminating or controllingdiseases such as small pox, leprosy, polio, and TB, all ofwhich is reflected in the steadily rising life expectancy

of the population. However, there are other indicatorswhich highlight serious problems in certain critical areas.High levels of malnutrition continue to affect a largepart of our child population, limiting their learningcapacity and influencing morbidity and mortality ratiosin the country. Our maternal mortality rates and infantmortality rates are far too high. The incidence of anaemiaamong women and children is at unacceptable levels. Fartoo large a proportion of the population, especially inrural areas, lacks access to affordable health care.

These problems need to be addressed by multipleinterventions, many of which range beyond curative health

care. These include dietary improvement, nutritionsupplementation for children, better child care practices,access to safe drinking water, improved sanitation, andimmunization. However, these efforts must be accompaniedby a much better system of affordable curative health carewhich is lacking at present. The National Rural HealthMission is an important step in providing broad basedimprovement in health care for the rural population. TheRashtriya Swasthya Bima Yojana is a new and important

innovation providing the population below the povertyline with an insurance policy covering hospital treatmentfor a defined set of conditions with the governmentmeeting the premium wit. The policy allows the patient

to choose from multiple service suppliers includingprivate hospitals who join the system.

INFRASTRUCTUREDEVELOPMENTPoor quality of infrastructure seriously limits Indias growthpotential in the medium term and the Eleventh Planoutlines a comprehensive strategy for development of bothrural and urban infrastructure, defined to include electricpower, roads, railways, ports, airports, telecommunications,irrigation, drinking water, sanitation, storage, andwarehousing. The total investment in these areas wasaround 5% of GDP in 200607 and the Plan aims at

increasing this to about 9% of GDP by the terminalannum 201112.

Since various social sector and livelihood supportprogrammes for the poor will have the first charge on publicresources, the strategy for infrastructure development hasbeen designed to rely as much as possible on private sectorinvestment through various forms of PPPs. The Planrecognizes that the scope for private participation ininfrastructure development in several areas is limited andthe infrastructure requirement of these areas therefore, hasto be met through public investment. However, it istherefore all the more necessary that the fullest possible

use must be made of opportunities to attract private sectorinvestment wherever this is feasible. Both the Centre andthe states have seen varying degrees of success in attractingprivate investment in areas such as power generation,telecommunications, roads, railways, airports, and ports,though much more needs to be done.

The Central Government has sought to evolve policiesfor private sector participation which are transparent andwhere the responsibilities of the private concessionaireare clearly defined. Where the nature of the investmentinvolves an element of monopoly rather than free entryby competing suppliers, the choice of concessionaire must

be determined by an open competitive bidding processand standards of service should be clearly set andmonitored by an independent regulatory authority. Thekey to successful PPP is that the public must perceive thatPPP has added value in terms of the scale of services andalso quality and cost.

Special attention is being paid to the Bharat Nirmanprogramme which focuses on the provision of keyelements of rural infrastructure such as irrigation, rural

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electrification, rural roads, rural drinking water supplyand sanitation, housing for the poor, and rural connectivityvia community IT service centres.

Urban InfrastructureThe rate of urbanization in India has been relatively slowso far, but faster growth is likely to change this in futureleading to a faster pace of urbanization in the years ahead.Urbanization is a natural outcome of the process ofdevelopment and we must gear up to the challenge tomeet the need for providing infrastructure and utilitiesin the cities. It will be necessary to upgrade the quality ofinfrastructure in existing cities to provide improvedmunicipal services and also to develop new cities andsuburban townships in the vicinity of existing citiesas satellites/counter magnets to redistribute the influx

of population.Urban infrastructure is expensive to construct and, the

financial condition of most of our cities is such that theywill not be able to finance the scale of investment for quitesome time. Accordingly, the Jawaharlal Nehru NationalUrban Renewal Mission (JNNURM) seeks to provideCentral assistance for urban infrastructure developmentlinked to a process of reforms at the city and urban localbody level which would make these bodies more financiallyviable, and ultimately capable of financing the investmentwe need in urban areas. The JNNURM has got off to agood start, but close monitoring will be necessary in

the Eleventh Plan to ensure successful implementationof individual projects and also the larger reforms agenda.

ENERGYAs in other developing countries, our ability to sustainrapid growth will depend critically upon the availabilityor affordability of energy. The Eleventh Plan faces specialchallenges in this area since the start of the Plan coincideswith a period of sharp increase in the world prices ofpetroleum products and a growing concern about theneed to increase energy efficiency, both to economize oncosts and also to reduce carbon emissions, as much as

possible. These challenges must be met in a manner whichdoes not come in the way of our objective of achievingfaster and more inclusive growth. It will be essential toensure efficient functioning of the major energy sectorsto maximize domestic production of energy and also toimport additional energy as needed. Energy pricing hasa critical role to play in this context.

It will be necessary to evolve appropriate policies forthe major energy producing sectorselectricity, coal, oiland gas, and various forms of renewable energywhich

are consistent with optimal use of all these energy sources.The Eleventh Plan outlines a broad approach based onthe Integrated Energy Policy formulated earlier by thePlanning Commission. The sharp increase in international

oil prices and also in coal prices poses a major challenge.While large price increases cannot be suddenly transmittedto the economy in one go, artificially suppressing energyprices cannot be a viable solution for an energy deficiteconomy. It comes in the way of expanding domesticsupply, promoting energy conservation and demandmanagement, and also encouraging growth of alternativeenergy sources. A gradual transmission of permanentchanges in these prices is both possible and necessaryand can be combined with protecting the most vulnerablesections of the community from sharp price changes.

The compulsions of moving to a rational energy

policy are underlined by the emerging threat of climatechange which presents special challenges over the longerterm. The burden for reducing energy emissions mustfall largely on the industrialized countries, which havecontributed the most in creating the problem in the pastand which today have much higher levels of per capitaemissions than India. However, we also need to play ourpart in containing the growth of our per capita emissionsto sustainable levels.

THE ROLE OF GOVERNMENTAs pointed out earlier, the strategy for delivering faster

and more inclusive growth will require an expansion inthe role of government in several areas. The Eleventh Planenvisages an expansion in the size of the Plan (Centreplus states) from 9.46% of GDP in the Tenth Plan to13.54% of GDP in the Eleventh Plan. Part of this increasewill come from expanded budgetary support from the Planand the rest from the internal and extra budgetary reservesof the public sector at the Central Government and thestate government levels.

The increase in budget resources depends criticallyupon the ability of both the Centre and the states tomaintain the high growth in tax revenues observed in

recent years. This will depend to some extent upon thepace of growth since rapid growth will produce buoyantrevenues, but it will also depend significantly upon thecontinuation and deepening of tax reforms. The strategyof simplifying the tax structure and streamlining taxadministration has generated better compliance inboth the Centre and the states which is reflected in therising share of taxes in GDP. This trend must be madeto continue. Another important element in mobilizingresources for public investment is the ability to contain

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subsidies and use the resources thus saved to undertakemuch needed public investment. A comprehensive revisionof subsidies in the system, including hidden subsidies ofone type or another, with a view to rationalizing them to

retain only those aimed at the truly vulnerable, is needed.The present subsidies on petroleum products areparticularly relevant in this context.

