Unit-7
Niti Aayog
Introduction to NITI Aayog in India:
The National Institution for Transforming India (NITI Aayog) is a government-run organisation that aims to transform India. Aayog is a policy think tank formed by the Indian government and state governments to replace the 65-year-old Planning Commission. On January 1, 2015, the Union Government of India declared the establishment of NITI Aayog.
Both State Chief Ministers and Lt. Governors of Union Territories will serve on the NITI Aayog's governing council, which will seek to promote a "cooperative federalism" in order to provide a "political agenda" to the Centre and States.
The body will include a CEO and Vice Chairperson, who will be named by the Prime Minister, as well as some full-time and two part-time members, as well as four Union Ministers who will act as ex-officio members. In addition, regional councils would be created, and experts and specialists from various fields would be invited as special invitees by the Prime Ministers.
NITI Aayog will function as the government's "think tank" and "directional and policy dynamo," providing strategic and technical guidance on key policy concerns, including economic issues of national and international interest, to both the federal and state governments.
As a result, NITI Aayog will never schedule, but rather formulate strategy. Various Ministries of the Central Government will plan developmental projects based on these policies, taking into account the need for long-term growth. The NITI is in favour of a shared federal system in which the federal government and the states work together to formulate policies.
NITI, on the other hand, wants to encourage healthy competition among developed countries.
As a result, the driving concept behind the new body would be "cooperative federalism," which would imply that states would have a voice in developing development plans and policies. The NITI Aayog was envisioned as a kind of inclusive think-tank that would provide strategic and technical guidance on economic issues of national and global significance to the Centre and States.
The NITI Aayog, which is modelled after China's National Reforms Development Commission, will have regional councils to concentrate on developmental activities in specific areas.
The Planning Commission had the authority to distribute funds to states for regional growth, but the NITI Aayog would not have that authority. Rather, the Finance Ministry's Department of Expenditure is now in charge of allocating funds to states.
Its main task will be to develop long-term policy and design structures, as well as to take the required steps to accelerate progress, and to closely track these activities.
As a result, the NITI Aayog will closely track and review the government's programmes and initiatives. “With central plan expenditure of the order of Rs 5.75 lakh crore being channelled per year for growth, it was absolutely important that there be concurrent, detailed, accurate, and reliable evaluation,” according to the Planning Ministry of the current NDA government.
This move primarily focuses on strategies for increasing understanding of and use of assessment as a method for improving the outcomes of good governance policies and programmes. So it was time to think about creating a National Evaluation Policy to guide monitoring and evaluation (M&E) activities in the country, focusing on quality standards and ethical procedures while also establishing appropriate institutional mechanisms.
(a) A group of people charged by the government with formulating and enforcing policies aimed at transforming India.
(b) It is a commission tasked with advising the government on social and economic matters.
(c) It is a think-tank institute of experts on staff.
(d) It is a body tasked with regularly monitoring and evaluating government programmes and initiatives.
The Formation of NITI Aayog:
The NITI Aayog comprises the following members and bodies:
1. India's Prime Minister serves as the chairperson.
2. The Chief Ministers of all States and Union Territories with assemblies, as well as Lieutenant Governors of other Union Territories, make up the Governing Council.
3. Regional Councils may be established to deal with particular problems and contingencies that affect several states or regions. The Regional Councils' goal is to resolve conflicts amicably between two or more states that are dealing with a common set of issues that typically stall development projects.
These councils will be formed for a specific period of time. The Prime Minister will convene Regional Councils, which will be made up of the Chief Ministers of States and Lieutenant Governors of Union Territories in the region, to discuss specific issues. The chairperson of the NITI Aayog or his nominee may preside over these Regional Councils.
4. The Prime Minister will appoint experts, professionals, and practitioners with appropriate domain experience as special invitees.
5. Full-time organizational framework (in addition to Prime Minister as the Chairperson) includes the following positions:
(i)Vice-Chairperson
(ii) Full-time members: two (2)
(iii) Part-time Members: A maximum of two ex-officio members from leading universities, academic agencies, and other related institutions. Part-time employees will be rotated on a regular basis.
(iv) Ex-officio Members: The Prime Minister can appoint up to four members of the Union Council of Ministers.
(v) Chairman of the Board of Directors (CEO). To be named by the Prime Minister as Secretary to the Government of India for a fixed term.
(vi) Guests of Honor.
(vii) Secretariat, as deemed essential for the organization's operation.
NITI Aayog's Current Members:
The NITI Aayog currently has the following members in various capacities:
Prime Minister Narendra Modi is the chairperson.
Sindhushree Khullar is the company's CEO.
Arvind Panagariya, Vice Chairperson (Well known India born economist and Columbia University Professor).
Rajnath Singh, Arun Jaitley, Suresh Prabhu, and Radha Mohan Singh are ex-officio members. Nitin Gadkari, Smriti Zubin Irani, and Thawar Chand Gehlot are among the special invitees. Bibek Debroy and V.K. Saraswat are the only full-time members. All Chief Ministers and Lieutenant Governors of Union Territories are members of the Governing Council.
The Aims and Objectives of NITI Aayog:
The following are some of NITI Aayog's major goals and objectives:
1. The NITI Aayog's mission is to provide important strategic and directional insight into the country's development process.
2. NITI Aayog aims to act as the government's "think tank," providing important strategic and technical guidance on key policy concerns, including economic issues of national and international concern, at both the federal and state levels.
3. NITI Aayog now seeks to replace the Planning Commission's one-way policy flow from the centre to the states with an amicable settled policy framed by a real and ongoing partnership of states.
