PLANNING

Planning commission objectives: Bring about an increase in NI and PCI Achieve full employment Reduce inequalities of income and wealth Socialistic society of equality and justice Achieve self-reliance

Three fundamental issues, how much to save, where to invest, and what manner to invest best handled by PC. 1. More domestic savings , savings put to more productive use 2. Induce people to save more 3. Create employment by investment in infrastructure 4. Social justice 1991 economic crisis recognized private sector to be free from unnecessary controls and regulations (LIBERALISATION) o Public sector was the key player till 7TH FYP. th 8 FYP indicative planning from planning by inducement Indicative Planning :o pvt sector to play bigger role o PC lost its faith in people o Market alone cant drive the country as it can meet demand and supply but not need and supply.

Growth and development alone cant be left to market mechanism, why??

1. Market can establish equilibrium between demand and supply, not need and supply 2. M cant bridge regional disparities, the inclusive growth goes with planning , e.g. Hill area plan, tribal area plan , backward area plan 3. M alone cant build the social infrastructure, like human development, health and education, skills, caliber etc. 4. M cant take care of the downtrodden and poor , PC can by launching PAP (Poverty alleviation programs) 5. Market mechanism is not adequate for sustainable growth coz it cant play an allocative role as India has scarce natural resources and safeguard the environment and forests. 6.

Post 2008-09 crisis, it was felt that proactive intervention and regulation is a must to discipline the financial sector. PSU have major role to play in energy, transportation, communication and irrigation. Planning directs for o Providing a vision of future o Constructing medium term economic goals

o Evolving information pooling and dissemination o Identifying areas of development o Appropriate policies to achieve development goals o Ensuring consensus between farmers , labour unions , trade unions Bureaucracy stricken and repetitive procedures counter productive Role of PC is of a think tank , independent of Gov. populist policies

5 major sources government finances a plan: Government surplus > (income non-development expenditure) , can be increased by additional taxation or reduced subsidies. Size of savings determined by 1. Size of non-development expenditure 2. Additional taxation magnitude PSUs surplus , a.k.a profit Public borrowings and savings borrowing from the market and savings in form of (Indira vikas patra , post office deposit) Monetized deficit printing more currency Net capital inflow from abroad Gross budgetary support (Gov. Surplus + Public borrowings and savings + Net capital inflow from abroad) HINDU rate of growth coined by Prof Raj Krishna in 1970s Idea lambasted in 1990s with an average 6% growth, 7.8 and 7.86 growth in next two FYP GDP can never grow at > 4% Reasons agriculture main occupation , Hindu lack killer instinct 11th FYP appraisal Benefits or even information about the policies and schemes didnt reach the vulnerable and disadvantaged section or intended beneficiaries. More robust monitoring and networking Is required for the benefits to reach to the intended. Key areas intended to be addressed o Health care o Water and sanitation o Women and children development o Rural development and local governance o Education o Employment

Health expenditure increased by 10-12 instead of 30 % as projected by health ministry. But they ignored the right to health bill. IMR is more than Bangladesh and Nepal , 44 against targeted 28 2% of GDP targeted in health , 1% used , WHO recommends 5 % NRHM was a failure and Gov. failed to put a ceiling on prices of medicines , people demand of broadening NRHM ambit PPP (public private partnership) efficacy questioned, emergency response 5 times costlier than others. Appraisal maintained that pvt sector is unable to carry on in social sector. ICDS (Integrated child development scheme) dysfunctional along with other child schemes, appraisal suggested greater involvement of Panchayati raj in accountability of teachers and education in rural schools. MGNREGA was not a satisfactory model, and grievances of low wages and delayed wages existed. Areas to be of relevance in Twelfth Plan 1. Restoring dynamism in agriculture 2. Managing Indias water resources 3. Power generation targets 4. Urbanization issues 5. Special tribal development issues

Areas not addressed by 11th FYP Infrastructure, governance reforms, land acquisition, black money, corruption, financial sector reforms, Better delivery of public services to poor, greater Gov. intervention in agriculture etc. PMs economic advisory council suggested that actin on these issues i s must for gaining momentum - Forest and environmental clearances - Bottlenecks in power, port and road sector - Mining restriction hurting power generation - Slow pace of project approvals and investment - Infrastructural funding as banks-reach - Failure to control inflation - Fiscal deficit - Lack of initiative

12th FYP