A second aspect of the changed role of governmentin the Eleventh Plan is that the public sector willincreasingly concentrate in areas that lie in the domainof the state governments, and within the states in thedomain of panchayati raj institutions. This is especiallytrue of elementary education, health, rural drinkingwater, rural sanitation, child nutrition, housing for thepoor, the national employment guarantee, and schemesfor watershed management. Programmes in these areas

are implemented at the local level and often dependcritically upon local level authorities and the system ofgovernance and accountability should therefore be atthe local level. The 93rd and 94th Amendments to theconstitution were landmark steps in empowering thePanchayats and urban local bodies and to give full effectto these amendments it is necessary to transfer functions,functionaries, and funds to the PRIs. While the functionsto be transferred have been clearly identified, the actualprogress made in transferring the functionaries and fundsremain limited. It is also necessary to build capacity atthe local level. NGOs can play an important role in

building capacity or in encouraging empowerment orparticipation or ways should be found of engaging theNGO community more actively in local level programmes.

THE EXTERNAL ENVIRONMENTWork on the Eleventh Plan began in 2006 and the Planwas finally approved by the NDC in December 2007.During this period, there were significant developmentsin the world economy, the implications of which are noteasy to quantify at this point. Oil prices increased verysharply in 2006 and this continued through 2007.Although there was uncertainty initially about whether

they would return to more normal levels, the assessmenttoday is that high oil prices are likely to continue, and

indeed further increases cannot be ruled out. There hasalso been a massive increase in world prices of foodgrainsand edible oils reflecting a variety of factors, some shortterm such as drought and low production in some of the

major producing countries, and others long term suchas the shift of land from foodgrains production to theproduction of biofuel crops, reflecting policies ofindustrialized countries on incentivizing such a shift.There has also been a sharp rise in prices of metals andmineral ores in world markets.

As price pressures have built up in world markets, theworld economy also gives signs of entering a cyclicaldownturn led by a sharp slowdown in the United States.The extent and duration of this cyclical downturn remainsuncertain, but it will clearly have some effect on theunderlying growth potential of emerging market economies.

The Indian economy is less dependent on global demandthan many East Asian countries and therefore the impactof a global slowdown on India will be less than for others,but we are also much more integrated than in the pastand we should therefore expect that just as we benefitfrom global prosperity in the upswing we will be affectedby the downswing, although less than others.

These developments present formidable challenges aswe implement the Eleventh Plan. The Plan is formulatedon the assumption that it should be possible for theeconomy to meet these challenges while still achievingthe medium term growth objective of 9% inclusive

growth. The objective may have become more difficult,but it is still manageable, provided suitable policies, someof which are not easy to implement, are put in place.

The Tenth Plan marked a historic breakthrough on theaggregate GDP growth front. The challenge before theEleventh Plan is to improve upon this growth performanceand also ensure greater sustainability and inclusivenessso that the development process being unleashed has thewidest possible spread of benefits. In the search forinclusion, the Plan pays special attention to the needs ofthe weaker sections including the Scheduled Castes,Scheduled Tribes, OBCs, and minorities. The objectives

of the Plan cannot have meaning if they are not translatedinto a visible flow of benefits to these groups.

New Delhi (Montek Singh Ahluwalia)25 June 2008 Deputy Chairman

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1Contents

1. INCLUSIVE GROWTH: VISION AND STRATEGY 1

2. MACROECONOMIC FRAMEWORK 25

3. FINANCING THE PLAN: FINANCIAL RESOURCES: CENTRE AND STATES 34

4. EMPLOYMENT PERSPECTIVE AND LABOUR POLICY 63

5. SKILL DEVELOPMENT AND TRAINING 87

6. SOCIAL JUSTICE: SCHEDULED CASTES, SCHEDULED TRIBES, OTHER BACKWARDCLASSES, MINORITIES AND OTHER VULNERABLE GROUPS 101

7. SPATIAL DEVELOPMENT AND REGIONAL IMBALANCES 137

7.1 Regional Imbalances 137

7.2 North Eastern Region 151

8. INNOVATION AND TECHNOLOGY 165

9. ENVIRONMENT AND CLIMATE CHANGE 191

9.1 Environment 1919.2 Climate Change 2039.3 Disaster Management 207

10. GOVERNANCE 223

11. CONSUMER PROTECTION AND COMPETITION POLICY 246

12. DEVELOPMENT OF INFRASTRUCTURE 254

13. EXTERNAL ENVIRONMENT: OPPORTUNITIES, CHALLENGES, AND RISKS 265


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1Tables

1.1 Investment in Infrastructure 11

2.1 Growth Performance in the Five Year Plans 252.2 Macroeconomic Parameters 262.3 Sectoral Growth in Recent Plans 262.4 Investment and Savings Rates 272.5 Total and Public Investment in the Ninth and Tenth Plans 282.6 Composition of Saving 302.7 Balance of Payments 313.1 Projected vis--vis Realized Financing Pattern of the Plan Outlay of the Centre (including UTs) 353.2 Non-Plan Revenue Expenditure (NPRE) and its Components 363.3 Gross Fiscal Deficit 363.4 Core Tenth Plan Resources of States and UTs 373.5 Projection of the Eleventh Plan Resources of the Centre 40

3.6 Tenth Plan Realization and Eleventh Plan Projection of Resources of the Centre 403.7 Eleventh Plan Resources of States and UTs 413.8 Core Tenth Plan Realization and Eleventh Plan Projection of Resources of States and UTs 413.9 Comparison of Tenth Plan Realization with Eleventh Plan Projection of Resources 423.10 Plan Resources as Per Cent of GDP 433.11 Public Sector Allocation for Eleventh Plan 443.12 GBS Allocation in Tenth and Eleventh Plans 443.13 Sectoral AllocationTenth Plan and Eleventh Plan 453.14 Projected Central Assistance to States/UTs for Eleventh Plan 464.1 Past and Present Scenario on Employment and Unemployment 654.2 Sector-wise Share of Employment by Current Daily Status 664.3 Annual Increase in Workforce by Category of Employment 66

4.4 Sector-wise Performance and Targets of Employment 674.5 Growth in Organized Employment 674.6 Non-Agricultural Workers by Size and by Ownership of Establishment 68

(Usual Principal Status Basis)4.7 Distribution of Workers by Type of Employment and Sector 694.8 Unemployment Rate among Youth (Age Group 1529 Years) 704.9 Unemployment Rates for Persons of Age 15 Years and above by Level of Education 70

on Current Weekly Status (CWS) Basis


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4.10 Incidence of Unemployment among Rural Agricultural Households 714.11 Unemployment Rate according to Usual Status (ps+ss) for Scheduled Castes 71

during 1983 to 2004054.12 Unemployment Rate according to Usual Status (ps+ss) for Scheduled Tribes 71

during 1983 to 2004054.13 Estimated Number of Children (514 Years) in the Labour Force, Workforce, 72

and UnemployedAll India (CDS Basis)4.14 Past and Present Macro Scenario on Employment and UnemploymentMale and Female 734.15(A) Population, Labour Force, Employment Projections 754.15(B) Projected Population, Labour Force, and Employment in Different Periods 754.16 Projected Increase in Number of Workers by Sector, 200712 and 200717 766.1 Comparative Incident of Crime against Scheduled Castes 1036.2 Literacy Rate of General Population and SC Population, 19612001 1056.3 Dropout Rates, 200405SC (Provisional) 1056.4 Percentage of Working and Non-working Population (Total and SCs), 2001 1066.5 Population Living Below Poverty LineSC (199394 and 200405) 107

