SPEECHSeptember 15, 2012New DelhiPrime Minister’s Statement at the Full Planning Commission MeetingI welcome you to this meeting to consider the draft Twelfth Five Year Plan.The full text of my remarks is being distributed separately, so I will be brief.We ended the Eleventh Plan with some notable achievements. The economy grewat an average annual rate of 7.9 percent. This is commendable for a period whichsaw two global crises – one in 2008 and another in 2011.Poverty declined twice as fast between 2004-05 and 2009-10 than it did in theprevious ten years.Agriculture grew at 3.3 percent per year in the Eleventh Plan, much faster thanthe 2.4 percent observed in the Tenth Plan.These are positive features. However, we must also recognise that the TwelfthPlan is starting in a year when the world economy is experiencing difficulties andour economy has also slowed down.These short term problems present a challenge, but they should not lead to unduepessimism about our medium term prospects.The economy has gained many strengths. Our immediate priority must be toorchestrate a rebound in the second half of the current year. We should then try toaccelerate growth to reach around 9 percent by the end of the Plan period.This will yield a target growth rate of around 8.2 percent over the Twelfth Plan.This is lower than the 9 percent originally projected, but some downward revisionis realistic given the state of the world.As the Plan document points out, our objective is not just growth of GDP, butgrowth that is inclusive and also sustainable. The SC/STs, OBCs, and theminorities must all participate fully in the growth process. The Plan has manyelements designed to ensure this.
The most important area for immediate action is to speed up the pace ofimplementation of infrastructure projects. This is critical for removing supplybottlenecks which constrain growth in other sectors. It will also boost investorsentiment to raise the overall rate of investment.The infrastructure ministries must set ambitious goals for their sectors over theTwelfth Plan. We need close to a trillion dollars of investment in infrastructure andwe have to work hard to achieve this.I will personally review the performance of the infrastructure Ministries comparedwith targets at the end of the first six months. I hope that out of this review we candefine an agenda for improved implementation.Turning to the longer term policy agenda, the Plan can be seen as consisting ofthree broad components.One is the set of Government programmes aimed at achieving specific sectoralobjectives. The Plan contains ambitious programmes in health, education, waterresource management, infrastructure development, and a number of programmesaimed at inclusiveness, most notably the MGNREGA, the PMGSY, the IWDP andthe National Rural Livelihoods Mission.Considerable resources are being allocated for these programmes. We need to paymuch greater attention to making sure that these programmes are also deliveringresults on the ground, especially for the SCs/STs and the weaker sections. Some ofthe changes in the Centrally Sponsored Schemes suggested by the ChaturvediCommittee will help to improve effectiveness.The second component relates to macro economic balance. To achieve the target of8.2 percent growth we need to revive investment in the economy. The investmentenvironment is therefore critical.Our fiscal deficit is too high and is attracting adverse comment from analysts. Itmust be brought down over the medium term to release domestic resources forproductive deployment in the economy.Because export prospects are weak, the Plan projects a current account deficitof 2.9 per cent of GDP. This must be financed mainly through FDI and FIIflows, so that reliance on external debt is limited. I believe we can attract the
financing we need provided our fiscal deficit is seen to be coming under controland the growth momentum is regained.The third key component of the Plan is the set of policies which can improveperformance in individual sectors. Let me mention a few key sector priorities.Health, education, and skill development are key sectors which enhance humancapability and can contribute hugely to the objective of inclusive growth. Theyhave been given high priority in the Twelfth Plan.Agricultural growth must be accelerated to about 4 percentManufacturing must grow much faster than it has, to generate the employmentgrowth we need.Infrastructure development is vital. It needs a combination of public investmentand PPP.Energy is a difficult area where our policy needs a comprehensive review. We areenergy deficient and import dependence is increasing. It is vital for our energysecurity that we increase domestic production and also increase energy efficiency.Rational energy pricing is therefore critical. Our energy prices are out of line withworld prices. The recent increase in diesel prices is an important step in the rightdirection.Water is another area where problems of scarcity and the challenges of effectiveresource management are likely to expand in the years ahead.Urbanisation is a new challenge which we must address.The central message of the Plan is that we can achieve our objective provided weput in place policies that will take care of our weaknesses. The Plan for the firsttime introduces alternative scenarios.Scenario one is called “Strong Inclusive growth”. It presents what is possible if thepolicy actions outlined in the Plan are substantially implemented. One can expect anumber of virtuous cycles to start operating, leading to positive results on bothgrowth and inclusion. This is the scenario we should aim for.
Scenario two is called “insufficient action”. It describes a state of partial actionwith weak implementation. The virtuous cycles that reinforce growth in Scenario I,will not kick in, and growth can easily slow down to 6 to 6.5 percent. Inclusivenesswill also suffer. This is where we will end up if we make only half-hearted effortsand slip in implementation. It is my sincere hope that we do not do so.Scenario three is called “policy logjam”. It reflects a situation where for onereason or another, most of the policies needed to achieve Scenario 1 are not taken.If this continues for any length of time, vicious cycles begin to set in and growthcould easily collapse to about 5 percent per year, with very poor outcomes oninclusion. I urge everyone interested in the country’s future to understand fullythe implications of this scenario. They will quickly come to an agreement that thepeople of India deserve better than this.I believe we can make Scenario I possible. It will take courage and some risks butit should be our endeavour to ensure that it materialises. The country deservesno less.Let me now invite the Finance Minister to give us his perspectives, after which Iwill request others to join.Thank you.Printed from the site http://www.pmindia.nic.in