Eleventh Plan’s Major Departures

The Eleventh Five Year Plan is awaiting its rites of passage.  Its draft has left Yojana Bhavan for the South Bloc. The Union Cabinet’s approval now is a mere formality. The National Development Council in all likelihood will give its nod by the end of this year. The document that will fashion the contours of India’s development path until 2012 has, behind the customary platitudes, some cleverly concealed policy departures.
It is a huge plan. It seeks to reduce poverty by another ten percentage points. The Plan aspires to electrify all the villages in the country. The planners’ objective is to create 7 crore new jobs in five years. Compared to the last plan, gross budgetary support in this Plan has nearly doubled. In line with this, fund allocation to various sectors is set to rise substantially.
The planners said faster and more inclusive growth has been their guiding principle in drafting the document. They claimed that they gave unprecedented importance to the social sector. Health care, education, social empowerment have received major hikes in plan allocations. Compared to the Tenth Plan, education received about 12% more funds.  While agriculture, education, healthcare and infrastructure received 55% of the Tenth Plan’s total allocations, they get 75% in the current Plan.
Its thrust on infrastructure development is very evident. For the next ten years, the total investment forecast for infrastructure is about Rs. 60 lakh crores. This plan earmarks nearly Rs.24 lakh crores in the next five years to this sector. The lion’s share of this allocation goes to power sector with Rs. 7, 25,325 lakh crores.  Roads, telecom, railways, irrigation, ports and airports also receive the planners’ munificence.  In all these, except in railways and ports, the planners expect significant investments by the private sector. On the whole, planners estimated that the private sector would bring in over Rs. 6 lakh crores into infrastructure in the next five years.
There is a clear indication in the Eleventh Plan’s draft about the government’s attempt to redefine the Public-Private Partnership (PPP). When the Finance Minister remarked recently that he was not satisfied with the way PPP was structured at present, he was in fact, echoing the Plan’s intent. Till now it is the government that identified projects and called for private sector’s participation and execution. Henceforth the government expects private sector to take lead. The Eleventh Plan will arguably be the government’s final orchestration of a farewell to the idea of controlling the commanding heights of the economy.
The Plan expects the economy to grow at an average rate of 10 per cent per annum. The growth rate of agriculture, however, is not estimated to exceed 4 per cent. This will further sharpen the income disparities between people engaged in agriculture and those earning their incomes from other sectors. In other words, people living in rural areas lag far behind their brethren in urban areas.
The Plan expects that every year during the plan period at least one crore people would abandon agriculture as a means of their livelihood.  At the end of the day, about five crore people forsake their livelihoods in agriculture. They will not know where to go. To absorb these many pairs of hands, the other sectors should open up job opportunities at the rate of six to seven per cent per annum throughout the plan duration.  In fact, one of the objectives of the Plan is to create about 7 crore employment opportunities by the end of 2012.
But this growth in job opportunities would not really help the rural folk who are expelled from their agrarian livelihoods. For, the people who are pushed out of this sector scarcely have the required skills to take advantage of those emerging employment opportunities in the new economy. This scenario does not square with the plan’s objective of reducing poverty by another ten percentage points.
The model the Eleventh Plan elects to follow inaugurates major departures. It is, in essence, a growth model led by the development of infrastructure.  It envisages large and significant role for private investment in this effort and redefines Public-Private Partnership. More significantly, it attempts large scale shift of labour force away from the agriculture sector. The planners do not, however, spell out which sector these crores of labourers should or could shift to.

This strategy can, indeed, achieve faster growth. But it can hardly be inclusive.

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