6.6 SC Representation in Central Government Services in 1994, 1999, and 2004 (as on 1.1.2004) 1076.7 Literacy Rate of General Population and ST Population during 19612001 1136.8 Dropout Rates, 200405ST (Provisional) 1136.9 Percentage of Working and Non-working Population (Total and STs) 1136.10 Population Living Below Poverty LineST (199394 and 200405) 1146.11 Percentage of ST Representation in Central Government Services in 1994, 1999, 114

and 2004 (as on 1.1.2004)6.12 Salient Features of Schemes for Other Backward Classes (OBCs) 1196.13 Percentage of OBC Representation in Central Government Services (as on 1.1.2004) 1206.14 Literacy Rate among all Religious Communities in 2001 1246.15 Children Currently StudyingProportion of Population by Age Group, 200405 1246.16 Work Participation Rate by Male and Female Population in Minority Communities 126

6.17 Distribution of Category of Workers 1266.18 Percentage of Elderly Persons to Total Population 1347.1.1 Growth Rates in State Domestic Product in Different States 1387.1.2 State-wise Growth Target for the Eleventh Five Year Plan 1397.1.3 Disparity in per capita GSDP 1407.1.4 Criteria and Weights 1417.1.5 Criteria and Weights under Gadgil Mukherjee Formula 1417.1.6 Inter-se Shares 1427.1.7 Allocation of Funds to States/UTs during 200708 under various Centrally Funded Schemes 1447.1.8 Disparities in State HDI 1507.2.1 Central Assistance as Percentage of GSDP during the Tenth Plan 1527.2.2 Sector-wise Investment by NEC from 1973 to 200607 153

7.2.3 Indicators of Banking Development in the North East 1559.1.1 Changes in Environment Clearance Notification, 2006 1929.1.2 Notified Standards for Water Quality 1969.1.3 Water Quality Data for River Ganga (Summer Average, MarchJune) 1989.1.4 Water Quality Data for River Yamuna (Summer Average, MarchJune) 1989.3.1 National Disaster Mitigation ProgrammeYear-wise Allocation of Funds in the 208

Tenth Five Year Plan10.1 List of Mission Mode Projects 234

Tables xv


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12.1 GCF in Infrastructure Based on Growth Targets (Top-down Estimates) 25512.2 Projected Investment as Percentage of GDP (Bottom-up Estimates) 25712.3 Sector-wise Investment Anticipated in the Tenth Plan and Projected for the Eleventh Plan 25712.4 Projected Investment in Infrastructure during Eleventh Five Year Plan 25812.5 Projected Investment in Rural Infrastructure 25912.6 Source-wise Projected Investment 26012.7 Likely Sources of Debt 26013.1 Composition of Exports during the Tenth Plan 26613.2 Direction of Indias Exports 26713.3 Broad Composition of Imports 26813.4 Direction of Indias Imports 26813.5 Indias Trade Balance 26913.6 Balance of Trade and Petroleum Products 26913.7 Simple Average Applied Rate (Total) 27013.8 Indias Exports and Imports of Disaggregated Services, 19902003 27213.9 Revealed Comparative Advantage (RCA) of India in Services 27213.10 Composition of Indias Services Exports 27313.11 Foreign Investment Flows during Tenth Plan Period 278

xvi Tables


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1Figures

5.1 Demographic Profiles of Select Countries 905.2 Aggregate Suitable Graduate Talent Pool for Offshore IT and BPO Industries 919.1.1 Urban Air Quality in Select Asian Cities, 200004 19510.1 Delivery System for Implementation of NREGP 235


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1Boxes

3.1 FRBMA, 2003 and Fiscal Consolidation 373.2 Thrust Areas of the Eleventh Plan 464.1 The Three Kinds of Estimates of the Unemployed 644.2 A Thirteen Point Action Plan Suggested by the NCEUS for Employment in the

Unorganized Sector 816.1 Major Scholarship Schemes under the Ministry of Social Justice and Empowerment 1026.2 Main Guidelines for SCSP and TSP 1046.3 SCSP and TSPThe Way Ahead 1106.4 Important Constitutional Provisions for Minorities 1226.5 Condition of Muslims as Reflected by the Sachar Committee Report 1236.6 Prime Ministers New 15-Point Programme for the Welfare of Minorities 1257.2.1 Critical Parameters for Growth of the North Eastern Region 159

8.1 Major Achievements of DAE (R&D Sector) during the Tenth Five Year Plan Period 1738.2 Major Achievements of DoS during the Tenth Five Year Plan Period 1758.3 Major Achievements of DBT during the Tenth Five Year Plan Period 1778.4 Major Achievements of DST during the Tenth Five Year Plan Period 1808.5 Major Achievements of DSIR/CSIR during the Tenth Five Year Plan Period 1828.6 Major Achievements of MoES during the Tenth Five Year Plan Period 1869.1.1 Strategy to Control Vehicular Emissions 19610.1 Legislative and Institutional Framework 24212.1 InfrastructureDeficit and Eleventh Plan Physical Targets 255


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1Annexures

3.1 Sectoral Allocation for Public Sectors ResourcesTenth Plan (200207) Realizations and 52Eleventh Plan (200712) Projections

3.2 Budget Support, IEBR, and Outlay for Central Ministry/DepartmentTenth Plan 53(200207) Realizations and Eleventh Plan (200712) Projections

3.3 Proposed Sectoral Allocations for States and Union Territories in the Eleventh Plan 564.1 Population, Labour Force, Employment, and Unemployment (199394 to 201617) 824.2 Annual Growth Rate of GDP per Worker 834.3(A) Percentage Distribution of Employed Persons by Category of Employment 83

(CDS)Rural India4.3(B) Percentage Distribution of Employed Persons by Category of Employment 83

(CDS)Urban India4.3(C) Percentage Distribution of Employed Persons by Category of Employment 84

(CDS)All India4.4 Conditions of Employment of Regular Wage/Salaried Workers200405 844.5 Distribution of Regular Wage/Salaried Workers by Type of Enterprise 844.6 Growth of Average Daily Wage Earnings in Rural India (at 199394 price) 854.7 The Working Poor in India by Gender, Location, and Category of Employment, 85

19992000 and 2004054.8 Net Migrants Rate (19912001) 865.1.1 Current Attendance Rates in Educational Institutions per 1000 Persons of Different 98

Age Groups during 2004055.1.2 Labour Force Participation Rates by Age, Area, and Sex during 200405 (CDS) 985.1.3 Per 1000 Distribution of Persons in the Age Group 1529 Years by Status of Vocational 99