4. The NITI Aayog will also work to improve inter-ministerial coordination and center-state coordination in order to put an end to policy implementation delays. It will aid in the creation of a common vision of national development goals and the promotion of cooperative federalism, with the goal of focusing on the belief that strong states equal a strong country.
5. The NITI Aayog's goals are to create frameworks for forming credible plans at the village level and then aggregating them at higher levels of government. This Aayog will pay particular attention to those in society who may be at risk of not benefiting enough from economic growth.
6. Through a collaborative group of national and international experts, professionals, and collaborators, the NITI Aayog will develop a knowledge, creativity, and entrepreneurial support system. In order to facilitate the implementation of the development agenda, the Aayog will provide a forum for the resolution of inter-sectoral and inter-departmental issues.
7. The NITI Aayog will keep track of and review programme implementation, with an emphasis on technological advancement and capacity building.
Undertaking the above activities, the NITI Aayog will aim to accomplish the following objectives and opportunities:
(i)A successful administration model in which the government acts as a "enabler" rather than a "first and last resort provider."
(ii) Moving away from an emphasis on "food security" to a combination of agricultural production and achieving real returns for farmers from their produce.
(iii) Ensuring that India participates actively in global commons debates and discussions.
(iv) To ensure that the socially active middle class stays engaged and that its full potential is realised.
(v) Make use of India's entrepreneurial, technological, and intellectual resources.
(vi) Take into account the non-resident Indian Community's geoeconomic and geopolitical influence.
(vii) Using new technologies, use urbanisation as an opportunity to build a healthy and safe environment.
(viii) Use technology to reduce opacity and the risk of governance mishaps.
Furthermore, the NITI Aayog aims to improve India's ability to deal with complex problems by implementing the following measures:
(i) Harnessing India's demographic dividend and realising the potential of India's youth, both men and women, through education, skill growth, gender equality, and job creation.
(ii) Poverty eradication and increased opportunities for every Indian to live a life of dignity and self-respect.
(iii) Discrepancies based on gender inequality, caste, and economic disparities are addressed.
(iv) Incorporate villages into the country's growth process on an institutional level.
(v) To provide policy assistance to more than 50 million small businesses, which are a major source of jobs.
(vi) To protect our natural resources and the environment.
By promoting better inter-ministry cooperation and improving Centre-State coordination, the NITI Aayog will try to frame a proper development strategy for the country and will also aim to put an end to slow and tardy policy implementation. It will also promote cooperative federalism and establish a common vision of national development goals, acknowledging the motto that strong states make strong nations.
Critics of the current setup panned it, with some referring to it as "old wine in a new bottle." Some opponents, on the other hand, have argued in its favour.
“The idea of creating an institution where state leaders can be part and parcel of the collective thinking with the Centre and other stakeholders in formulating a vision for the development of the country is right one,” said Arun Maira, a former member of the Planning Commission (NDC). The latter did not fully absorb and embrace it.”
However, it is too early to speculate on the new institution's effectiveness in terms of expected growth, which may happen until it changes gears and begins serious operations. The current move to decentralise planning and allow state feedback to direct it, on the other hand, appears to be a positive and successful step.
Another benefit of these institutions is that they provide a complex institutional framework by which eminent individuals from outside the government can contribute to policymaking. Furthermore, one of the NITI Aayog's main responsibilities is to continuously track and review the implementation of programmes and initiatives, which is a new function in the current setup.
The Union Government created NITI Aayog (National Institution for Transforming India) on January 1, 2015, as a replacement for the Planning Commission, as announced by Prime Minister Narendra Modi on Independence Day. This is the result of intensive consultation with a wide range of stakeholders, including state governments, domain experts, and related organisations.
The Union Government created NITI Aayog (National Institution for Transforming India) on January 1, 2015, as a replacement for the Planning Commission, as announced by Prime Minister Narendra Modi on Independence Day. This is the result of intensive consultation with a wide range of stakeholders, including state governments, domain experts, and related organisations.
Planning Commission:
It was established on March 15, 1950, as an advisory institution with the aim of forming five plans in the country along the USSR axis (former Soviet Union).
Functions of the Planning Commission:
1. Calculate the country's physical, capital, and human resources.
2. To devise a strategy for maximising and balancing the use of human capital.
3. Assess the different stages of planning and recommend resource distribution based on priority.
NITI Aayog
The NITI Aayog was established "to provide crucial strategic and directional feedback into the development process." It will serve as a "think tank" that will provide policy advice to the Centre and the states. By promoting better inter-ministerial cooperation and better Centre-State coordination, the Aayog hopes to put an end to "weak and tardy policy implementation" (co-operative federalism). Ex-officio chairman is Prime Minister Narendra Modi, vice chairman is Shri Arvind Panagariya, and Chief Executive Officer is Shri Amitabh Kant.
Functions of NITI Aayog
1. To create a common vision of national development priorities, markets, and strategies with States' active participation in light of national goals.
2. To promote continuous cooperative federalism with the States through organised support programmes and processes, realising that strong states make a strong country.
3. Establish frameworks for forming reliable plans at the village level, which will then be aggregated at higher levels of government.
4. To ensure that national security priorities are integrated into economic strategy and policy in areas that are expressly referred to it.
5. Pay particular attention to those in our society who might be at risk of not benefiting enough from economic growth.
6. To develop long-term strategic policy and programme structures and strategies, as well as to monitor their progress and effectiveness. Lessons learned through monitoring and reviews can be used to make creative changes, including mid-course corrections if necessary.
