The Prime Minister, Dr.
Manmohan Singh addressed the 57th meeting of the National Development
Council in New Delhi today.
Following is the text of the Prime Minister`s opening remarks on this
“I have great pleasure in welcoming you to this meeting of the National
Development Council to consider the draft Twelfth Five Year Plan.
The draft that is before you presents a comprehensive assessment of the
many challenges our country faces in achieving the Plan objective of
faster, more inclusive and sustainable growth.
As we begin our Twelfth Plan journey, it is worth noting that we do so
with an economy that has shown many areas of strength.
We achieved an average of 7.9 percent growth in the Eleventh Plan
period, despite the fact that there were two global crises in this
period. This growth has also been much more inclusive than in the past.
The percentage of the population below the official poverty line
declined by about 2 percentage points per year after 2004-05, which is
two and a half times faster than the rate of decline between 1993-94 and
2004-05. This basic finding that poverty declined faster would hold even
if the poverty line is revised.
Agriculture growth accelerated from 2.4 percent in the Tenth Plan to 3.3
percent in the Eleventh Plan. Real wages in agriculture have grown at
6.8 percent per year in recent years, compared with only 1.1 percent per
year in the period before 2004-05. Better agricultural performance is an
important reason why poverty declined faster.
States that used to grow slowly in earlier periods have done much
better. The average growth rate of the five poorest states exceeds the
national average for the first time in any Plan period. I think we may
be reaching the stage when the term “BIMARU States” can be relegated to
While these developments indicate the strengths of our economy, it is
also true that the current economic situation is difficult. The
continuing crisis in the global economy has reduced growth everywhere.
It is expected to be zero in the Eurozone and Japan and emerging market
economies have also slowed down.
The global slowdown, combined with some domestic constraints, has meant
that our growth has also slowed down. Our first priority must be to
reverse this slowdown. We cannot change the global economy, but we can
do something about the domestic constraints which have contributed to
The most immediate problems we need to tackle are the implementation
problems affecting large projects, including particularly power
projects, which are stuck because of delays in getting clearances and
fuel supply agreements. We have taken a number of steps to deal with
this problem, including the establishment of a new Cabinet Committee on
Investment under my Chairmanship.
I am confident these steps will have a positive effect, but their full
impact will take time.
The Deputy Chairman has indicated that in view of the latest assessment
of the state of the global economy, the overall growth target for the
Twelfth Plan is being set at 8 percent. This is a reasonable
modification but I must emphasise that achieving an average of 8 percent
growth, following less than 6 percent in the first year, is still an
As the Plan document makes clear, the high growth scenario will
definitely not materialise if we follow a “business as usual” policy.
The Plan identifies a number of areas where new initiatives and policy
innovations are needed. Many of these are areas where the principal
responsibility is that of the States. I look forward to hearing the
views of Hon’ble Chief Ministers on these suggestions.
While we need to accelerate growth, we do not view growth as an end in
itself. Our real objective must be to improve the condition of lives of
the aam aadmi, which is why we emphasise that growth must be inclusive.
There are two reasons why rapid growth is necessary to achieve greater
inclusiveness. First, it is necessary to generate the revenues to
finance our many programmes of inclusiveness. If growth slows down,
neither the States nor the Centre will have the resources needed to
implement inclusiveness programmes. We will either be forced to cut
these programmes, or be pushed into tolerating a higher fiscal deficit,
which will have other negative consequences.
Rapid growth also contributes directly to inclusiveness because it
provides greater access to income and employment opportunities. Policies
aimed at stimulating growth in agriculture and in medium and small
industries, combined with steps to promote education and skill
development, will produce a growth process which is inherently more
inclusive. The Twelfth Plan strategy contains many elements which will
ensure that growth is as inclusive as possible. I welcome your comments
on this strategy.
We also need to pay special attention to disparities between
socio-economic groups such as SCs, STs, OBCs and minorities. These
groups lag behind the rest of the population in key socio-economic
indicators. Fortunately, the gaps are closing but the pace at which this
is happening is not satisfactory and certainly does not match
expectations. We need to consider how we can do better.
Gender inequality is another important aspect which deserves special
attention. Women and girls represent half the population and our society
has not been fair to this half. Their socio-economic status is
improving, but gaps persist. The emergence of women in public spaces,
which is an absolutely essential part of social emancipation, is
accompanied by growing threats to their safety and security. I have in
mind the brutal attack on a young woman only a few days ago in the
capital and other such reprehensible incidents elsewhere. We must
reflect on this problem, which occurs in all states and regions of our
country, and which requires greater attention both by the Centre and the
In this particular case, the culprits have been apprehended, and the law
will deal with them expeditiously. Government has decided to review the
present laws and examine the levels of punishments in cases of
aggravated sexual assault. A committee of eminent jurists, headed by the
former Chief Justice of India, Justice J.S. Verma, has been constituted
for this purpose. Let me state categorically that the issue of safety
and security of women is of the highest concern to our Government. A
Commission of Inquiry is being set up to look into precisely these
issues in the Capital. There can be no meaningful development without
the active participation of half the population and this participation
simply cannot take place if their security and safety are not assured. I
urge all Chief Ministers to pay special attention to this critical area
in their states.
There are many sectors of our economy that are dealt with in detail in
the Plan document. I will only touch on some of them in my remarks.
Agriculture is an area of critical concern. Although the share of
agriculture in GDP has fallen to only 15%, about half of the population
still relies on agriculture as its principal income source. What happens
in agriculture is therefore critical for the success of inclusiveness.
We need to build on the success of the last Plan by increasing land
productivity in agriculture so that we not only meet our rising demand
for food, but also increase incomes of those dependent on agriculture.