Training Received or being Received200405

5.1.4 Number per 1000 Persons of Different Age Groups who Received Formal Vocational 99Training2004055.2 Potential Labour Surplus/Shortage in Working Age Group across the World (2020) 1005.3 List of Twenty High Growth Sectors 1007.2.1 Socio-economic Indicator of North East and India 1617.2.2 (a) Central Assistance for State Plans during the Tenth Plan (200207) 1637.2.2 (b) Central Assistance to NE States, including NLCPR and NEC and per capita Assistance 163

(eight States taken together)7.2.3 Year-wise Expenditure by Central Ministries in NER 164


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7.2.4 Investment in NER during the Tenth Five Year Plan 1648.1 Progress of Plan Expenditure of Central Scientific Departments 1888.2 Major Deliverables of Scientific Departments during the Eleventh Five Year Plan 1899.1 Financial Performance in the Tenth Plan 215

9.2 Physical Performance of Important Plan Schemes of the Tenth Plan 2189.3 Projects/Schemes Identified by the Working Group/NDMA for being taken up by 219

NDMA/MHA for Implementation during the Eleventh Plan9.4 Tenth Plan Outlay and Actual Expenditure in Environment and Forest Sectors 220

(States and UTs)9.5 State-wise and Scheme-wise Releases of Central Funds to ongoing CSS under 221

MoEF during the Tenth Plan12.1 Anticipated Plan Investment in Infrastructure in the Tenth Plan 263

xx Annexures


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1Acronyms

ACA Additional Central AssistanceADIP Assistance to Disabled Persons for

Purchase/Fitting of Aids/AppliancesAHWR Advanced Heavy Water ReactorAIBP Accelerated Irrigation Benefit ProgrammeAICTE All India Council for Technical EducationAICOPTAX All India Coordinated Project on

TaxonomyAPDRP Accelerated Power Development and

Reform ProgrammeAPSARA Assessment of Passive System ReliabilityAPTA Asia-Pacific Trade Agreement

AR4 Fourth Assessment ReportARC Administrative Reforms CommissionASHA Accredited Social Health ActivistATI Advanced Training Institute

BADP Border Areas Development ProgrammeBCR Balance from Current RevenuesBOD Biochemical Oxygen DemandBPL Below Poverty LineBPO Business Process OutsourcingBRGF Backward Regions Grants FundBSI Botanical Survey of India

BTX Benzene, Toluence, and Xylene

CAAPs Clean Air Action PlansCAD Computer Aided DesignCADP Command Area Development ProgrammeCAM Computer Aided ManufacturingCAPART Council for Advancement of Peoples

Action and Rural TechnologyCBO Community-based Organization

CBWTF Common Bio-medical Waste TreatmentFacilities

CCPD Chief Commissioner for Persons withDisabilities

CDB Core DatabaseCCI Competition Commission of IndiaCDC Consultancy Development CentreCDM Clean Development MechanismCDS Current Daily Status BasisCETP Common Effluent Treatment PlantCFC Certified Filing CentreCHC Community Health Centre

CIN Corporate Identity NumberCO2COS Committee of SecretariesCPCB Central Pollution Control BoardCPSE Central Public Sector EnterpriseCPSU Central Public Sector UnitsCSC Common Service CentreCSIR Council of Scientific and Industrial

ResearchCSO Civil Society OrganizationCSS Centrally Sponsored SchemesCSTC Central Standing Tripartite Committee

CWS Current Weekly Status

DAE Department of Atomic Energy DBT Department of Biotechnology DDP District Domestic ProductDEM Digital Elevation MapDGCA Director General Civil AviationDIN Director Identification NumberDIT Department of Information Technology


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xxii Acronyms

DLCP Dal Lake Conservation ProjectDMS Data Management SystemDO Dissolved OxygenDoNER (Ministry of) Development of North

Eastern RegionDoS Department of SpaceDPC District Planning CommitteesDRM Disaster Risk MitigationDSIR Department of Scientific and Industrial

ResearchDST Department of Science and Technology EAP Externally Aided Projects

EBR Extra-Budgetary ResourcesECB External Commercial BorrowingEDI Entrepreneurship Development Institutes

EIA Environmental Impact AssessmentENVIS Environment Information System

FAIR Facility for Antiproton and Ion ResearchFDI Foreign Direct InvestmentFII Foreign Institutional InvestmentFIPB Foreign Investment Promotion BoardFOB Free on BoardFRBM Fiscal Responsibility and Budget

ManagementFTA Free Trade Agreement

GAP Ganga Action PlanGBPIHED GB Pant Inst itute of Himalayan

Environment and DevelopmentGBS Gross Budgetary SupportGCI Global Competitive Index GDP Gross Domestic ProductGDPmp Gross Domestic Product at market pricesGEF Global Environment Facility GER Gross Enrolment RatioGHG Green House GasGIS Geographical Information SystemGMO Genetically Modified Organism

GMP Good Manufacturing PracticesGoI Government of IndiaGSLV Geosynchronous Launch VehicleGST Goods and Service Tax GSTP Global System of Trade Preferences

HACCP Hazard Analysis and Critical Control PointsHADP Hill Area Development ProgrammeHBNC Home Based Newborn Care

HDI Human Development Index HDR Human Development ReportsHLC High Level CommitteeHPI Human Poverty Index

HRD Human Resources Development

IAY Indira Awaas YojanaICAR Indian Council of Agricultural ResearchICDS Integrated Child Development SchemeICFRE Indian Council of Forestry Research and

EducationICOR Incremental Capital Output RatioIEBR Internal and Extra Budgetary ResourcesIIFCL India Infrastructure Finance Company Ltd.IITM Indian Institute of Tropical Meteorology IMD India Meteorological Department

INO Indian Neutrino Observatory INSPIRE Inn ov at ion i n Sci en ce Purs ui t f or

Inspired ResearchIPCC Intergovernmental Panel on Climate

ChangeIT Information Technology ITES IT enabled services

JFM Joint Forest ManagementJNNURM Jawahar la l Nehru National Urban

Renewal MissionJRF Junior Research Fellow

LGBRIMH LGB Regional Institute of Mental Health,Tezpur

MCA Model Concession AgreementsMFP Minor Forest Producemg MilligramMLD Million Litres per Day MMA Ministry of Minority AffairsMMPs Mission Mode ProjectsMNRE Ministry of New and Renewable Energy MoEF Ministry of Environment and Forests

MoES Ministry of Earth SciencesMSEs Micro and Small EnterprisesMSMEs Micro, Small and Medium EnterprisesMSP Minimum Support PriceMWe Megawatt electrical

NBCFDC National Backward Classes Finance andDevelopment Corporation

NCA Normal Central Assistance


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NCCS National Centre for Cell ScienceNCEUS National Commission for Employment

in the Unorganized SectorNCMP National Common Minimum Programme

NCMRWF National Centre for Medium RangeWeather Forecasting

NCP National Competition Policy NDC National Development CouncilNDMA National Disaster Management AuthorityNDMP National Disaster Mitigation ProgrammeNEC North East CouncilNEMP National Environmental Monitoring

ProgrammeNEPA North East Police Academy NFHS National Family Health Survey NHDP National Highways Development

