Prime Minister of India - Dr. Manmohan Singh

PM's opening remarks at Full Planning Commission Meeting

"I welcome you all to this very important meeting of the Planning Commission which is to discuss the draft 11th Five Year Plan. This is an important occasion as we are going to leave our collective stamp on the development approach that is going to guide our national efforts in the next five years. The last three years under the UPA government have seen a large number of new initiatives focusing on agriculture, rural development, infrastructure and the social sectors. Most of these initiatives are path-breaking in their own way, commit large resources to individual programmes and have brought the concerns and needs of the poor to the centre of our economic and social agenda. They are all, in many ways, steps towards our larger goal of rapid and inclusive growth. The Eleventh Plan has given us a chance to weave all these individual sectoral initiatives into a coherent whole, focusing on rapid economic growth reaching out to every nook and corner of our vast country.

We are certainly entering the Eleventh Plan in a strong position as far as growth is concerned. Growth in the first four years of our government will be close to 9%. We have never had such a consistently good growth performance in the past. It is important to emphasize the importance of growth for our economy. It provides the basis for expanding our resource base and consequently, our expenditures. It is the remarkable growth that we have seen in the last three years and the efforts put in by the Finance Ministry to gather more revenues that have enabled the huge expansion in outlays on rural employment, Bharat Nirman, agriculture, health and education that we have seen during this period. We must continue to create an environment where the growth processes continue to be vigorous and there is simultaneously full scope for individual initiative, creativity and enterprise.

Of course, the growth cannot be restricted to isolated pockets or to certain sections of society. We need it to be far more broad based. The Plan, therefore, rightly emphasizes a strategy of inclusive growth. We must certainly do what is necessary to achieve the target of 9 - 10% growth during the 11th Plan period. We must build on the strengths already evident to achieve this growth outcome. Simultaneously, we must ensure that delivery services of programmes for the empowerment of the poorer sections of our society are effective and free of leakages suggestive of wasteful use of scarce resources.

There are legitimate concerns on inclusiveness. The Plan does bring out the fact that the reduction in poverty and the quality of employment created up to 2004-05 is inadequate. We do not have data on what happened to employment and poverty beyond 2004-05. We do not really know our government has done better on these dimensions but there is reason to hope that initiatives such as the NREGA, Bharat Nirman, Sarva Siksha Abhiyan, Mid-Day Meal and National Rural Health Mission may have improved the situation. Nevertheless there is no room for complacency on this issue. The numbers remain too large and poverty line is over 30 years old. I am glad the Planning Commission has set up an expert group to review this matter. It must complete its work fast.

We must also ensure that growth is inclusive in the broadest sense of the term. This requires revival of agriculture, full encouragement of the manufacturing sector with special emphasis on expansion of industrial enterprises of all sizes, and a strong effort in promoting programmes that deliver essential services to the common man and also provide livelihood support.

I am happy to note that the share of the Central GBS allocation to key sectors such as agriculture, irrigation and rural development, health and education is being substantially increased. We must ensure that the additional funds being provided are properly spent, especially since much of what needs to be done is in these sectors.

Looking at the details of each sector, there is cause for considerable satisfaction that outlay on education goes up from 7.68% of the Central GBS in the 10th Plan to over 19% in the 11th Plan. It is the most favoured sector and the three fold increase in its share and a five fold increase in the actual outlays demonstrate the criticality of this sector in ensuring sustained and inclusive growth in the future. I would like to emphasize that this investment will pay off with a time lag - but it will pay off handsomely. However, this payoff will happen only if all initiatives in education are well thought out, well designed and grounded properly. They must ensure expansion, inclusion and also, quality.

There are concerns that some regions of our country are falling behind in their educational attainments and this gap must be bridged by the end of the 11th Plan. The 6000 model schools in all the Blocks, the 30 new Central Universities, the 370 new colleges in educationally backward districts and the huge expansion in the number of IITs, IIMs, IIITs and IISERs and the planned universalisation of secondary education are all going to bear fruit only if the Central and State Governments work purposefully to see that outcomes match outlays. I must emphasize the importance of quality in our institutions of higher education. The pursuit of quality requires reforms in these institutions in the way they are run. The Plan emphasizes this and I would like the Ministry of Human Resource Development and the Planning Commission to work together to see how these objectives can be actually achieved. The issue is no longer one of resources. It is of planning, management and delivery capability.