NITI Aayog vs Planning Commission
Parameter | NITI Aayog | Planning Commission |
Financial clout | Being a think-tank or advisory body. The finance ministry may be given the authority to distribute funds. | Had the authority to distribute funds to ministries and state governments. |
Full-time members | There could be fewer full-time members than on the Planning Commission. | The previous Commission consisted of eight full-time members. |
States' role | State governments are likely to play a larger role in the Planning Commission than they did previously. | States' participation was limited to the National Development Council and annual Plan meetings. |
Member secretary | To be well-known among CEOs and to be named by the Prime Minister. | Secretaries and member secretaries were appointed using the standard procedure. |
Part-time members | To have a variety of part-time members who can be called upon when required. | There was no allowance for part-time members on the Full Planning Commission. |
Why NITI Aayog Replaced Planning Commission: Reasons
1. In contrast to the Commission, which implemented five-year plans and allocated resources to meet set economic goals, the new National Institution for Transforming India (NITI) would behave more like a think tank or forum, according to its supporters.
2. The representatives of India's 29 states and seven union territories will be represented at NITI. However, the full-time team, which includes a deputy chairman, CEO, and experts, will report directly to the 64-year-old Prime Minister, who will serve as chairman. It differs from the National Development Council's planning committee, which used to report to it.
3. The major difference between the NITI Aayog and the Planning Commission's approaches to planning is that the former would encourage greater state participation, while the latter will take a top-down approach with a one-size-fits-all programme.
4. The Planning Commission's function was to formulate broad policies and serve as a consultative body. The NITI Aayog will be in charge of allocating resources to states based on their needs.
5. Policy preparation, which was the responsibility of the Planning Commission, had no direct input from the governments. The states were involved indirectly through the National Development Council; this will not happen again in the NITI Aayog.
The NITI Aayog aims to enable India to better face complex challenges, through the following:
1. Making the most of India's demographic dividend and realising the potential of India's youth, both men and women, through education, skill growth, gender equality, and jobs.
2. Poverty eradication and the opportunity for every Indian to live a life of dignity and self-respect
3. Differences centred on gender inequality, caste, and economic disparities are addressed.
4. Incorporate villages into the planning process on an institutional level.
5. Policy support for over 50 million small businesses, which are a significant source of new jobs.
6. Environmental and ecological assets must be protected.
On January 1, 2015, the government of India replaced the old planning commission, which was formed in 1950, with a new institution known as NITI Aayog. It functions under the leadership of the Prime Minister. The National Institution for Transforming India (NITI Aayog) will attempt to provide important strategic and directional insight into the development process. The emphasis is on cooperative federalism.
What’s new with NITI Aayog:
The one-way flow of policy from the centre to the states, which was a hallmark of the Planning Commission period, is now being replaced by a real and ongoing relationship of states.
(i) NITI Aayog is more of a "think tank" than a money-distribution organisation.
(ii) NITI Aayog will provide appropriate strategic and technical advice to governments at the federal and state levels on a wide range of policy issues.
(iii) There will be a multi-directional flow of policy with NITI Aayog (from Center to States, from States to Center, between ministries etc.)
(iv) Better inter-ministerial coordination: The NITI Aayog will devise frameworks to establish credible proposals at the village level, which will then be aggregated at higher levels of government.
(v) Through a collaborative group of national and international experts, the NITI Aayog will develop a knowledge, creativity, and entrepreneurial support system.
(vi) The National Institution for Transforming India will use a holistic approach to serve as a catalyst for growth.
(vii) The 7 pillars of effective governance that NITI Aaayog is built on are: (1) Pro-People (2) Pro-Activity (3) Participation (4) Empowering (5) Inclusion of all (6) Equality (7) Transparency.
(viii) State governments play an equal role in the nation's development process, according to NITI Aayog, which promises the concept of cooperative federalism.
(ix) NITI Aayog is envisioned as a think tank that serves as a forum for tracking and implementing all government policies by bringing together various ministries at the federal and state levels.
(x) Uplifting the poor, marginalised, and downtrodden is a priority, as is empowering oppressed and marginalised groups and redressing identity-based inequality of all kinds – gender, region, religion, caste, and class.
NITI Aayog: Objectives and Opportunities:
(i) The NITI Aayog will work to achieve the following goals and opportunities:
(ii) a management model in which the government acts as a "enabler" rather than a "first and last resort provider."
(iii) Progress from "food security" to a combination of agricultural production and real returns that farmers receive from their produce.
(iv) Ensure that India participates actively in global commons debates and discussions.
(v) Ensure that the economically active middle class is kept engaged and that its full potential is realised.
(vi) Utilize India's entrepreneurial, scientific, and intellectual human capital; incorporate the Non-Resident Indian Community's significant geo-economic and geo-political strength; and use urbanisation as an opportunity to create a wholesome and secure habitat through the application of modern technology.
(vii) Utilize technologies to reduce opacity and the risk of governance mishaps.
NITI Aayog: Aims:
The NITI Aayog's aim is to help India better deal with complex challenges by doing the following:
(i) Taking advantage of India's demographic dividend and realising the potential of young people, both men and women, through education, skill growth, gender equality, and employment; eradicating poverty and providing every Indian with the opportunity to live a life of dignity and self-respect; and redressing inequalities based on gender inequality, caste, and economic disparities.
(ii) Integrate villages into the development process on a systemic level; provide policy support to more than 50 million small businesses, which are a major source of job creation; and protect our environmental and ecological assets.
Structure and Composition of NITI Aayog:
a) Chairperson: India's Prime Minister
b) Governing Council: The Lt. Governors of Union Territories and the Chief Ministers of all States make up this body.
c) Regional Councils: Will be created to resolve particular problems and disasters that affect several states or regions.
d) The NITI Aayog's strategy and planning will be anchored at the state level. The Prime Minister will convene Regional Councils for defined priority domains, which will be led by relevant sub-groups of States (grouped around geographic, economic, social, or other commonalities) and Central Ministries.
e) 7.3.5 Regional Councils:
Full-time Organisational Framework:
In addition to the Prime Minister, who will serve as Chairperson:
1. Vice-Chairperson: the Prime Minister may nominate this person.
2. Full-time members: experts with foreign experience.
3. Ex-officio Members: no more than two from leading universities, academic agencies, and other related institutions. Part-time employees will be rotated on a regular basis.