ProgrammeNIC National Informatics CentreNITA National Institute of Tribal AffairsNISER National Institute of Science Education

and Research, BhubaneswarNLCP National Lake Conservation PlanNLCPR Non-Lapsable Central Pool of ResourcesNMITLI New Mil lennium Indian Technology

Leadership InitiativeNMNH National Museum of Natural HistoryNPOP National Policy on Older PersonsNPRE Non-Plan Revenue Expenditure

NRCD National River Conservation DirectorateNRCP National River Conservation PlanNREGA National Rural Employment Guarantee

ActNREGP National Rural Employment Guarantee

ProgrammeNRHM National Rural Health MissionNRI Non Resident IndianNRM Natural Resource ManagementNSAP National Social Assistance ProgrammeNSDP Net State Domestic ProductNSFDC National Scheduled Castes Finance and

Development CorporationNSSO National Sample Survey OrganizationNSTFDC National Scheduled Tribes Finance and

Development CorporationNTFP Non Timber Forest Produce

OBC Other Backward Class

PAB Project Approval Board

PAH Polyaromatic hydrocarbonsPCB Pollution Control BoardPESA Panchayat (Extension to Scheduled

Areas) Act

PFBR Prototype Fast Breeder ReactorPHC Primary Health CentrePHWR Pressurized Heavy Water ReactorPIM Participatory Irrigation Management ActPMGSY Pradhan Mantri Gram Sadak YojanaPOL Petroleum, Oil and LubricantsPPP PublicPrivate PartnershipPPPAC PublicPrivate Par tnership Appraisal

CommitteePRI Panchayati Raj InstitutionPSE Public Sector EnterprisePSLV Polar Satellite Launch Vehicle

PSU Public Sector UndertakingPTG Primitive Tribal Group

QR Quantitative Restriction

RCA Revealed Comparative AdvantageRD Rural DevelopmentRFP Request for Proposal DocumentRGGVY Rajiv Gandhi Grameen Vidyutikaran

YojanaRIMS Regional Institute of Medical SciencesRIPAN Regional Institute of Para-medical and

NursingRKVY Rashtriya Krishi Vikas YojanaRRB Regional Rural Bank RSPM Respirable Suspended Particulate MatterRTI Right to Information Act

SAFTA South Asian Free Trade AgreementSARDP-NE Special Accelerated Road Development

Programme for the North EastSBBs State BoardsSC Scheduled CasteSCA Special Central Assistance

SCDC Scheduled Castes DevelopmentCorporation

SCSP Scheduled Caste Sub PlanSDC Skill Development CentreSDH Sub-Divisional HospitalSERC Science and Engineering Research

CouncilSFR State of Forest ReportSGRY Sampoorna Grameen Rozgar Yojana

Acronyms xxiii


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SGSY Swarnjayanti Gram Swarojgar YojanaSHDR State Human Development ReportsSHE Scholarships for Higher EducationSHG Self-Help Group

SJSRY Swarna Jayanti Shahri Rozgar YojanaSME Small and medium scale enterpriseSO2 Sulphur DioxideSoI Survey of IndiaSSA Sarva Siksha AbhiyanST Scheduled TribeSTP Sewage Treatment PlantSWAN State-Wide Area Network

TAC Tribes Advisory CouncilTBA Traditional Birth AttendantTFC Twelfth Finance Commission

TPDU Technology Promotion, Developmentand Utilization Programme

TRIFED Tr ibal Co op erat ive Mar ketingDevelopment Federation of India Ltd.

TSC Total Sanitation CampaignTSDF Transport, Storage and Disposal FacilitiesTSP Tribal Sub PlanTTC Technology Transfer Cell

UGC University Grants CommissionUID Unique ID

UIDSSMT Urban Infrastructure DevelopmentScheme for Small and Medium Towns

ULBs Urban Local BodiesUNCRPD United Nations Convent ion on the

Rights of People with DisabilitiesUNESCO United Nations Educational, Scientific

and Cultural OrganizationUNFCCC United Nations Framework Convention

on Climate ChangeUNODC United Nations Off ice on Drug and

CrimeUPSS Usual Principal and Subsidiary Statusus Usual StatusUSOF Universal Service Obligation FundUT Union Territory

VET Vocational Education and TrainingVGF Viability Gap FundingVO Voluntary OrganizationVOC Volatile Organic CompoundVRC Village Resource CentreWGDP Western Ghats Development ProgrammeWPR Work Participation Rate

ZPs Zilla PanchayatZSI Zoological Survey of India

xxiv Acronyms


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Inclusive Growth 1

1Inclusive GrowthVision and Strategy

INTRODUCTION1.1. India has entered the Eleventh Plan period with animpressive record of economic growth. After a lacklustreperformance in the Ninth Plan period (199798 to 200102), when gross domestic product (GDP) grew at only5.5% per annum, the economy accelerated in the TenthPlan period (200203 to 200607) to record an averagegrowth of 7.7%, the highest in any Plan period so far.Besides, there was acceleration even within the Tenth Planperiod and the growth rate in the last four years of thePlan has averaged 8.7%, making India one of the fastestgrowing economies in the world.

1.2. It can be argued that there is an element of cyclicalityin the high growth observed in the past four years sincethese were also years of a global upswing. However, Indiasgrowth performance goes beyond mere cyclicality. It isunderpinned by a number of factors which are real sourcesof strength and will serve us well in the years ahead. Savingsand investment rates have increased significantly. Theindustrial sector has responded well to economic reformsand has shown that it is capable of competing in theglobal economy. Perceptions about India among globalinvestors are very favourable. These developments suggest

that the economy is now at a point when it can achievesustained economic expansion that has the potential tobring significant improvement in the lives of our people.If this momentum can be accelerated in the years ahead,it will put India on the path to becoming one of the keyplayers in the world economy over the next two decades.

1.3. These positive factors notwithstanding, a majorweakness in the economy is that the growth is not perceivedas being sufficiently inclusive for many groups, especially

Scheduled Castes (SCs), Scheduled Tribes (STs), andminorities. Gender inequality also remains a pervasiveproblem and some of the structural changes taking placehave an adverse effect on women. The lack of inclusivenessis borne out by data on several dimensions of performance.

1.4. The percentage of the population below the officialpoverty line has come down from 36% in 199394 to28% in 200405. However, not only is this still high, therate of decline in poverty has not accelerated along withthe growth in GDP, and the incidence of poverty amongcertain marginalized groups, for example the STs, has

hardly declined at all. Because population has also grown,the absolute number of poor people has declined onlymarginally from 320 million in 199394 to 302 million in200405. This performance is all the more disappointingsince the poverty line on which the estimate of the pooris based is the same as it was in 197374 when per capitaincomes were much lower. Other indicators of deprivationsuggest that the proportion of the population deprivedof a minimum level of living is much higher. For example,National Family Health Survey-3 (NFHS-3) shows thatalmost 46% of the children in the 0 to 3 years age groupsuffered from malnutrition in 200506, and what is even

more disturbing is that the estimate shows almost nodecline from the level of 47% reported in 1998 by NFHS-2.

