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Planning for equitable growth

With the National Development Council approving the Eleventh Plan, the stage is set for the Planning Commission to draw up the annual State plans in consultation with the State governments. The plan which was earlier cleared by the Cabinet envisages an annual growth rate of 9 per cent during the five-year period beginning 2007-08. That as well as what once seemed to be wishful thinking — a double digit growth by 2011-12 — look eminently possible now. The econom y has grown by 9 per cent on an average over the last three years of the Tenth Plan, making up for the slow start during the first two years. Such a good performance is unprecedented, prompting the Prime Minister to claim at the end of the NDC meeting that there are good reasons to think that the economy has crossed some invisible barrier and moved on to a higher growth trajectory. Historically, high savings and investment rates have made such growth rates possible. The former at 34 per cent and the latter at over 35 per cent of the GDP can be sustained, given the relatively young population profile. The country has also shown considerable resilience in meeting the challenges of globalisation. Indian industry has restructured and become competitive and the domestic environment has become conducive for enterprise. There are of course serious threats that cannot be discounted. The external sector now amounting to almost 40 per cent of the GDP is vulnerable to a possible slowdown in the United States economy, the global financial crisis, and the continually rising oil prices.

The NDC has endorsed the view that while growth is extremely important, it cannot be the only goal and objective of all planning processes. Growth imperatives will have to be reconciled with a large number of other concerns listed by the Prime Minister. One such is inter-regional disparity with some States continuing to lag far behind others in terms of economic and social indicators and which, if left unattended, can do incalculable harm to the cohesion of the polity. The urban-rural disparity is another, and it is partly explained by the relative failure of agriculture. Thirdly, high growth rates have not made enough of a dent on poverty. In trying to address such equity concerns the Eleventh Plan has reoriented the priorities substantially by stepping up the allocations for education, agriculture, health care, and infrastructure. These sectors now account for almost 75 per cent of the total expenditure compared to 55 per cent in the Tenth Plan. Attention is also to shift to improving the delivery mechanisms at the ground level and ensuring that the plan targets are carefully monitored.

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