ENERAL STUDIES Civil Services Mains Exam.-2013 (PAPER-IID) Book No.-I Ph, 011-25825591; 42437002; 9811489560 73-75; 1" Floor; Ring Road ;Beside GTB Metro Station Kingsway Camp;New Delhi. E Ph. 08447273027Es) Inclusive growth Inclusive growth basically means, “broad based growth, shared growth, and pro-poor growth”. Inclusive growth by its very definition implies an equitable allocation of resources with benefits accessible to every section of the society. Inclusive strategy involves 2 much greater role of the States, and closer coordination between the Centre and the States, than would be meeded for a parely corporate-led growth strategy. This is because most of the policy measures and institutional support required for small and medium entrepreneur- led growth lie in the domain of State Govemments and local badies. The Centre’s contributions would lie mainly in creating the ‘appropriate macroeconomic framework, financial gai@etor pol and national level infrasiucture. inclusive growth has been projected as the stratcyic pillar inhe forthcoming I2thfive year plan. ‘The policy designers are of the opinion that the ‘inclusive growth steategy for the 12ihfive year plan should be based on the experience of inclusive oulcomes of the Ifthfive year plan’. ‘The approach to 12thfive year plan titled “Faster, Sustainable and More Inclusive Growth” defines inclusive growth as: Inglusive growth should result in lower incidence of poverty, universal access 0 school education including skill and education, better opportunities for wage employment and livelihood, improvement in health outcomes, improvement in provision of basic amenities like water, clectricity, roads. sanitation and heusing. Has growth of Indian eeonomy been really inclusive during the last plan or desades of reforms? ‘This question demands a close empirical investigation. nce the last two. Since July 1991, Indian economy has witnessed several reforms encompassing all the major scciors of the cconomy (agriculture, industry, trade, foreign investment, technology, public sector, financial institutions and so on), The main objective of these reforms was to put the Indian econamy out of the low level equilibrium trap. These reforms have marked a steady break from the previous policy regime of state controlled and insulated economy. Duc to these policies. India saw robust rates of growth of GDP. Since the last decade or so, GIP and lavestment growth have recorded historical increase in India. However, ia the last two years, there is a sharp decline in growth rate due to the economic crisis at the slobal level. But the ecanomic survey of 2013 predicts that the recovery is on the way as far as growth is coneemed. Who is benefiting from this higher growth trajectory is the other important question. The questions that arise are:Can high growth provide beller and secure employment to the common people? Has this growth mace health and educational facilities more accessible te the common people? Has this high growth rate been able fo reduce real poverty? Al these issues are elosely related to the title of Lith and the current [2thfive year plan (2012-17). The policy designers initially believed that ‘generally higher GDP economic grawth will “trickle down’ to lower levels, But in India, this Stickle dawn’ has not worked. Therefore, we need special interventions in terms of redesigning the growth patiern and also inclusive programmes to address the needs of the excluded, “Inclusive growth’ as a strategy of economic development received attention owing to a rising, concem that the benefits of esomomic growth have not been equitably shared. Growth is inclusive when il creates economic opportunities along with ensuring equal access to them. Apart from addressing the issue of inequality, the inclusive growth may also make the poverty reduction efforts more effective by explicitly creating productive economic opportunities for thethe society. The inclusive growth by encompassing the Ritheno: several other benefits as well to the economy. ‘The concept “Inclusion” should be seen as a process of including the exeluded as agents ‘whose participation is essential in the very design of the development process, and not simply as welfierc targets of developmeni programmes (Planning Commission, 2007). Inclusive growth cefers to both the pace and the pattem of the economic growth. The fiteranare ‘on the subject draws fine distinction between direct income redistribution or shared growth and nclusive growth. The inclusive growth approach takes a longer term perspective as the focus is ‘on productive employment rather than on direct income redistribution, asa means of increasing incomes for excluded groups, Inclusive growth is, therefore, supposed 10 be inherently sustainable as distinet from income distribution schemes which can in the short run reduce the disparities, between the poorest and the rest, which may have arisen