4. Ex-Officio Members: the Prime Minister can appoint up to four members of the Union Council of Ministers.
5. Chief Executive Officer: The Prime Minister will appoint the Chief Executive Officer, who will hold the rank of Secretary to the Government of India, for a fixed term.
6. Secretariat: as determined by the needs of the organisation.
NITI Aayog specialized Wings:
Difference between NITI Aayog and Planning Commission:
ORGANIZATION:
a) Planning Commission – There was a vice chairperson, a member secretary, and full-time staff on the Planning Commission. The standard procedure is used to nominate secretaries or member secretaries.
b) NITI Aayog – New Secretary-level CEO and Vice-Chairperson positions. There will be five full-time and two part-time participants. Ex-officio members may include four cabinet ministers. The Prime Minister appoints the CEO directly.
PLANNING:
a) NITI Ayog formulates national development policy in a market economy integrated with the globalised world, while the Planning Commission pursues top-down planning for government with public sector capital.
RELATION WITH STATES:
a) The planning commission was a federal agency with no representation from the state government. For contact with states, there was no systemic mechanism.
b) The National Institute of Transforming India (NITI Ayog) works with state governments to foster cooperative federalism. It gives you a place to communicate with states in an organised and routine way.
FINANCE:
a) With the creation of the Planning Commission, the position of the Finance Commission was greatly reduced. The Planning Commission was in charge of allocating money.
b) The NITI Ayog has no part in the allocation of funds. The Finance Ministry will determine the state's tax contribution, CSS fund allocation, and Union assistance to the state programme.
CONSTITUTION AND REPORTING:
a) The Planning Commission reported to the National Development Council, which was comprised of State Chief Ministers and Lieutenant Governors.
b) State Chief Ministers and Lieutenant Governors make up the Niti Aayog Governing Council.
Niti Aayog: Criticism:
a) It's a non-constitutional body that isn't accountable to parliament, much like the Planning Commission.
b) Without consulting the states, the planning commission was disbanded.
c) Lieutenant Governors, not chief ministers, serve the states. This goes against the federalist principles.
d) The distribution of funds to welfare schemes will be impacted. Gender budgeting, for example, has been reduced by 20 percent.
Conclusion:
The NITI Aayog will work closely with the Ministries of the Central Government and State Governments in terms of collaboration, consultation, and coordination. Although it will make recommendations to the federal and state governments, it will be up to them to make and enforce the decisions. People-centric, participatory, collaborative, open, and policy-driven governance is a vital prerequisite of good governance, which NITI Aayog would aim to promote and empower. It will provide crucial strategic and directional guidance to the development process, with an emphasis on deliverables and outcomes. The core mission of NITI Aayog will be to be an incubator and disseminator of new thinking and ideas for growth.
a) Though India's planned economic growth began in 1951 with the implementation of the First Five-Year Plan, theoretical efforts began much earlier, even before independence. The Indian National Congress formed the National Planning Committee in 1938, the Bombay Plan and Gandhian Plan in 1944, the Peoples Plan in 1945 (by the Indian Trade Union's postwar reconstruction committee), and Jaiprakash Narayan's Sarvodaya Plan in 1950 were all moves in this direction.
b) Five-Year Plans (FYPs) are national economic systems that are centralised and integrated. In the late 1920s, Joseph Stalin launched the first FYP in the Soviet Union. They have since been embraced by the majority of communist states as well as a number of capitalist countries. China and India also use FYPs, but China's Eleventh FYP was renamed a guideline (guihua) rather than a plan (jihua) from 2006 to 2010, to reflect the central government's less hands-on approach to growth.
c) Following independence, India's First FYP was introduced in 1951, under the socialist control of Prime Minister Jawaharlal Nehru. The process started with the establishment of the Planning Commission in March 1950, in order to achieve the government's stated goals of promoting a rapid rise in the people's standard of living through efficient utilisation of the country's resources, increased productivity, and providing opportunities for all to work in the community's service. The Planning Commission was tasked with assessing all of the country's resources, supplementing those that were deficient, formulating strategies for the most efficient and balanced use of resources, and deciding objectives.
d) The first Five-Year Plan was introduced in 1951, and two more five-year plans were established until 1965, when the Indo-Pakistan Conflict forced a pause. Drought in two consecutive years, currency depreciation, a general increase in costs, and resource erosion interrupted the planning process, and the fourth Five-year plan began in 1969, following three Annual Plans between 1966 and 1969.
e) Owing to the rapidly changing political situation at the Centre, the Eighth Plan was unable to take off in 1990, and the years 1990-91 and 1991-92 were regarded as Annual Plans. After the implementation of structural reform measures, the Eighth Plan was officially introduced in 1992.
f) The emphasis in the first eight Plans was on a growing public sector with massive investments in basic and heavy industries, but since the launch of the Ninth Plan in 1997, the emphasis on the public sector has waned, and the current thinking on planning in the country is that it should become more indicative.
Outline of various Five year plan.