Agriculture must be a central focus for the government given the importance of the rural population. The Plan points out that some improvement in performance is evident. Agricultural growth averaged 4% in the last 2 years and is likely to be 4% this year as well. We must ensure that this dynamism is maintained and indeed enhanced. The recently launched Rashtriya Krishi Vikas Yojana and the Food Security Mission are major initiatives which attempt to change the way in which we have approached agricultural development. By focusing on district level planning and emphasizing flexibility and local relevance, we hope that we will be able to sustain the desired growth rate in agriculture and also ensure that it is regionally more balanced.

I would like to also point out that I foresee the next decade as one in which our food security will be under stress. Global trends in food production and prices and our own demand patterns of consumption are going to put increasing pressure on both the availability and prices of basic food stuffs. If we have to manage these pressures, we need to ensure that the agriculture sector not only performs as per our expectations but also that our food planning adjusts to the emerging market realities.

Health too sees a substantial increase in outlays - both in absolute terms and in its share. The National Rural Health Mission remains the centre piece of our efforts and by the end of the Plan, the total government spending on health at all levels would reach 2% of our GDP.

Infrastructure development is critical for 9% growth. A look at the Plan figures may show an apparent decline in the share of this sector in the budget support. But this is because of a greater reliance on non‑budgetary support. In addition to a doubling of the actual budget outlays on infrastructure, there is an ambitious attempt to change the financing pattern. Public sector investment in infrastructure will increase substantially based on increases in Internal or Extra Budgetary Resources (IEBR) in the public sector. A large private investment is also planned through the PPP mode. Given our resource constraints this is the only option available. We must make it succeed.

The size of the Central GBS involves a substantial increase over the 10th Plan. The size of the GBS in the 11th Plan is pegged at Rs. 14 lakh crores which is almost double that of the previous Plan. As a share of GDP, total Plan resources at the Centre and State levels move from around 9.4% to 13.5%. These are large increases by any reckoning. This will only be possible if we have strong growth, if tax revenues remain buoyant as they have been in recent years and if non-Plan expenditure is checked and checked effectively. We need to address the problem of mounting subsidies in food, fertilizers and now, in petroleum which is a recent phenomenon. Over Rs. 1 lakh crores are going to be spent this year alone on these three items. I would like my cabinet colleagues and the Planning Commission to reflect what these mean for our development options and what development options these subsidies are shutting out. Do they mean fewer schools, fewer hospitals, fewer scholarships, slower public investment in agriculture and poorer infrastructure? It is important that we restructure subsidies so that only the really needy and the poor benefit from them and all leakages are plugged.

While the Deputy Chairman will outline in some detail about the key elements of the Plan, I would like to say that our government has, in the last three years, laid out the architecture for rapid inclusive growth. The developmental focus is now firmly on the marginalised sections and regions without sacrificing enterprise and growth. There will be improvements in this architecture in the future. But the basic elements are now fully in place. This is a matter of satisfaction and indeed of pride. For the next few years, the emphasis must be on ensuring that these programmes deliver what they promise. We must work purposefully to realise the socio-economic transformation the Plan seeks to achieve.

Today, it is realistically possible - and indeed feasible - to hope to eradicate chronic poverty, ignorance and disease within our lifetime. We can aspire to build an India "where the mind is without fear and the head is held high, where knowledge is free" and "where tireless striving stretches its arms towards perfection'. Such was the grand vision of poet RabindranathTagore and indeed of our Founding Fathers. The 11th Plan must fulfil that dream.

The Planning Commission has done commendable work in putting this document together. I compliment the Deputy Chairman, his member colleagues and the officials of the Planning Commission and invite all of you present to share your thoughts."