MCom I Semester Business Environment Twelfth Five Year Plan ( 2012 – 17 ) Study Material Notes

MCom I Semester Business Environment Twelfth Five Year Plan ( 2012 – 17 ) Study Material Notes : Objectives of twelfth year Plan Environment and Sustainability Sectoral Growth Targets Resouce allocation in Twelfth Five Year Plan Financing of Twelfth five year Plan Main Areas of Development During twelfth five year Plan Table 5 Infrastructure investment Criticisms of and Challenges Before Twelfth Five Year Plan Long Answer Questions Short Answer Questions  Objective Questions :

CTET Paper Level 2 Language I English Question Model Paper

Twelfth Five Year Plan (2012-17)

The Twelfth Five Year Plan was started on April 1, 2012 and covers the five year period from 2012-17. The slogan of Twelfth Plan is ‘Faster, Sustainable and More Inclusive Growth.’ It means that Twelfth Plan aims at achieving faster growth which can be maintained in the long run and the benefits of growth should reach the masses.

OBJECTIVES OF TWELFTH YEAR PLAN

As per approved draft 12th Five Year Plan that are listed below, reflect objectives and vision of rapid, sustainable and more inclusive growth.

1 Economic Growth

(i) Read GDP Growth Rate of 8.0 percent.

(ii) Agriculture Growth Rate of 4.0 percent.

(iii) Manufacturing Growth Rate of 7.1 percent.

(iv) Industrial sector Growth Rate of 7.6 percent.

(v) Service sector Growth Rate of 9.0 percent.

(iv) Every State must have a higher average growth rate in the Twelfth Plan than that achieved in the Eleventh Plan.

2. Poverty and Employment

(i) Head-count ratio of consumption poverty to be reduced by 10 percentage points over the preceding estimates by the end of Twelfth Five Year Plan.

(ii) Generate 50 million new work opportunities in the non-farm sector and provide skill certification to equivalent numbers during the Twelfth Five Year Plan.

III. Spreading Education

(i) Increase mean years of schooling to 7 years by the end of the Plan.

(ii) Enhance access to higher education by creating two million additional seats, aligned to the skill needs of the Economy.

(iii) Eliminate gender and social gap in school enrolment, i.e., between boys and girls and among SCs, STs, Muslims and the rest of population by the end of the plan.

3. Health

(i) Reduce IMR (Infant Mortality Rate) to 25 and MMR (Maternal Mortality Rate) to 1 per 1000 live birth, and improve child sex ratio (0-6 years) to 950 by the end of the Twelfth Five Year Plan.

(ii) Reduce TFR (Total Fertility Rate) to 2.1 by the end of Twelfth Five Year Plan.

(iii) Reduce undernutrition among children aged 0-3 years to half of NFHS3 (National Family Health Survey-3) levels by the end of Twelfth Five Year Plan.

4. Infrastructure

(i) Increase investment in infrastructure as a percentage of GDP to 9 percent by the end of Twelfth Five Year Plan.

(ii) Increase the Gross Irrigated Area from 9C million hectare to 103 million hectare.

(iii) Provide electricity to all villages and reduce AT & C losses to 20 percent.

(iv) Connect all villages with all-weather roads.

(v) Upgrade national and state highways to the minimum two-lane standard.

(vi) Complete Eastern and Western dedicated freight corridors.

(vii) Increase rural teledensity to 70 percent.

(viii) Ensure that at least half of rural population has access to piped drinking water supply and at least half of gram panchayats achieve the Nirmal Gram (Clean Village) status by the end of the plan.

5. Environment and Sustainability

(i) Increase green cover (as measured by Satellite imagery) by 1 million hectare every year during the Twelfth Five Year Plan.

(ii) Add 30,000 MW of renewable energy capacity in the Twelfth Plan.

(iii) Reduce emission intensity of GDP in line with the target of 20 percent to 25 percent reduction by 2020 over 2005 levels.

VII. Services

(i) Provide access to banking services to 90 percent Indian household by the end of Twelfth Five Year Plan.

(ii) Major subsidies and welfare related beneficiary payments to be shifted to a direct cash transfer by the end of the Twelfth Plan, using the Aadhar platform with linked bank accounts.

Inclusiveness : The plan emphasizes growth must not only be rapid but also more inclusive. Inclusiveness is a multi-dimensional concept which includes the following:

(i) Inclusiveness as poverty reduction,

(ii) Inclusiveness as group equality.

(iii) Inclusiveness as regional balance.

(iv) Inclusiveness as inequality.

(v) Inclusiveness as empowerment.