Plan |
|
Goal of the First Plan(1951-1956)
2.1percent growth 3.6percent actual growth | It was created using the Harrod-Domar Model. At the start of the first five-year Plan, the nation was faced with an influx of migrants, a serious food shortage, and rising inflation. Agriculture, price stability, fuel, and transportation were all part of the plan. It was a fruitful plan largely due to strong harvests in the plan's final two years. The objectives of refugee recovery, food self-sufficiency, and price control were mostly met.
|
The Second Strategy (1956 - 61) 4.5 percent is the target growth rate. Actual Growth Rate:4.3 Percentage Points | 'Simple aggregative' is a term that refers to a The Harrod Domar Growth Model was used again for overall forecasts, and the resource allocation strategy to diverse sectors such as agriculture and industry was focused on Prof. P C Mahalanobis' two and four sector models. (This plan is also known as the Mahalanobis Plan.) The second proposal was formulated in a stable economic setting. Agriculture was thought to be given a lower priority. The plan emphasised rapid industrialization, especially in the heavy and basic industries. Large imports through foreign loans were advocated. Due to a severe shortage of forex, development goals were trimmed, prices rose (by around 30%) compared to the previous Plan, and the second FYP was only moderately competitive. |
Third Plan (1961-1966) | 5.6 percent growth goal
Actual Growth Rate:2.8 Percentage Points | At the time of its inception, it was thought that the Indian economy had reached a “takeoff stage.” Its aim was to make India a "self-sufficient" and "self-generating" economy. Agriculture was given top priority to help exports and industry, based on the experience of the first two plans (agricultural production was seen as a limiting factor in India's economic development). Due to unexpected events such as Chinese aggression (1962), the Indo-Pak war (1965), and extreme drought in 1965-66, the Plan failed miserably to meet its objectives. Due to wars, the emphasis changed from growth to defence and development in the later stages. |
There are three annual plans.
(1966-69) euphemistically described as Plan holiday. | The failure of the Third Plan, which included the depreciation of the rupee (to boost exports) and an inflationary slowdown, resulted in the postponement of the Fourth FYP. Instead, three Annual Plans were adopted.
Prevailing crisis in agriculture and serious food shortage necessitated the emphasis on agriculture during the Annual Plans. ● During these plans a whole new agricultural strategy was implemented. It involving wide-spread distribution of high-yielding varieties of seeds, extensive use of fertilizers, exploitation of irrigation potential and soil conservation. ● During the Annual Plans, the economy absorbed the shocks generated during the Third Plan ● It paved the path for the planned growth ahead. |
Fourth Plan (1969 - 74) Target Growth: 5.7% Actual Growth: 3.3% | The refusal of allies to supply vital equipment and raw materials during the Indo-Pak war culminated in the Fourth Plan's twin goals of "development with stability" and "progressive achievement of self-reliance." ● Main emphasis was on growth rate of agriculture to enable other sectors to move forward . First two years of the plan saw record production. The last three years did not measure up due to poor monsoon. Implementation of Family Planning Programmes were amongst major targets of the Plan. ● Influx of Bangladeshi refugees before and after 1971 Indo-Pak war was an important issue along with price situation deteriorating to crisis proportions and the plan is considered as big failure. |
The Fifth Strategy (1974-79) 4.4 percent is the target growth rate. Actual Growth Rate: 4.8 Percentage Points | D.P. Dhar prepared and released the final draught of the fifth plan against the backdrop of an economic crisis resulting from out-of-control inflation fueled by increasing oil prices and the government's inability to take over the wholesale wheat trade. ● It proposed to achieve two key goals: "poverty eradication" (Garibi Hatao) and "self-sufficiency." Promotion of a high rate of growth, improved income distribution, and substantial increases in domestic savings rates were seen as main instruments. Cost estimates for the Plan were entirely incorrect due to high inflation, and the initial public sector outlay had to be updated upwards. Following the declaration of emergency in 1975, the emphasis turned to the implementation of the Prime Minister's 20-Point Plan. FYP faded into obscurity, and when the Janta Party came to power in 1978, the Plan was scrapped. |
Rolling Strategy (1978 - 80) | There were two Sixth Plans in total. In comparison to the Nehru Model, which the government criticised for concentration of power, widening inequality, and rising poverty, the Janta Government proposed a strategy for 1978-1983 that focused on jobs. The nation, on the other hand, only lasted two years. When the Congress regained power in 1980, it embarked on a new strategy aimed at directly attacking the issue of poverty by creating conditions conducive to economic growth. |
Plan No. 6 (1980 - 85) 5.2 percent is the target growth rate. Actual Growth Rate: 5.7 Percentage Points | With an emphasis on ‘food, jobs, and productivity,' the Plan aimed to increase food grain production, increase job opportunities, and raise productivity. The strategy was a huge success, as the economy grew at a rate of 6% instead of the targeted 5%, despite the fact that the economy was still struggling to get out of the ‘Hindu Rate of Growth' in the 1980s. |
The Seventh Strategy (1985 - 90) 5.0 percent is the target growth rate. 6.0 percent actual growth | With an emphasis on ‘food, jobs, and productivity,' the Plan aimed to increase food grain production, increase job opportunities, and raise productivity. The strategy was a huge success, as the economy grew at a rate of 6% instead of the targeted 5%, despite the fact that the economy was still struggling to get out of the ‘Hindu Rate of Growth' in the 1980s. |
Target Growth in the Eighth Plan(1992-1997)
Actual Growth of 5.6 percent 6.8% of people | The eighth plan has been delayed for two years due to political instability in the country's capital.