1.5. Indicators of human development such as literacyand education, and maternal and infant mortality rates,show steady improvement, but they also suggest that theprogress is slow and we continue to lag behind several otherAsian countries. While the literacy rate has gone up from18.3% in 1951 to 64.8% in 2001, the number of illiteratepersons still exceeds 304 million, making India the


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2 Eleventh Five Year Plan

country with the highest number of illiterate persons inthe world. Life expectancy at birth has increased fromapproximately 32 years for both males and females in1951 to 63.9 years for males and 66.9 years for females in

200106. Yet this is well below the life expectancy ofaround 80 years in industrialized countries and 72 yearsin China. Although Indian women now have higher lifeexpectancy than Indian men, as is the case in industrializedcountries, India also has an adverse sex ratio with only933 women per 1000 men. More disturbing, the child sexratio (ages 06) has declined sharply from 962 in 1981 to927 in 2001. Indias maternal and infant mortality rates aremuch higher than those of countries in East Asia, showingpoor access to essential health care services.

1.6. The composition of growth in recent years has also

presented some problems. Agriculture has grown veryslowly from the Ninth Plan onwards and this has widenedthe ruralurban divide and also contributed to the severedistress in rural areas in some regions. Although there isan upturn in agricultural growth after 2004, it is too earlyto be complacent. Total employment in the economy hasimproved in recent years, but the labour force has growneven faster, leading to an increase in the unemploymentrate. Permanent employment in the organized sector hasdecreased, although organized sector firms may beincreasing their informal employment. Also, economicgrowth across regions has not been balanced, with

some of the most backward areas yet to experience anysignificant growth. The delivery of essential social servicesat the grass roots level is also poor and this is a majorcausative factor in unequal development. Much higherlevels of human development can be achieved even withthe given structure of the economy, if only the deliverysystem is improved.

1.7. These features suggest that while there are significanteconomic achievements that India can celebrate in its60th year of Independence, it is still far from redeemingthe pledge which Pandit Jawaharlal Nehru made on the

eve of Independence: [] for ending of poverty,ignorance, disease and inequality of opportunity. TheEleventh Plan provides an opportunity to act decisivelyto consolidate the gains that have been made in theTenth Plan and also to correct the deficiencies that havebeen observed.

VISION FOR THE ELEVENTH PLAN1.8. The central vision of the Eleventh Plan is to buildon our strengths to trigger a development process which

ensures broad-based improvement in the quality of lifeof the people, especially the poor, SCs/STs, other backwardcastes (OBCs), minorities and women. The NationalDevelopment Council (NDC), in approving the Approach

to the Eleventh Plan, endorsed a target of 9% GDP growthfor the country as a whole. This growth is to be achievedin an environment in which the economy is much moreintegrated into the global economy, an integration thathas yielded many benefits but also poses many challenges.If this is achieved, it would mean that per capita GDPwould grow at about 7.6% per year to double in less thanten years. However the target is not just faster growthbut also inclusive growth, that is, a growth process which

yields broad-based benefits and ensures equality ofopportunity for all.

1.9. This broad vision of the Eleventh Plan includes severalinter-related components: rapid growth that reducespoverty and creates employment opportunities, accessto essential services in health and education especiallyfor the poor, equality of opportunity, empowermentthrough education and skill development, employmentopportunities underpinned by the National Rural Employ-ment Guarantee, environmental sustainability, recognitionof womens agency and good governance.

RAPIDGROWTHANDPOVERTYREDUCTION1.10. The persistence of poverty on the scale at which it

still exists is not acceptable. A decisive reduction in povertyand an expansion in economic opportunities for allsections of the population should therefore be a crucialelement of the vision for the Eleventh Plan. Rapid growthof the economy is an essential requirement to achieve thisoutcome since it is an instrument for achieving a steadyincrease in employment and incomes for large numbersof our people.

1.11. Growth in the Eleventh Plan should be betterbalanced to rapidly create jobs in the industrial andservices sectors. This is necessary if a significant portion

of the labour force is to shift out of agriculture, where it iscurrently engaged in low productivity employment, intoa non-agricultural activity that can provide higher realincomes per head. This must be accompanied by effortsto improve the income-earning opportunities of thosewho remain in agriculture by raising land productivity.This process would also lead to higher farm incomes anda rise in real wages of agricultural labour whose bargainingpower will improve as surplus labour is shifted out ofthis sector.


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Inclusive Growth 3

1.12. Rapid growth in the economy at large, and especiallyin the employment generating sectors such as medium andsmall industry and services, needs to be supplementedby targeted livelihood support programmes aimed at

increasing productivity and incomes of the poor inseveral low income occupations which will continue asimportant sources of employment for quite some time.Special programmes aimed at target groups such as smalland micro enterprises, weavers, artisans, craftsmen, etc.will therefore remain important in the Eleventh Planperiod. Considerable experience has been gained over the

years in the management of these programmes. Thisexperience must be brought to bear in redesigning theprogrammes in the Eleventh Plan to make them moreeffective in achieving their stated objectives.

THEEMPLOYMENTCHALLENGE1.13. The ability to generate an adequate number ofproductive employment opportunities will be a majorfactor on which the inclusiveness of growth will be judged.India is currently at a stage of demographic transitionwhere population growth is slowing down but thepopulation of young people entering the labour forcecontinues to expand. This means that a working personwill have fewer dependents, children or parents. Thedependency ratio (ratio of dependent to working agepopulation) declined from 0.8 in 1991 to 0.73 in 2001and is expected to decline further to 0.59 by 2011. If the

workforce is gainfully employed, a lower dependency ratiomeans a higher rate of savings which, in turn, can raisethe growth rate. This young demographic profile placesIndia favourably in terms of manpower availability andcould be a major advantage in an environment whereinvestment is expanding in India and the industrial worldis ageing.

1.14. It is, however, essential to produce a growth processin which employment would be available not only for newentrants to the labour force but also in the non-agriculturalsector for workers leaving agriculture. Over 19992000

to 200405, urban employment has grown at a faster ratethan population. However, since more urban womenhave joined the workforce, the unemployment rate hasincreased over these years.

1.15. Rapid growth focused on labour-intensive industriesand small and middle enterprises will create employmentopportunities in the manufacturing and services sectors.The ability to create jobs will be enhanced by greater labourflexibility which may require some changes in labour laws.

This is a controversial issue on which it is difficult to reacha consensus but the weight of evidence suggests that whileoutright hire and fire approaches may not be desirable,there is room for creating greater flexibility, short of

this position.

1.16. The ability to sustain a labour-intensive growthprocess depends crucially upon the expansion of skillcapabilities in the labour force. Specific programmes fordevelopment of skills at all levels will be a part of theEleventh Plan.

ACCESSTOESSENTIALSERVICES1.17. A person is poor because her endowments of capital,land, labour and skills are meagre, and also because heraccess to public goods and services and natural resources

is limited. Often, a poor person is trapped in the prison ofilliteracy. Disease and ill-health prevent her from gettingthe most out of the one asset she has, her labour. Withouttraining and skills she cannot aspire to do a better job.Without an all-weather road that connects her habitationto the nearest market, she cannot get a fair price for herproduce. Without electricity and access to credit, her abilityto increase productivity of land or of artisan activity islimited. Without the sewers and drains, water works andwater mains that service her town; without the policingthat should protect her life and limb, property (howevermeagre), person and dignity as an equal citizen of India;

she cannot function effectively. Thus, while in the shortrun, access to basic facilities such as health, education,clean drinking water, etc. impacts directly on welfare, inthe longer run, it determines economic opportunities forthe future. Without access to these services one cannotbe considered to have equality of opportunity.

