(Online Course) Contemporary Issues for IAS Mains 2012: Yojana Magazine – Prospects and Policy Challenges in The Twelfth Plan

Yojana Magazine

Entertainment Industry  – Prospects and Policy Challenges in
The Twelfth Plan

Q. Major Challenges for 12th Plan.

Answer: Much of what needs to be done to accelerate
GDP growth during the Twelfth Plan will be done by the private sector, but the
central and state governments have a crucial role to play in providing a policy
environment that is seen as investor-friendly and is supportive of inclusive
growth. Four critical challenges facing the economy in the Twelfth Plan, which
are perhaps more serious than they were at the start of the Eleventh Plan, are
those of (a) managing the energy situation, (b) managing the water economy, (c)
addressing the problems posed by the urban transformation that is likely to
occur, and (d) ensuring protection of the environment in a manner that can
facilitate rapid growth. In addition, the efficiency in implementation of
projects on the ground needs to be greatly improved.

Q. Performance&Multidimensionality of inclusiveness.


  • Improved economic performance has dramatically altered
    global perceptions of India’s potential. An early recognition of this was a
    Gold man Sachs report of November 2002, which included India, with Brazil,
    Russia and China in a new BRIC group of emerging market countries which was
    predicted to overtake the G-8 in terms of total GDP by 2035. Continued
    strong performance in the decade of the 2000s and resilience in the face of
    a global slowdown, has reinforced this positive assessment. The general
    perception today is that India may now be on the path of sustained high
    growth based on high rates of domestic savings, high quality of
    entrepreneurial and managerial skills, and the cumulative effect of economic
    reforms on productivity. Similar transitions have been achieved by the other
    Asian countries such as Japan, Korea, Taiwan, and most recently China, and
    it is felt that India may also now be in the same position.

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  • It is more difficult to assess performance on
    inclusiveness than on growth for three reasons. First, inclusiveness is a
    multidimensional concept and progress therefore needs to be assessed in many
    different dimensions. Second, the data relating to various aspects of
    inclusiveness become available only after a considerable lag, and
    information for the Eleventh Plan period is often not available. Third, most
    policies aimed at inclusiveness have an impact only over a relatively long
    term, and this means that even when policies are moving in the right
    direction, the results may only be evident much later. For example, steps
    taken to improve education for the poor will improve their earning ability
    in future, but this impact will only be reflected in actual income earning
    much later.

  • ¨ The multidimensional nature of inclusiveness is best
    illustrated by listing some of the many dimensions that are relevant. The
    extent of reduction in the percentage of the population below the poverty
    line is clearly a very important indicator of progress. However, many
    families that are above the poverty line in terms of per capita consumption
    may lack access to basic services such as education, health, clean drinking
    water and sanitation. Inclusiveness must obviously include progress in
    delivery of these essential services. Inclusiveness must also extend to
    addressing concerns about inequality. It is sometimes argued that inequality
    should not matter as long as the poor are getting better off and it is
    probably true that a rapid rate of improvement in incomes for the poor may
    make them willing to accept some increase in inequality. However, large
    increases in inequality, accompanying only modest improvements in the levels
    of living of the poor, are unlikely to be acceptable. Inequality in this
    context relates not only to the distribution of income or consumption across
    individuals, but also inequality across states, and in some cases, even
    across regions within states.

  • ¨ Inclusiveness in the Indian context also requires a
    special focus on particular social groups such as the scheduled castes (SC)
    and scheduled tribes (ST), and also the minorities. Since these groups are
    concentrated in the lower ranges of the income distribution, it may be
    thought that an effective strategy for reducing poverty or inequality
    addresses the concerns of these groups. However, if inclusiveness is defined
    as bringing these groups at par with the rest of the population, it has to
    address the issue of achieving a fair representation for these groups along
    the entire income distribution. This is conceptually very different from
    reduction in overall poverty or inequality, in the sense that it can be
    achieved leaving the incidence of poverty and the level of inequality
    unchanged. The Eleventh Plan explicitly recognised the multidimensional
    nature of inclusiveness by enumerating 27 monitor able targets of which GDP
    growth was only one. The others focused on different aspects of inclusion
    such as growth in agriculture, reduction in poverty, growth of employment
    opportunities, etc. One consequence of multidimensionality is that the
    extent of progress in different dimensions will vary. For example, it is
    perfectly possible for poverty to decline while inequality increases.
    Similarly, inequality among households in the country as a whole may
    decrease, or remain unchanged, while inequality across states increases. Any
    overall assessment of progress on inclusiveness will have to be based on a
    composite view of all these developments.

  • ¨ Both the extent of poverty and the lack of access to
    essential services remain serious problems. However on the positive side,
    there is steady improvement in many areas and if the rate of improvement
    observed in the period for which data are available has continued – and
    there is every reason to think it would have – the current situation may be
    significantly better than what the latest data suggest. Nevertheless, it
    cannot be denied that we have seen slower progress in ensuring inclusion
    than on accelerating growth and this contrast feeds the public perception
    that rapid growth has only led to a concentration of income and wealth at
    the upper end.

  • ¨ The perception of concentration of wealth and widening
    disparities is sharpened by the tendency of the media, including especially
    the electronic media which now has very wide reach, to publicise success at
    the top end, including the conspicuous consumption with which it is often
    associated, while simultaneously focusing attention on the depth of poverty
    at the other end. Both extremes are understandably viewed as newsworthy, but
    in focusing disproportionately on them, the steady improvement in living
    standards of the very substantial population in the middle, and the
    associated rise of a growing middle class receives much less attention than
    it should. And yet this not only represents an important welfare gain, but
    also an important social development, with potentially large positive
    effects in terms of expectations, values and a rising demand for better and
    more accountable government.

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