Worsening balance of payments, increasing debt burdens, expanding budget deficits, industrial contraction, and inflation were all major concerns at the time of the plan's launch. Under the Prime Ministership of Shri P V Narasimha Rao, the plan implemented drastic policy measures to tackle the bad economic condition and achieve an annual average growth of 5.6 percent by introducing fiscal and economic reforms, including liberalisation. Rapid economic growth (highest annual growth rate so far – 6.8%), high growth in agriculture and allied sectors, and manufacturing sector, growth in exports and imports, and improvement in trade and current account deficit were some of the key economic outcomes during the eighth plan era. Even though the public sector's share of overall investment had dropped to around 34%, a high growth rate was achieved. |
Plan No. 9 (1997- 2002) 6.5 percent is the target growth rate. Actual Growth Rate: 5.4 Percentage Points | The United Front Government's plan focused on "Development of Social Justice and Equality." The Ninth Plan aimed to rely primarily on the private sector – both domestic and international (FDI) – and the state was expected to play a greater role as a facilitator and to become more involved in the social sector, such as education, health, and infrastructure, where private sector involvement was expected to be restricted. It prioritised agriculture and rural development in order to create enough sustainable jobs and eliminate poverty. |
Plan No. ten (2002 - 2007) 8% is the target growth rate. 7.6 percent actual growth | Recognizing that economic growth cannot be the only goal of a national plan, the Tenth Plan established ‘monitorable goals' for a number of key development indicators (11) in addition to the 8% growth target. Reduced gender differences in literacy and wage rates, reduced infant and maternal mortality rates, improved literacy, access to potable drinking water, and cleaning of large contaminated rivers were among the goals. Agriculture was declared the primary moving force of the economy, and governance was considered a factor of growth. With more participation of Panchayati Raj Institutions, the states' position in planning was to be increased. The aim was to achieve sustainable development of all states by breaking down growth and social development goals by state. |
Eleventh Strategy (2007 - 2012) 9 percent growth is the goal.Actual GrowthRate: 8% | Following UPA's return to power on the promise of helping Aam Aadmi, the Eleventh Plan was aimed "Towards Faster & More Inclusive Development" (common man). By the end of the Tenth Plan, India had become one of the world's fastest growing economies. Savings and investment rates had risen, the manufacturing sector had performed admirably in the face of global competition, and foreign investors were eager to invest in India. However, many groups, especially SCs, STs, and minorities, did not perceive the growth as sufficiently inclusive, as evidenced by data on poverty, malnutrition, mortality, current daily jobs, and other factors. The broad vision for the 11th Plan included many interrelated components such as rapid growth, poverty reduction, and job creation, access to vital health and education services, especially for the poor, employment expansion through the National Rural Employment Guarantee Program, environmental sustainability, and gender inequality reduction, among others. Various goals were set, including lowering unemployment (to less than 5% among educated youth) and the poverty headcount ratio (by 10%), lowering dropout rates, closing the gender gap in literacy, infant mortality, total fertility, lowering malnutrition in the 0-3 age group (to half its current level), improving the sex ratio, forest and tree cover, and improving air quality in major cities. ensuring electricity to all villages and BPL households (by 2009) and reliable power by the end of the 11th Plan, all-weather road connectivity to habitations with populations of 1000 and above (500 in hilly areas) by 2009, connecting every village by telephone, and providing broad band connectivity to all villages by 2012 In 2009-10 and 2010-11, the economy recovered significantly, with growth rates of 8.6 percent and 9.3 percent, respectively. However, a second bout of global recession in 2011 caused by Europe's sovereign debt crisis, combined with domestic factors such as tight monetary policy and supply-side bottlenecks, resulted in a 6.2 percent contraction in 2011-12. As a result, the average annual growth rate of Gross Domestic Product (GDP) during the Eleventh Plan was 8%, which was lower than the target but higher than that of the Tenth Plan. Given the two global crises that occurred during this time span – one in 2008 and the other in 2011 – the 8% growth rate can be considered adequate. During the 11th Plan phase, the agriculture, manufacturing, and services sectors are expected to rise at 3.7 percent, 7.2 percent, and 9.7 percent, respectively, compared to growth targets of 4 percent, 10-11 percent, and 9-11 percent. After experiencing an increasing level of domestic savings as well as investment, and particularly after the emergence of systemic break during the Tenth Plan period, the Eleventh Plan set a target of 34.8 percent for domestic savings and 36.7 percent for investment. Domestic savings and expenditure, on the other hand, averaged 33.5 percent and 36.1 percent of GDP at market prices in the Eleventh Plan, respectively, falling short of the target but not by much. According to the Planning Commission's most recent poverty figures, the country's poverty rate decreased by 1.5 percentage points a year between 2004-05 and 2009-10. The rate of decline from 2004-05 to 2009-10 is twice as fast as the rate of decline from 1993-94 to 2004-05. Despite the controversy surrounding the current poverty count based on the Tendulkar Formula, the Committee believes that if we use the old system or the new, the percentage of people living in poverty decreases in a similar manner. On the fiscal front, the government's expansionary steps to combat the global slowdown resulted in increases in key indicators through 2009-10, with some moderation thereafter. For more than half of the Plan era, the issue of price stability remained a hot topic. The government's ability to pass on the cost of higher imported oil prices could have limited the availability of investible funds available, allowing the 11th Plan to fall short of its goals. |
Twelfth Five Year Plan (2012-17).
a) The Twelfth Plan began at a time when the global economy was experiencing a second financial crisis, triggered by the Eurozone's sovereign debt issues, which exploded in the Eleventh Plan's final year. All countries, including India, were affected by the crisis. In 2011-12, our growth slowed to 6.2 percent, and the trend continued into the first year of the Twelfth Plan, when the economy is expected to rise by just 5a certain percentage As a result, the Twelfth Plan stresses that the economy's first goal must be to restore rapid growth while ensuring that it is both inclusive and sustainable. The subtitle reflects the broad vision and goals that the Twelfth Plan aims to achieve: ‘Faster, Sustainable, and More Inclusive Development.' Poverty reduction, fostering group equality and regional balance, reducing discrimination, and inspiring people are all ways to promote inclusiveness. whereas, while environmental sustainability is essential, so is the development of human capital through improved health, education, skill development, nutrition, information technology, and institutional capacities, as well as infrastructure such as electricity, telecommunications, roads, and transportation.
