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What Next for Faster, More Inclusive and Sustainable Growth

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• There are Short Term and Medium Term Challenges

• Short Term : Reverse the current growth slowdown :

5.5 percent in 2012-13, Aim for 6.5 to 7 percent in 2013-14

• Longer Term : Get back to high growth. This requires accelerating from 5.5% in 2012-13 to over 9% in last two years

• This is very difficult, especially given the global situation

Twelfth Plan Strategy

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• Inclusiveness is a multi-dimensional concept :

Reduce poverty

Improve regional equality across states and within states

Improve conditions for SCs, STs, OBCs, Minorities

Generate attractive employment opportunities for youth

Close gender gaps

• Twelfth Plan lists 25 monitorable indicators

Growth must not only be rapid, but also more inclusive

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• Average GDP Growth of 8 percent

• Agriculture Growth of 4 percent

• Reducing head-count poverty by 10 percentage point

• Generating 50 million work opportunities

• Eliminating gender and social gap in education

• Reducing IMR to 25, MMR to 100 and TFR to 2.1

• Enhance infrastructure investment to 9% of GDP

• Achieve universal road connectivity and access to power for all villages

• Access to banking services for 90 percent households

• Major welfare benefits and subsidies via Aadhaar

25 Monitorable Targets, e.g.

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• There are two routes to inclusiveness through higher growth which expands income and

employment opportunities through government pro-poor programmes which target poorer

groups

• Both are important. Twelfth Plan combines the pro-poor programme approach with efforts to get a growth pattern which is faster and inherently more inclusive

• Two routes are mutually reinforcing High growth generates more revenues, to finance

inclusiveness programmes Many inclusiveness programmes (health and education)

contribute to growth

Strategy for Achieving Inclusiveness

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• Must increase the rate of investment, especially in infrastructure• Domestic savings must increase even more to reduce the investment

saving gap which is necessary to keep the Current Account Deficit under control

• Government dis-savings must be eliminated. This means fiscal deficit must be reduced

• Growth of subsidies has to be contained• 75% of the investment in the economy is private investment

(household plus corporate)• Both the Centre and the States have to create an eco-system that

encourages private investment • Infrastructure, especially quality of power, and availability of skills

is critical

Macro-Economic Challenges in Achieving High Growth

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• Twelfth Plan sets ambitious targets for Flagship Programmes in areas of Health, Education, Rural infrastructure, Livelihood Development etc.

• Too much focus on the level of expenditure in these programmes. Not enough on effectiveness in terms of end results

• Implementation in the field is the responsibility of State Government agencies. However, programme guidelines are set by the Central Government

• There are demands for greater flexibility from states. We are responding as follows : Guidelines are being made more flexible to meet the

requirements of individual States 10% flexi-fund within each scheme for innovations

Effectiveness of Plan Programmes

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• 8 percent GDP growth requires 6 percent growth in energy supply from all sources

• Our fossil fuel resources are limited, and our import dependence is already high

• Enhanced Energy Efficiency in all sectors

• We need to push push for renewable Energy: Wind, Solar and Storage Hydro

• Difficult Policy Issues: Coal vs. Forest Cover Petroleum Price Distortions Natural Gas Exploration Framework All Energy Prices: Coal, Petroleum product, Natural Gas and

Electric power are currently under priced. Fuel adjustment is needed

Energy

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• Management of water resource is a major challenge. Estimates of water availability have been optimistic

• Twelfth Plan proposes modified AIBP and expanded Watershed Management Programme

• Water sector needs better Regulatory Framework New Groundwater Law Water Regulatory Authorities in each state National Water Framework Law

• Agriculture accounts for 80% of water use at present, must shift to more water efficient agriculture practices

• Manage urban and industrial water demand through water recycling and rationalise user charges

Water

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• 12th Plan goal of 8% inclusivve growth is not a foregone conclusion

• Depends on difficult policy decisions to be taken by Centre and States

• For the first time Plan presents three scenarios

Strong Inclusive Growth 8%

Insufficient Action 6 to 6.5%

Policy logjam 5 to 5.5%

• Anything much less than 8% will not satisfy aspirations of the people

Alternative Scenarios

Thank You