The mid-term appraisal clearly brings out the strengths of India’s economy and also the resilience it has shown during the global economic crisis. In the five years preceding the crisis in 2008-09, our economy grew at an average growth rate of nearly 9 per cent a year. The rate of investment had increased to nearly 38 per cent of the gross domestic product (GDP) and was financed by a domestic saving rate of over 36 per cent of GDP.
These high rates of investment and savings were accompanied by the growing dynamism and competitiveness of the private sector. Despite being hit by a global crisis of exceptional severity, we were able to maintain a growth rate averaging nearly 7 per cent in the last two years. Our strengths can help us return to the 9 per cent growth trajectory by 2011-12. However, as the mid-term appraisal rightly emphasises, restoration of high growth should not be taken for granted.
The global environment is expected to remain difficult in the years that lie ahead and exports are likely to grow more slowly than they did before the crisis. We will need another source of demand to offset slower exports growth and that demand should ideally come from an expansion in investment in infrastructure, both in the rural areas and the economy in general.
Our concern for inclusiveness in the 11th Plan period is reflected in the fact that, in addition to the 9 per cent growth target, the Plan lists 26 other monitorable targets highlighting inclusiveness concerns. These include targets for agricultural growth, poverty reduction, employment generation, school enrolment, reduction in the gender gap and access to clean drinking water.
We do not have all the data we need to measure progress in these dimensions during the first three years of the 11th Plan, but the document before us presents a reasonable assessment of the overall position in these areas.
As far as agricultural growth is concerned, the severe drought we faced in 2009-10 has depressed the average performance in the first three years. However, the drought has been managed much better than in the past, with a much smaller negative effect on output. With a normal monsoon this year, we can expect a strong rebound in agricultural production. If we can ensure that the various schemes are implemented well in the remaining two years of the Plan, there is a good chance that agricultural growth may come close to the 4 per cent target.
Our target for reducing poverty is to cut the percentage of the population below the poverty line by ten percentage points during the Plan period. This implies a pace of poverty reduction more than twice that experienced in the past. Our success in ensuring inclusive growth depends critically on how well we do in this dimension of performance.
The official estimates of poverty are based on the National Sample Survey’s (NSS’) last study conducted in 2004-05. The next estimate will be for 2009-10, based on the NSS survey that is currently being conducted. Estimates from this survey will be available by 2011. The question whether the high growth rate experienced in the period after 2004-05 has helped to reduce poverty can be answered confidently only after that.
Although we do not have data on poverty or even on employment after 2004-05, we do have assessments of the performance of the many schemes and programmes that are designed to achieve the objective of inclusiveness. The total expenditure in these schemes has increased steadily during the 11th Plan and has reached Rs 1,61,784 crore in 2010-11. I am happy to say that these efforts have produced progress towards the objectives intended.
Rates of enrolment in primary schools have increased. Gender gaps in schooling are narrowing. Life expectancy rates after immunisation of children have increased. The percentage of population with access to safe drinking water has also gone up and so has village connectivity and electrification. But, I must add that, while there is progress, we have achieved less than what we need to.
(Excerpts from Prime Minister Manmohan Singh’s address to the meeting of the full Planning Commission for its mid-term appraisal in New Delhi on March 23)