b) Apart from the global slowdown, the domestic economy has also been hampered by a number of internal issues. Following the fiscal expansion initiated after 2008 to provide a fiscal boost to the economy, macro-economic imbalances have surfaced. Inflationary pressures are increasing. Major energy and transportation investment programmes have stalled due to a number of implementation issues. During the 2012–13 tax year, some changes in tax treatment created uncertainty among investors. As a result of these changes, the rate of investment has slowed and economic growth has slowed.
c) As a result, the policy dilemma in the Twelfth Plan is two-fold. The immediate challenge is to halt the current slowdown in growth by reviving investment as soon as possible. This necessitates immediate action to address infrastructure implementation constraints that are delaying major projects, as well as action to address tax-related issues that have generated uncertainty in the investment climate. In the long run, the Plan must implement policies that capitalise on the economy's many strengths in order to restore its true growth potential.
d) The immediate priority is to restore investor confidence, followed by short-term actions to remove roadblocks to infrastructure projects, especially in the energy sector, which would necessitate addressing the issue of fuel supply to power plants, discom financial problems, and clarification on the New Exploration Licensing Policy (NELP).
e) Despite the fact that planning can include both government and private sector operations, a large portion of the public discourse in India revolves around the scale of the public sector programme. The Twelfth Plan sets out a comprehensive series of government initiatives aimed at achieving the goal of rapid and inclusive development. Given the limited resources available, it is critical to take ambitious measures to increase the quality of government spending through plan programmes. Fiscal reforms such as GST, as well as controlling the current account deficit and reducing subsidies as a percentage of GDP while also allowing for targeted subsidies that advance the cause of inclusiveness, are all major concern.
f) Achieving long-term growth would necessitate a rise in the rate of investment and savings. In order to return the economy to 9% growth by the end of the Twelfth Plan, the fixed investment rate must increase to 35% of GDP by the end of the Plan duration. This will necessitate both private investment, including private corporate investment, and public investment, particularly in key infrastructure areas such as electricity, transportation, water supply, and water resource management. A core component of the plan must be reversing the combined decline in government and corporate savings.
Monitorable Targets of the Plan:
The twenty-five core indicators mentioned below represent the twelfth Plan's vision of rapid, sustainable, and more inclusive growth:
1) Economic Growth
a. An annual growth rate of 8% in real GDP.
b. A 4.0 percent growth rate in agriculture.
c. A growth rate of 10% in manufacturing.
d. In the Twelfth Plan, every State must achieve an average growth rate that is ideally higher than in the Eleventh Plan.
2) Poverty and Employment
a. By the end of the Twelfth FYP, the head-count ratio of consumption poverty would have decreased by ten percentage points compared to previous figures.
b. During the Twelfth FYP, create 50 million new jobs in the non-farm sector and offer skill certification to an equal number of people.
3) Education
a. By the end of the Twelfth FYP, the Mean Years of Schooling would have increased to seven years.
b. Increase access to higher education by adding two million additional seats for each age group that are matched with the economy's skill needs.
c. By the end of the Twelfth FYP, close the gender and social gaps in school enrollment (that is, between girls and boys, as well as between SCs, STs, Muslims, and the rest of the population).
4) Health
a. By the end of the Twelfth FYP, reduce the IMR to 25 and the MMR to 1 per 1,000 live births, and increase the Child Sex Ratio (0–6 years) to 950.
b. By the end of the Twelfth FYP, reduce the total fertility rate to 2.1.
c. By the end of the Twelfth FYP, reduce undernutrition among children aged 0–3 years to half of the NFHS-3 levels.
5) Infrastructure, Including Rural Infrastructure
a. By the end of the Twelfth FYP, increase infrastructure spending as a percentage of GDP to 9%.
b. By the end of the Twelfth FYP, increase the Gross Irrigated Area from 90 million hectares to 103 million hectares.
c. By the end of the Twelfth FYP, provide electricity to all villages and reduce AT&C losses to 20%.
d. By the end of the Twelfth FYP, link all villages with all-weather roads.
d. By the end of the Twelfth FYP, national and state highways will have been upgraded to a minimum two-lane standard.
e. By the end of the Twelfth FYP, the Eastern and Western Dedicated Freight Corridors will be completed.
f. By the end of the Twelfth FYP, increase rural tele-density to 70%.
e. By the end of the Twelfth FYP, ensure that 50% of the rural population has access to 40 lpcd piped drinking water and that 50% of gramme panchayats have achieved Nirmal Gram Status.
6) Environment and Sustainability
a. During the Twelfth FYP, increase green cover (as determined by satellite imagery) by 1 million hectares per year.
b. In the Twelfth Plan, add 30,000 MW of renewable energy capacity.
c. Aim for a 20% to 25% reduction in GDP emission intensity by 2020, compared to 2005 levels.
1) Service Delivery
24.By the end of the Twelfth FYP, 90% of Indian households will have access to banking services. 25. By the end of the Twelfth Plan, major subsidies and welfare-related beneficiary payments will be made via direct cash transfer, using the Aadhar platform and connected bank accounts.