There are two routes for achieving inclusiveness :

(i) Through higher growth which expands income and employment opportunities

(ii) Through government pro-poor programmes which target poorer groups.

Both are important. Twelfth Plan combines the pro-poor programme approach with efforts to get a growth pattern which is faster and inherently more inclusive.

SECTORAL GROWTH TARGETS

The sectoral growth targets of Twelfth Plan are given in Table ahead :

Table 1: Sectoral Growth Targets of Twelfth Plan

Investment and Saving Requirements for Twelfth Plan : The macroeconomic parameters for the Twelfth Plan are presented in Table 2.

Table 2: Saving and Investment Requirements in Twelfth Plan Items

As shown in the table for achieving 8.2 percent growth rate of GDP during Twelfth Plan, investment rate should be 39.3 percent of GDP under the assumption that average annual inflation rate varies from 4.5 percent to 5 percent. For achieving investment rate of 39.3 percent, saving rate will have to increase to 34.2 percent Investment and saving requirements during Twelfth Plan. The Net current account deficit in the Twelfth Plan period is expected to average 2.9 percent of GDP.

RESOURCE ALLOCATION IN TWELFTH FIVE YEAR PLAN

Table 3 the resource allocation, i.e., the expenditure proposed to be incurred under various heads by the public sector in the Twelfth Plan.

Table : 3 Twelfth Plan Outlay and its Allocation

It is evident from the above table 3 that out of the total outlay the allocations are as follows:

(i) The maximum allocation, i.e., 34.7 percent of plan resources, will be spent on social service like education, health and housing.

(ii) 39.5 percent will be spent on economic infrastructure that is energy, transport and communication.

(iii) 17.2 percent will be incurred on agriculture, rural development, irrigation and flood control measures etc.

(iv) Industry and minerals will absorb just 4.9% of total outlay only.

(v) On Science and Technology, General Economic services and General services, the Twelfth Five Year Plan proposes to incur 2.2%, 4.0% and 1.4% respectively out of total outlay.

It is obvious from the figures of the Table 3 that 74.2 percent of total outlay of the plan is allocated to the development of economic infrastructure and social services. Resources allocation of the plan makes it clear that by emphasising on economic infrastructure and social services, this plan is committed towards achieving ‘Faster and more inclusive growth’.

FINANCING OF TWELFTH FIVE YEAR PLAN

The pattern of financing the Twelfth Five Year Plan is given in Table 4:

Table 4: Financing Pattern of Public Sector

Outlay during Twelfth Plan

It is clear from the above Table 4 that:

(i) 100% financing of this plan, will be done from the internal source. In other words, there will be no dependence on foreign loans.

(ii) The most notable feature of the Twelfth Five Year Plan relatively modest dependence on borrowing amounting only 45’9 percent of the Twelfth Five Year Plan projection is as compared to dependence amounting 59.5 percent in the ‘Eleventh five year plan realizations.

(iii) in this plan 29.2 percent will be received from BCR, 45.96 percent will be obtained from borrowings and resources of surplus from public sector undertaking will be 24.98 percent i.e., nearly one-third of the total public sector plan.

MAIN AREAS OF DEVELOPMENT DURING TWELFTH FIVE YEAR PLAN

Main areas of development during Twelfth Five Year Plan are as follows:

1 Agriculture : During the Twelfth Five Year Plan also, the Planning Commission has fixed the target of 4 percent, rate of growth in agriculture. This is the first time such a ‘High’ rate of growth has been fixed. An amount of

3,63,273 crore was provided for agriculture and allied activities. This is 47 percent of total outlay of plan. Besides 2,10.326 crore was proposed for irrigation and flood control i.e., 5.5 percent of total proposed outlay. The plan aimed to double the agricultural growth from present 2 percent to 4 percent per year. With about 50 percent population still dependent on agriculture, we cannot expect inclusive growth if we do not boost up agriculture sector. Following measures were taken in this plan to develop agriculture sector :

(i) Diversifying while also protecting food security concerns.

(ii) Fostering inclusiveness through a group approach by which the poor will get better access to land, credit and skills.

(iii) Bringing new technology to farmers’ doorstep.

(iv) Enhanced facilities for agricultural credit and revival of co-operative credit.

(v) Promoting agro-based industries and agro-exports.

(vi) Utilisation of waste and under-utilised land.

(vii) Increase in irrigation facilities and efficient use of water resources.

(viii) Extension of green revolution to areas of low productivity in the Eastern Region.