1.18. Since access to these services for the majority ofthe population depends not only upon their income levelsbut upon the delivery of these services through publiclyfunded systems, the Eleventh Plans vision of povertyreduction includes major expansion in the supply of these

services. The resources needed to create the infrastructurenecessary for delivering these services to the poor are large.Fortunately, the rapid growth being targeted for theEleventh Plan will facilitate the ability to undertake theseprogrammes, both by way of higher tax revenues resultingfrom higher growth and a larger borrowing capabilityeven while adhering to fiscal deficit targets expressed asa percentage of GDP. These additional resources can bedevoted to Plan expenditure aimed at ensuring effectivedelivery of essential services.


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SOCIALJUSTICEANDEMPOWERMENT1.19. The vision of inclusiveness must go beyond thetraditional objective of poverty alleviation to encompassequality of opportunity, as well as economic and social

mobility for all sections of society, with affirmative actionfor SCs, STs, OBCs, minorities and women. There mustbe equality of opportunity to all with freedom and dignity,and without social or political obstacles. This must beaccompanied by an improvement in the opportunitiesfor economic and social advancement. In particular,individuals belonging to disadvantaged groups shouldbe provided special opportunities to develop their skillsand participate in the growth process.

1.20. This outcome can only be ensured if there is a degreeof empowerment that creates a true feeling of participation

so necessary in a democratic polity. Empowerment ofdisadvantaged and hitherto marginalized groups istherefore an essential part of any vision of inclusive growth.Indias democratic polity, with the establishment of thethird layer of democracy at the Panchayati Raj Institution(PRI) level, provides opportunities for empowerment andparticipation of all groups with reservations for SCs, STs,and women. These institutions should be made moreeffective through greater delegation of power andresponsibility to the local level.

ENVIRONMENTALSUSTAINABILITY

1.21. The vision of the Eleventh Plan must also include aclear commitment to pursue a development process whichis environmentally sustainable. Natural resources such aswater and land are limited and their per capita availabilityis actually diminishing because of rising population andalso because of irrational exploitation of common poolresources. The Eleventh Plan must be based on a strategythat not only preserves and maintains natural resources,but also provides equitable access to those who do not havesuch access at present. Unless environment protection isbrought to the centre stage of policy formulation, whatis perceived as development may actually lead to a

deteriorating quality of life. This seems to be happeningall around, in the poor and generally worsening qualityof air in cities and even villages; in the increasingly pollutedwaters of our lakes and rivers, which are not fit for evenbathing, let alone drinking; in the loss of biodiversity, andin the shrinking habitats of wild animals. This degradationof natural resources reduces the well-being of people, andthe poor and women suffer more, as they depend muchmore on natural common property resources for fuel andwater, and also have fewer resources to take defensive actions.

1.22. The danger to environment is caused by activitiesworldwide. The growing evidence on climate changeshows that Green House Gas (GHG) emissions, resultingfrom the cumulative action of all countries, will, if not

effectively contained, produce changes in climate whichwould have very severe effects in the future. India will beseriously affected by such climate change in the form ofreceding Himalayan glaciers, a variably differenthydrological cycle than at present, greater water scarcityand higher temperatures which would have an adverseimpact on agricultural production with the presentlyknown technologies. A rise in the sea level, leading tocoastal submergence would cause large-scale displacementof people.

1.23. We must certainly begin to consider what steps we

need to take to adapt to these changes and to mitigatethe damage to climate. However, an effective strategyrequires international co-operation to evolve forms ofburden sharing for mitigation as well as adaptation thatare fair and equitable across nations. We have to addressthese challenges in the years ahead.

GENDEREQUITY1.24. For the first time in the history of Indian planningthere is an attempt to move beyond empowerment andrecognize women as agents of sustained socio-economicgrowth and change. The Eleventh Five Year Plan

acknowledges womens agencies and tries to ensure thattheir needs, rights and contribution are reflected in everysection of the Plan document. Gender is, therefore, a crosscutting theme; it is not confined to a single chapteron Women and Children. The vision is to develop anintegrated approach which would eventually dispense theneed for a separate chapter.

1.25. While endeavoring to guarantee the rights andentitlements of all women, the Eleventh Plan recognizesthat women are not a homogenous category. Theirsituations, and consequently requirements, differ based

on their locations within various castes, communities,religions, geographic and development zones and theeffort during the Eleventh Plan is to cater to all thesedifferential and specific requirements.

GOVERNANCE1.26. Finally, the vision for the Eleventh Plan must includean improvement in governance. Over the years, thegovernments at the Centre and the States have launcheda large number of initiatives at substantial public expense


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to achieve the objectives of growth with poverty alleviationand inclusiveness. Experience suggests that many ofthese initiatives have floundered because of poor design,insufficient accountability and also corruption at

various levels. Increasingly, there is demand for effectiveimplementation without which expanded governmentintervention will be infructuous.

1.27. The strategy for the Eleventh Plan must thereforeaim at bringing about major improvements in governancewhich would make government-funded programmes incritical areas more effective and efficient. The best possibleway of achieving this objective may be by involvingcommunities in both the design and implementation ofsuch programmes, although such involvement may varyfrom sector to sector. Experience shows that Civil Society

Organizations (CSOs) can work with PRIs to improvethe effectiveness of these programmes. For achieving thevision of the Eleventh Plan, it is extremely important toexperiment with programme design to give moreflexibility to decision making at the local level.

1.28. It is especially important to improve evaluation ofthe effectiveness of how government programmes workand to inject a commitment to change their designs in thelight of the experience gained. Evaluation must be basedon proper benchmarks and be scientifically designed togenerate evidence-based assessment of different aspects

of programme design. Along with greater transparencyand feedback from community participation, this isparticularly important in the case of programmesdelivering services directly to the poor.

1.29. Accountability and transparency are critical elementsof good governance. The Right to Information Act (RTI)enacted in 2005 empowers people to get informationand constitutes a big step towards transparency andaccountability.

THEROLEOFTHESTATES

1.30. A notable feature of the Tenth Plan was the increasein the share of outlays for Centrally Sponsored Schemes(CSS) in the Gross Budgetary Support (GBS) for theCentral Plan. This was done for two reasons; first, theCentres own investment in industry was almost entirelyfunded by the Internal and Extra-Budgetary Resources(IEBR) of Public Sector Enterprises (PSEs); and, second,the enlarged role that the Centre has taken for itself inproviding for social infrastructure, especially in thebackward States, through programmes such as National

Rural Employment Guarantee Programme (NREGP)Sarva Shiksha Abhiyan, Bharat Nirman, etc. The outlayon CSS, taken together with scheme-wise Centralassistance provided to State Plans, amounts to over 55%

of the Central GBS in 200708, the first year of the EleventhPlan. This level will not go down during the EleventhPlan period.