on account of policies intended to jampstart growth, While income distribution schemes can allow people to benefit from economic growth in the short run, inclusive oat ys people to “contribute to and benefit from economic growth”. The current policy objective of inclusive growth with stability given in the 12 FYP requires that thoes be productive and structural growth along with environmental security. Need for inclusive growth There are prudential, political and moral reasons . Practically. we need co build an inclusive society because human resource needs to be developed. Education, hcalth and skills for all, will mean huge employment, productivity, innovation, exports and so on, Politically, if there is no inclusive growth, conflicts will arise on a mass basis and could even tum into extremist movements ike naxalism and communalism which can strike a bady blow to the imegrity of the pation. At any rate, Constituion of India promises inclusive growth in the Preamble and the DPSPs and so the nation owes it co all. Morlly, it is inhuman to leave mitlions weak and estitute while the nation is growth at an impressive rate, ‘Challenges of achieving inclusive growth Achievement of inclusiveness is a challenge in the following way © The number of people to be targeted being so Jarge- hundreds of millions, the effort has to be commensurate © Fiscal, human and administrative resources necessary are huge © Institutional mechanisms for federal coordination, PPPs, strong LSG bodies(PRIs and Nagarapalikas) need to be developed = Decentralization is eructal as inclusive governance is an integral part of inclusive growth © Suitable laws that enable people-centered growth proccss- be it in land acquisition, environmental field, R&R,- are required Poverty ind recent achievements “he record in recent years of the anti-poverty strategies- the heart of inclusive growth- is encouraging. ‘The percentage of the population below the official poverty line has been falling fut even as that happens, the numbers below the poverty Tine remain large. According to the Tatest official estimates of poverty bused on-the Tendulkar Committee poverty line, as many 2° 29.8 pee cent of the population, that is, 350 million people were below the poverty line in 2009: 10. Questions have been raised about the appropriateness of the Tendulkar poverty line which 5 al al lal id al al all all sal il al ied sad al al aid i ll)comesponds to a family consumption level of "3.900 per month an mural areas and “4,800 per month in urban areas (in both cases fir a family of five). There is mo doubt that the Tendulkar ‘Committee poverty Tine represents a very low level of consumption and the scale of poverty even on this basis is substantial, An Expert committee under Dr. C. Rangarajan has been set up to eview all issues related to the poverty line keeping in view intemnational practives.(Read ahead for detailed examination of issues) It ie well ewtablished that the pereeniage of the population in poverty has been falling consistently but the ratc of decline was too slow. The rate of decline in poverty in the period 3004-05 to 2009 10 was 1.5 percentage points per year, which is uwvice the rate of decline of 0.74 percentage points per year observed between 3993-94 and 2004-05. Normally, large sample surveys used for official estimates of poverssdife Conducted every five years, but because 2008-10 was a drought year, the National Sample Survey Office (NSSO) felt that it would tend to overstate poverty and it was therefore decided to selvance the next large sample survey to 2011-12. The results of this survey — NSSO 68" Round details came out in 2013 June and are discussed ahead). NSSO 68" Round findings on poverty, consumption and inequality in consumption are: Poorest of poor in the country survive on barcly Rs 17 per day in villages and Rs 23-2 day in cities. According to the data, which relates to 2011-12 (July-June), five per cent population on the bottom rung had an average moathly per eapita expenditure (MCPE) of Rs 521.44 in mural areas and Rs 700.50 in urban areas. On the other end of the spectrum, top five per cent of the population had an MPCE of Rs 4,481 in rural arcas and Rs 10,282 in urban areas, The National Sample Survey Oflice’s (NSSO) 68th round of survey is based on samples consisting of 7,196 villages in rural India and 5,263 urban blocks except some remote areas, during July 201 1-June 2012, the release said.On an average on the all-India basis, MPCE was around Rs 1.430 for rural India and about Rs 2,630 for urban India Thus average urban MPCE. was about $4 per cent higher than average rural MPCE for the country as a whole, though there swore wide Variations in this differential aeross states”. Inter-group Equality inclusiveness is not just about bringing those below an official fixed poverty line to a level above it Its also about a growth process which is seen to be ‘fair’ by different