Paradoxically, we should not aim at increasing total employment in
agriculture. In fact, we need to move people out of agriculture by
giving them gainful employment in the non agricultural sector. It is
only when fewer people depend upon agriculture that per capita incomes
in agriculture will rise significantly and sufficiently to make farming
an attractive proposition.
Agriculture is a state subject and most of the policy initiatives needed
are in the realm of State Governments. The Minister of Agriculture, my
colleague Shri Sharad Pawar will be dealing with these issues in some
detail and I look forward to the reaction of Chief Ministers on this
Growth in manufacturing should be at double digit levels, but this has
yet to take place. The Plan mentions many new initiatives aimed at
strengthening performance in the manufacturing sector. Small and medium
industries are particularly important as they generate more employment.
Both the Centre and the States must give priority attention to creating
an eco-system in which these industries can grow and flourish.
Better infrastructure is the best guarantee for rapid growth of the
economy. Infrastructure development is heavily capital intensive and
both the Centre and the States are severely constrained by resource
availability. The central government, and many state governments, have
been successful in promoting infrastructure development through PPPs.
India has the second largest number of PPP projects in infrastructure in
the world. It will be necessary to continue this thrust in the Twelfth
Five Year Plan.
The Eleventh Plan paid special attention to the North East and I am
happy to say that North Eastern states have responded well. GDP growth
in a number of states was higher than the national average. We plan to
step up the pace of investments in infrastructure, particularly roads,
rail, airports, waterways and power transmission systems to support and
stimulate economic activity in this vital region of our country. I am
hopeful that as a result of our Look East Policy, this region will fast
become a major gateway to trade and economic activity with our
I have mentioned that both the Centre and the States face resource
constraints. Both therefore have to make determined efforts to mobilise
resources to fund the Plan. The Plan document points out that we need to
increase the tax ratio as a percent of GDP through a combination of tax
reforms and better tax administration. Early implementation of the Goods
and Services Tax (GST) is critical in this context. I hope we will have
the co-operation of the States to introduce GST as quickly as possible.
The Plan also draws attention to the need to control subsidies. Some
subsidies are a normal and indeed essential part of any socially just
system, but subsidies should be well designed and effectively targeted
and the total volume must be kept within limits of fiscal
sustainability. Failure to control subsidies within these limits only
means that other plan expenditures have to be cut or the fiscal deficit
target exceeded. The Finance Minister will be addressing these issues in
A common complaint against government programmes is that they suffer
from leakages, corruption, delays and poor targeting. The Central
Government is taking a major step to deal with this problem by shifting
several beneficiary oriented schemes to a direct transfer mode, using
the Aadhaar platform. This will begin to roll out for selected schemes
in selected districts in the course of January 2013. In due course, a
wide range of benefits like scholarships for students, pensions for
elderly, health benefits, MNREGA wages and many other benefits will
migrate to direct transfer into bank accounts using Aadhaar as a bridge.
This is an innovative step which will be watched by the entire global
development community. The Central and State Governments must work
together to make this a success.
Many State Governments have said that Centrally Sponsored Schemes are
often ineffective because of rigid guidelines. The Deputy Chairman has
already pointed out that we are taking steps to rationalise the
Centrally Sponsored Schemes along the lines recommended by the B.K.
Chaturvedi Committee, including proposals to introduce greater
flexibility in these schemes. I am sure these changes will be widely
There are two areas I wish to mention which pose a major challenge for
our economy and these are energy and water.
Energy is a critical input for any growth process and our domestic
energy resources are not sufficient to meet our country’s growing needs.
We import oil, natural gas and in recent years even coal. If we wish to
keep our energy import requirement within reasonable limits, we must
emphasise energy efficiency to moderate demand and we must increase
domestic production of energy. Energy pricing is critical for both
objectives. If domestic energy prices are too low, there will be no
incentive to increase energy efficiency or to expand even supply.
Unfortunately, energy is underpriced in our country. Our coal, petroleum
products and natural gas are all priced well below international prices.
This also means that electricity is effectively underpriced, especially
for some consumers. Immediate adjustment of prices to close the gap is
not feasible, I realise this, but some phased price adjustment is
necessary. Energy experts are unanimous that we cannot expect to achieve
rapid, inclusive and sustainable growth if we are not willing to
undertake a phased adjustment in energy prices to bring them in line
with world prices. The Central Government and the states must work
together to create awareness in the public that we must limit the extent
of energy subsidies. I look forward to hearing the comments of Hon’ble
Chief Ministers on this complex issue.
The management of our water resources poses severe challenges. We are
rapidly approaching the position where the total demand for water in the
country simply cannot be met by available supply. As with energy, we
have to respond by increasing water use efficiency and also by expanding
supply in a sustainable manner.
The Plan document outlines a comprehensive strategy for dealing with
this problem, starting with a serious effort to map available ground
water supplies aquifer by aquifer. Available water also needs to be
allocated to different uses through a Water Regulatory Authority. This
is an area where action lies largely in the domain of State Governments.
The development of our country is necessarily a cooperative endeavour
involving many stakeholders. It involves both the public sector and the
private sector, the Central Government and the State Governments. It
also involves the common people particularly those participating
actively in devising new ways of addressing old problems.
We have been reasonably successful in what we have achieved so far, but
we must remember that we are still a low income country. We need twenty
years of rapid growth to bring it to middle income level. The journey is
long and requires hard work and commitment. This meeting of the National
Development Council is an opportunity to re-dedicate ourselves to the
arduous task before us.
The people of this country have bestowed upon us the responsibility of
creating the conditions in which they can fulfil their dreams and
aspirations. If we do our part, I have no doubt that the talented people
of India have the capacity to take this great nation to heights of
glory. The people have high expectations of us. I am sure all Chief
Ministers will agree that we must not fail to come up to the
expectations of our people.”