(ix) Revamping National Food Security Mission (NFSM). Targets under NFSM:(a) increasing foodgrains production by 25 million tonnes, (b) increasing production of oilseeds by at least 4.5 percent per annum.

(x) Launching of National Mission for Sustainable Agriculture (NMSA).

2. Industry : The target of the Twelfth Plan is to achieve growth rate of 8.1 percent per annum in industrial production. Following steps will be taken in this plan to develop industries :

(i) Strengthening manufacturing sector by implementing National Manufacturing Policy, 2011.

(1) Increase manufacturing sector’s growth rate to 12-14 percent over the medium term to make it an engine of growth for the economy so that the manufacturing sector contributes at least 25 percent of the national GDP by 2025.

(iii) Increase the rate of job creation in manufacturing sector to create 100 million additional jobs by 2025. Emphasis should be given to creation of appropriate skill sets among the rural migrant and urban poor to make growth inclusive.

(iv) Increase depth’ in manufacturing, with focus on the level of domestic value addition, to address the national strategic requirements.

(v) Enhance global competitiveness of Indian manufacturing through appropriate policy support.

(vi) Ensure sustainability of growth, particularly with regard to the environment.

To achieve these objectives, the plan advocates a paradigm shift in industrial policy which would involve a close coordination between producers and the government policymakers, with the government playing an active role in providing incentives for domestic industrial growth and in relieving constraints on industrial competitiveness. This paradigm would require “a change in the mindset of government functionaries from being controllers’ to ‘facilitators’, from ‘resource allocators’ to’knowledge managers’ and from ‘scheme managers’ to ‘continuous learners’.”

Three Components of India’s Manufacturing Strategy and Plan: Twelfth plan advocates the building up India’s manufacturing plan strategy around three components:

(i) The first are capabilities and process that go across many, if not all sectors of manufacturing, and that build into the ecosystem the processes for rapid learning and building of capabilities.

(ii) The second component has to be the plans to strength the performance of selected sectors.

(iii) The third component of the strategy is the institutional ability for effective consultation and collaboration between producers and public policymakers and implementers and the systemic reform of existing systems and processes within the government.

Other Steps

(i) Special emphasis will be laid on technological upgradation of industries so that our domestic industry can successfully face competition from foreign enterprises. Import of technology and capital goods will be liberalised.

(ii) After achieving great success in IT sector in earlier plans, now Twelfth Plan will focus on success in pharmaceuticals, auto-components and textile.

(iii) Small-scale industries will be given adequate credit facilities, marketing facilities, availability of technology, tax concessions etc. To achieve 8.1 percent annual growth rate in industries, mirco, small and medium enterprises will have to achieve growth target of at least 10 percent per annum

3. Infrastructure Development : The total investment needed for infrastructure development is defined to include, electric power, roads, railways, airports, telecommunication, irrigation, drinking water, sanitation, storage and warehousing.

The total investment in infrastructure sector in the Twelfth Plan is estimated to be 56.3 lakh crore. The share of private investment in the total investment in infrastructure rose from 22 percent in the Tenth Plan to 38 percent in the Eleventh Plan. It will have to increase to about 48 percent during the Twelfth Plan if the infrastructure investment target is to be met.

It is estimated that 8.26 percent of GDP will be spent on infrastructure Investment in infrastructure in the Twelfth Plan is shown in the following table

Table 5 : Infrastructure Investment Items

The Twelfth Plan lays special emphasis on the development of social sectors in view of their impact on human development and quality of life. Transport

(i) Railway: Development of capability in the Railways is another priority in the Twelfth Plan. Some of the important areas proposed to be taken up are mentioned below :

(a) Enhancing accommodition in trains.

(b) Enhancing speed of trains.

(c) Introduction of tailored services.

(d) Technological modernisation.

(e) Greater attention to safety, and

(f) Ensuring financial viability.

(g) Special package for development of road connectivity for 24 Airports.

(ii) Road : Twelfth Plan emphasises the stepping up of the National Highway Development Programme (NHDP) with an aggressive pursuit of PPP to construct toll roads on a Build-Operate-Transfer (BOT) basis. The Plan also emphasises the need to step up road connectivity in Jammu & Kashmir, the North-East and other special category states.

(iii) Airport: In the area of airport development, the Twelfth Plan proposes to take up several projects like Navi Mumbai airport, the Goa airport and the Kannaur airport. “Creative Use’ of PPP model would be taken up wherever possible.

(iv) Port: Some of the major initiatives for the port sector in the Twelfth Plan is indicated below:

(a) Re-look at MCA to promote PPP in port sector.