1.31. Many of the major CSS are in areas where the StateGovernments have traditionally borne the bulk of theexpenditure. Even during the Eleventh Plan period,the non-Plan expenditure on these sectors by the StateGovernments will be considerable. The strategy forensuring the best use of the available resources, therefore,requires that the Central Government engage moreintensively with the States not only with regard to Plan

expenditure but also in respect of what have traditionallybeen non-Plan expenditures. Separately, it is proposed toset up a high-level committee (HLC) to suggest how thisplanning for resources could be best accomplished. Morethan ever before, the success of the Eleventh Five YearPlan will depend upon the quality of service delivery bythe State Governments.

STRATEGY FOR THE ELEVENTH PLAN:POLICIES FOR INCLUSIVE GROWTH1.32. The strategy for inclusive growth in the EleventhPlan is not just a conventional strategy for growth to which

some elements aimed at inclusion have been added. Onthe contrary, it is a strategy which aims at achieving aparticular type of growth process which will meet theobjectives of inclusiveness and sustainability. This strategymust be based on sound macroeconomic policies whichestablish the macroeconomic preconditions for rapidgrowth and support key drivers of this growth. It mustalso include sector-specific policies which will ensurethat the structure of growth that is generated, and theinstitutional environment in which it occurs, achievesthe objective of inclusiveness in all its many dimensions.

1.33. The elements of the strategy proposed in theEleventh Plan are discussed in detail in the individualchapters. The major components are summarized in thefollowing sub-sections.

MACROECONOMICFRAMEWORK1.34. The broad macroeconomic framework of thePlan is discussed in detail in Chapter 2. It envisages acontinuation of the uptrend in domestic investment andsavings observed in the Tenth Plan taking domestic


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investment from an estimated 35.9% of GDP in 200607to an average of 36.7% of GDP in the Eleventh Plan period.This is expected to be supported by the domestic savingsrate of 34.8% of GDP in the Eleventh Plan period.

These investment rates are broadly consistent withachieving an average growth rate of 9% per year in theEleventh Plan period. The Plan also implies a substantialincrease in the total resources for the Central and StatePlans from 9.46% of GDP in the Tenth Plan to 13.54% ofGDP in the Eleventh Plan. This outcome depends upongovernment non-Plan expenditure, especially subsidiesremaining under control and a significant improvementin the IEBR of the public sector in both the Centre andthe States.

1.35. The macroeconomic projections involve a rise in

the current account deficit from 1.1% of GDP in 200607to an average of 1.9% of GDP in the Eleventh Plan period,based on oil prices at the average level of 200607. Therecent hardening of oil prices, if it continues, will involvea further increase in the current account deficit by up to1 percentage point of GDP. Even if this were to happen,it will be feasible to finance the increased deficit givenIndias export potential and the prospect of continuinginflows of foreign investment. The real challenge in thepersistence of high oil prices lies in the need to pass onthese prices to consumers which could moderate growtha little in the short run.

1.36. On balance, the Plan target of 9% per year appearsachievable with some downside risks if oil prices hardenfurther. The broad sectoral composition of growthassociated with this projection involves doubling thegrowth rate of agriculture to 4% per year compared witha little over 2% per year in the Tenth Plan and raising theindustrial growth rate from 9.2% in the Tenth Plan tobetween 10% and 11% in the Eleventh Plan. Further,manufacturing is targeted to grow at over 12% per yearand this is expected to provide high-quality employment.

AGRICULTURE1.37. The target of doubling the rate of growth ofagriculture to 4% in the Eleventh Plan is critical forachieving greater inclusiveness. This calls for initiativeson several fronts.

1.38. The poor performance of agriculture in the pastdecade or so is partly due to the emergence of technologyfatigue in the intensely irrigated crop production regions.This is reflected in the fact that the new varieties released

do not seem to have produced significantly higher yieldsper hectare. The long-term response to this phenomenonis a comprehensive strengthening and restructuring of theIndian Council of Agricultural Research (ICAR) system

to give greater focus to research in strategic areas whichwould help to evolve cropping systems suited to variousagro-climatic zones. It is particularly important to focusresearch on raising the yield potential in rain-fed areas.There is also a need to increase the accountability of theState agricultural universities and to make their researchmore directly useful. Public expenditure on agriculturalresearch, taking the Centre and the States together, needsto increase from 0.7% of agricultural GDP at present toat least 1% by the end of the Eleventh Plan.

1.39. In the short run, we must exploit the large scope

for yield improvement which is reflected in the large gapthat exists in most parts of the country between the yieldsthat are actually being realized on the ground and yieldsthat can be achieved with the existing varieties using bestpractices in farm conditions. This yield gap varies from60 to 100%, depending on the crop and the region. TheEleventh Plan must focus on evolving suitable strategiesfor each agro-climatic zone to reduce the gap. This willrequire better assessment of location-specific potentialsand constraints, and more effective extension. A newcentral assistance programme, the Rashtriya Krishi VikasYojana (RKVY) has been launched to incentivize State

Governments to prepare district level agricultural plansthat take account of local conditions. The programmewill encourage effective convergence among variousCentral schemes which are currently implemented indistricts as stand-alone schemes and will provideCentral assistance to meet a part of the additional costof the agricultural plans, above existing expenditurecommitments. The preparation of district-specificagricultural plans is an important innovation and it isexpected to sharpen the focus on local crop productivityconstraints. Adequate funding will be provided to buildcapacity for such district planning and, simultaneously,

there will be a very substantial increase in Central supportto State extension systems.

1.40. Adoption of best practices typically involvesadditional investment. The most important area forinvestment in agriculture relates to the provision of waterand its efficient use. There is definitely a need for morepublic investment to develop irrigation where it is feasible,including modernisation of the existing irrigation systemsto improve efficiency. It is also necessary to undertake


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watershed management programmes in dryland areas.The specific initiatives needed in this regard are discussedlater in the chapter.

1.41. Private investment by farmers is also needed in landdevelopment, pump sets and drip irrigation, agriculturalmachinery, etc. On-farm investments are limited by theavailability of credit to farmers which needs priorityattention. Commercial banks have extended credit toagriculture commendably in the later years of the TenthPlan period, and this needs to continue. However,whereas overall credit has expanded, the number of loanaccounts has declined, suggesting that small farmers arenot receiving adequate credit. To correct this, the co-operative banking system must be revived along the linesrecommended by the Vaidyanathan Committee. The

Committees recommendations have been accepted bymany States, but implementation of follow-up actionneeds to be expedited.

1.42. Deteriorating soil health is a major constraintlimiting productivity in agriculture. The present systemof fertilizer subsidy which is based on subsidization ofproducts rather than nutrients, contributes to the problembecause there is excessive subsidy on nitrogen comparedto potassium and phosphates, and no subsidy at all onmicronutrients. The result is excessive use of nitrogenousfertilizer which depletes the soil of other micronutrients

(sulphur, zinc, boron), reducing soil productivity overtime. Most farmers do not have information on the soilhealth of their farms and the extent of micronutrientdeficiency, which varies across areas. Increased awarenessof thi

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India 11th 5year Plan