Sectoral Pattern of Growth :
1) The table on the following page summarises the sectoral growth trend associated with the 8% growth scenario. Agriculture, Forestry, and Fishing is expected to rise at a rate of 4%, which is higher than the 3.7 percent growth rate achieved in the Eleventh Plan. In the Eleventh Plan, the Mining and Quarrying Sector grew by just 3.2 percent, with negative growth of 0.6 percent in 2011–12 reflecting problems in the iron ore sector, gas production, and coal production. The Twelfth Plan expects a significant increase, with a growth rate of 5.7 percent on average. With a growth rate of just 2.7 percent in 2011–12, the manufacturing sector slowed during the Eleventh Plan. In the Twelfth Plan cycle, the average growth rate is expected to be over 7%, which is a major improvement over the situation in 2011–12 and 2012–13. On average, city, gas, and water supply are expected to rise at 7.3 percent, compared to 6.1 percent in the Eleventh Plan. Construction, which grew at a 7.7% annual rate in the Eleventh Plan, is expected to rise at a 9.1% annual rate in the future. Trade Hotels and Restaurants is expected to grow 7.4%, Transport, Storage and Communication is expected to grow 11.8 percent, Insurance and Business Service is expected to grow 9.9%, and Community and Personal Services is expected to grow 7.2 percent.
Public Sector Resources in the Twelfth Plan:
1) Several significant events occurred during the Eleventh Plan that have ramifications for the Twelfth Plan's funding. The Indian economy weathered the global financial crisis of 2008 with aplomb. Slower development, on the other hand, has a negative effect on the growth of the Centre's finances, especially taxes. The award of the Sixth Central Pay Commission has gone into effect. The 13th FC award, which covers the years 2011–15, is currently being implemented, with several amendments to the fiscal responsibility and budget control system goals. Service tax has emerged as a promising revenue source. In collaboration with the states, efforts are being made to implement a single Goods and Service Tax (GST). This would be a significant change to the indirect tax scheme. According to the projections of fiscal deficits based on the Medium Term Fiscal Policy Statement 2012–13, debt resources for financing GBS for the Twelfth Plan will be higher at first, but will eventually decline. Net borrowing by the Centre, which was 5.9% of GDP in 2011–12 (RE), is expected to fall to 5.1 percent of GDP in 2012–13. (BE). The fiscal deficit as a percentage of GDP is expected to decrease further to 4.5 percent in 2013–14, 3.9 percent in 2014–15, 3.2 percent in 2015–16, and 3.0 percent in the Twelfth Plan's final year.
Annual GDP growth rate by origin industry at constant prices (2004-05)
1) The 13th Finance Commission increased state devolution from 30.5 percent to 32 percent of the divisible pool, covering the period from 2014 to 2015, which includes the first three years of the Twelfth Plan. The Twelfth Plan's resource forecasts are based on a tax devolution rate of 28.45% of gross tax revenue. This was calculated by taking into account the surcharges being phased out and maintaining the same ratio beyond the 13th FC cycle before the Twelfth Plan's final year. This could change once the 14th FC's guidelines are available.
2) While there may be positive GST spin-off effects, primarily through better tax enforcement, the Twelfth Plan assumptions on tax capital of the Centre and States envision revenue neutrality of GST. According to the Centre's GBS projections, it would increase from 5.13 percent of GDP in 2012–13 to 5.22 percent in 2016–17. In the Twelfth Plan period, the average GBS for the Central Plan was 5.23 percent of GDP, compared to 4.69 percent in the Eleventh Plan. Total subsidies as a percentage of GDP are expected to fall to 1.5 percent by 2016–17 as a result of the reforms.
3) For the Eleventh Plan, the balance from current revenue (BCR) as a percentage of GDP was expected to be 2.31 percent, but it turned negative by (–)0.61 percent. However, due to strong tax revenue growth and a decrease in non-plan spending, BCR for the Twelfth Plan is expected to be 1.88 percent of GDP. The fiscal deficit ceiling ensures that borrowings, including net miscellaneous capital receipts, fall from 5.06 percent of GDP in the Eleventh Plan to 3.35 percent in the Twelfth Plan.
State resources:
1) During the Eleventh Plan, the fiscal deficit of the states as a whole stayed below 3% of GDP. Although prescribing various fiscal directions for individual states, the 13th FC also set a deadline for all states to reach a fiscal deficit of 3% of GDP by 2014–15. As a result, the fiscal deficit cap for all States, which was just over 3% of GDP in 2012–13, is expected to stay around 2.22 percent during the Twelfth Plan era. As a result, the States' ability to mobilise debt capital is undoubtedly restricted, and they must focus on improving revenue realisation and controlling non-Plan spending.
2) At current rates, the Aggregate Plan resources of the States and UTs, including PSE resources, are estimated to be Rs 37,16,385 crore. Own capital (including borrowings) total Rs 28,58,599 crore, while CA totals Rs 8,57,786 crore. The combined aggregate Plan resources of the States and UTs account for 3.88 percent of the total Plan resources.
3) The combined Plan resources of the States and UTs are expected to be 5.45 percent of GDP, representing a 0.44 percentage point improvement over the Eleventh Plan realisation. The BCR, which was Rs 2,74,400 crore in the Eleventh Plan at 2006–07 prices, is expected to rise to Rs 9,59,979 crore at current prices. This corresponds to a 0.39 percentage point increase in GDP over the Eleventh Plan. However, resource forecasts for PSEs indicate a 0.06 percentage point increase over the Eleventh Plan. CA to the US has remained nearly constant as a proportion of GDP.
Sectoral Allocation of Resources :
Energy, Transportation, and Social Services account for roughly 70% of the overall outlay, with individual shares of 19%, 16%, and 35%, respectively, and their outlays rose by 110,96, and 112 percent respectively, relative to the 11th Plan.
The eleventh and twelfth plans have the same overall financing trend as the eleventh and twelfth plans.
The center's resource in the eleventh and twelfth plans
The eleventh strategy has been implemented, and the resource situation in the UTs has been projected for the twelfth time.
Sectoral resource distribution in the public sector—realisation of the eleventh plan (2007-12) and the twelfth plan (2012-17) Projection is a term that refers to the act of
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