(b) Re-look at port regulation and tariff setting by Tamp by adopting practices consistent with the Landlord port model.

(c) Investment in land infrastructure including modern cranes, silos/ warehouses, ICDs, connectivity and so on.

(d) Move towards greater flexibility for decision making by port trusts through greater delegation of powers.

(e) Landlord port model.

(f) Corporatisation of major ports in the long run.

In addition, two entirely new PPP ports are proposed by the central government-one in West Bengal and the other in Andhra Pradesh.

Telecommunications: Telecommunication has seen impressive expansion and large investment in the past several years with the teledensity increasing from 26.2 percent in 2008 to 7-7 percent in 2012.

Some of the policy issues and new initiatives proposed in the Twelfth Five Year Plan are given below:

(a) Several new policies have been approved by government relating to promotion and development of the ESDM sector.

(b) Finalisation and implementation of National policies on electronics and information technology.

(c) Establishment of national electronic mission.

(d) Create a comprehensive national IT standards

(e) Develop a holistic approach for funding socially relevant R&D projects in public private partnership (PPP) modes.

In short, in order to achieve the objective of the Twelfth Five Year Plan. the following themes have been identified:

(a) e-Government

(b) e-Learning

(c) e-Security

(d)e– Industry (Electronic System Design and Manufacturing)

(e) e- Industry (IT-ITes)

(f) e- Innovation/R & D

(g) e-Inclusion

4. Human Resource Development : Twelfth Five Year Plan proposed certain special measures for improving the conditions for human resources development. Therefore, special priority has been given to extension of education and health care facilities to the weaker and underprivileged sections of the society alongwith providing primary housing facilities. The plan also proposed special programmes for empowerment of women and also on elimination of child labour practice to the maximum possible extent.

Health : Following steps will be taken under 12th plan to improve public health :

(i) In this plan public health spending was proposed to be increased to at least 2.5 percent of GDP.

(ii) Prevention and treatment of communicable diseases.

(iii) Achieving zero growth rate in spread of HIV/AIDS.

(iv) Expansion and improvement of under-graduate and post graduate medical education.

(v) Improving the functioning of public sector health system.

(vi) Strengthening of Integrated Child Development Scheme (ICDS). For this, Government has sanctioned 173 ICDS projects.

(vii) Improving maternal and child-care.

(viii) Providing clean drinking water and access to basic sanitation facilities.

(xi) Strengthening National Rural Health Mission for providing primary Health Service universally.

Fligher Education : In Twelfth Five Year Plan following proposals are to be included:

Twelfth Five Year Plan (2012-17) | 273

(i) The Government aims to double faculty at HEIs by the end Plan period from 0.8 million at present to 1 million at the end of the double faculty at HEIs by the end of the Twelfth

(ii) The Government also wants to tap the pool of retired experts, who can function as adjunct faculty and also enroll for doctoral degrees.

(iii) A National Mission on Teachers and Teaching would be launched in the Twelfth Plan to pool all the existing and new initiatives on faculty development under one umbrella.

(iv) The institutional weakness of Academic Staff Colleges (ASCs) are stated to be eliminated through qualitative change in the content and methodology of development of faculty.

(v) In order to provide global exposure to Indian faculty, the Government plans to launch the International Faculty Development Programme.

(vi) Establish meta university framework to promote inter-institutional collaboration and designing of innovative interdisciplinary programes.

(vii) The Twelfth Plan emphasizes on leveraging technology for interinstitutional collaboration, innovation and faculty development to address challenges relating to infrastructure and faculty in India’s higher education system.

Universal Access to Secondary Education : In order to reach a level of providing universal access to secondary education, the Twelfth Five Year Plan proposes the following measures :

(i) Setting up all the 6000 high quality model schools at Block level-3500 schools in partnership with states approved and 2500 model schools in PPP mode.

(ii) Upgradation of 11,200 upper primary schools to secondary schools to meet increased demand.

(iii) Direct benefit transfer of scholarships /incentives linked with Aadhar.

(iv) Increasing the intake capacity of 44,000 existing government secondary schools, residential schools and hostels facilities for boys and girls.

(v) Strengthening of infrastructure facilities in existing schools with provision of Laboratory/Library/ICT in schools and 80,500 ACRs.

(vi) Ensuring 100% trained teachers in all schools.

Elementary Education

(i) Provision of atleast 1 year of well-supported, well resourced, pre-school education in primary schools to all children particularly those in EBBs.

(ii) Additional KGBVs in EBBs and in areas with high concentration of SCs, STs and muslim population.

(iii) Residential schools for children in the areas of civil strife, children of migrating population and tribal children-seasonal hostels for the children of migrating families.

(iv) Support to states for children private schools (RTE 25% quota) and focused efforts in enhancing the access of urban poor children to elementary education.

Social Sector : Following steps will be taken to improve social services:

(i) Special programmes for the upliftment of SC/STs, other backward classes, minorities, women and children.

(ii) National Policy for land acquisition for resettlement of tribal population.

(iii) Providing essential services to the poor people.

(iv) Special attention ensure gender equity and social, economic and political empowerment of woman.

(v) Computerisation of Public Distribution System.

5. Innovation: Following measures will be taken to develop innovations :

(i) Intellectual property rights will be strengthened to protect the rights of innovators.

(ii) Strengthening science and technology infrastructure and establishing globally competitive research facilities.

(iii) Encouraging the tie-up of industry and academic research institutions so that students get practical knowledge and can develop commercially visible technology.

(iv) National Innovation Council has been set up. It will encourage innovation and will provide financial support to innovators for developing and testing their ideas.

(v) Government has declared this decade (2010 to 2020) as decade of innovation.

(vi) To mobilise the skills and expertise of Indian scientists and technologists living abroad.

(vii) R & D expenditure will be raised from 0.9 percent of GDP to 2 percent of GDP by the end of this Plan.

CRITICISMS OF AND CHALLENGES BEFORE TWELFTH FIVE YEAR PLAN

The main criticism of and challenges before the Twelfth Five Year Plan are as follows:

1 Unrealistic Agriculture Growth Rate: The most important challenge relating to the success of the 12th Five Year Plan is to accelerate and achieve the growth rate of per annum in agriculture.

2. Problem of Poverty and Unemployment have Remained Neglected: In state of devising policies for encouraging the growth of labour intensive and technologically upgraded small-scale industry and small and medium farmer operated agricultural, the plan talks of accelerating industrial growth rate to percent and agriculture growth rate to percent, as if reaching that objective alone will be enough to solve the problem of poverty, malnutrition and insecurity for the masses of the Indian people.

3. Flows in Development of Rural Infrastructure: The plan projects a masive programme of rural infrastructure, but curiously enough that does not include the building of hundreds, if not thousands of schools with toilet and drinking water facilities, which are practically needed by all major states.

4. Over-Estimation: In the plan, resources are to be provided from current revenue balances and from surplus of public enterprises. The balance of about 39 percent resources are to be provided by market borrowing. It appears that the Planning Commission has over-estimated the surplus from current revenues.

EXERCISE QUESTIONS

Long Answer Questions

1 What are the main objectives of Twelfth Five Year Plan ? Discuss the strategies and priorities of Twelfth Five Year Plan?

2. Critically examine the Twelfth Five Year Plan.

3. Write an essay on the financial pattern of Twelfth Five Year Plan.

Short Answer Questions

1 Write the main objectives of Twelfth Five Year Plan.

2. What are the targets of sector wise development ?

3. What are the main priorities of Twelfth Five Year Plan?

4. Write the strategies of development of the agriculture and irrigation sectors in Twelfth Five Year Plan.

5. Write any two main criticism of Twelfth Five Year Plan.

Objective Questions

(I) Select the Correct Alternatives :

1 The Twelfth Plan aimed at a GDP growth rate of:

(a) 9% per annum

(b) 8-2% per annum

(c) 7.9% per annum

(d) 6.5% per annum

2. The total outlay of the Twelfth Five Year Plan is:

(a) 80,50,124 crore

(b) 39,94,060 crore

(c) < 75,88,325 crore

(d) – 24,88,325 crore

3. The main problem of underdeveloping countries is related to:

(a) capital

(b) allocation of resources

(c) land

(d) none of these

4. Allocation of resources in planned economy is aimed to:

(a) reduce disparities in income and wealth

(b) encourage agricultural sector

(c) allocation of resources

(d) none of these

[Ans.: 1. (b), 2. (a), 3. (b), 4. (a)]

(IT) Write True or False :

1 The Twelfth Five Year Plan aimed at a GDP of 8-2 percent per annum.

2. The Twelfth Plan covers the five years period 2013-18.

[Ans.: 1. True, 2. False)

(III) Fill in the Blanks:

1 With strategy of faster and inclusive growth, the Twelfth Plan identifies various monitorable targets at the

2. The main problem of underdeveloped countries is related to the ………

3. The objective of allocation of resources in a planned economy is to increase …. and per capita income.

(Ans: 1. national level, 3. allocation of resources, 4. national product.]