socio-economic groups, that constitute our society. The poor are certainly one target group, but inclusiveness must abso embrace the concer of other groups such as the Scheduled Castes (SCs), Scheduled Tribes (SEs), Other Back- ward Classes (OBCs), Minorities, the differently abled and other marginalised groups. Women can also be viewed ax a disadvantaged group for this purpose These distinct “identity groups’ are sometimes correlated with income slabs the SCs and STs, for example, are in the lower income category and ull poverty alleviation strategies help them directly, Women on the other hand span the entire income spectrum, but there ane gender-based issues of inclusiveness that are relevant all along the spectrum. Inclusiveness from a group perspective goes beyond a poverty reduction perspective and includes consideration of the status ef the group as a whole relative to the general population. For example, narrowing the gap between the SCs or STs and the general population must be part of any reasonable definition @F imelusiveness, and this is quite distin from the concem with poverty, or inequality, though themyo are lated.‘Balance regional development (BID) and Inclusive growth “Another aspect of inclusiveness relates to whether all States, and indeed all regions, are se=a benefit from the growth process. The regional dimension has grown in importance in resem ‘years. On the positive side, as the PM mentioned in the 57" NDC speech(Sce ahead), many of jhe erstwhile backward States have begun to show significant improvement in growth ‘performance and the variation in growth rates across States has narrowed. However, Both the better performing and other States are inereasingly concerned about their backward regions, or districts, which may not share the general improvement in living standards experienced elewhere. Many of these districts have uaigque charseteristies including high concentration of iribal population in forested areas, or Minorities in urban areas. Some districts are also affected by left wing extremism, making the task of development much mare difficult. In the ‘Twelfth Plan, govt aims pay special attention to the scope for acceleraling growth in the States that arc lagging behind. This will require strengthening of States’ own capacities to plan, to implement and to bring greater synergies within thesdlpadministaton and withthe Central Government, A$ a first step, the Planning Commission is working with it"s counterpart Planning Boards and Planning Departments in all State Govemments to improve their capabilities. An important constraint on the growth of backward regions in the country is the poor state of infrastructure, especially road connectivity, schools and health facilities ead the avaifability of electricity, all of which combine to hold back development, Improvement in infrastructure must therefore be an important component of any region- ally inclusive development strategy. ‘The efforts of the govt in this regard are + FC eriteria = PC transfers special category states BRGF Green sevolution in the eastern region + North easter region Vision 2020 Special focus on North east ‘Molding that infrastructure deficiency in North-East is a "major concem”, Prime Minister ‘Manmohan Singh in 2008 announced linking of all state capitals there by rail to ensure betier ‘connectivity and earmarking of Rs 31,000 crores to improve roads. Releasing "Vision Document 2020 for the North-Fastem Region’ he suid besides developing rail ‘and air connectivity, the government is also committed to improve road facilities in the Eleventh Plan. For improving air connectivity, he announced that a green-field airport will come up at Itanagar to connect the region with the rest of the country. He said all villages on the Arunachal Pradesh border will soon be electrified at a cost of Rs 550 crore. The Vision Document, approved by the North-East Counell, also lays stress on promoting education in the region. Govt is to setup a NTFT and IIT at Shillong. Green Revolution in Eastern India The programme gets Rs 1,000 crore in bis Budget for 2013-14.[t was during Union Budget 2010-11 that for the first time, separate funds were allecated for the castem parts of the country. ‘The scheme, which comes under Rashtriya Krishi Vikas Yojana, includes Assam; Bihar, Jharkhand, castern UP, Chhattisgarh, Odiithe and West Bengal. Rice was a priority crop under the scheme, The olher areas of focus fing activities such as water management, construction of farm ponds and repair is. The main moive behind this projectis to ensure food security. ‘The idea is to tap the eastern region for foo grains and pul Centre has also allocated Rs S00 crore for encouraging crop diversificstion to promote technological innovation. The original Green Revolution States face the problem of stagnaling yields and over-exploitation of water resources. The answer lies in erop diversification. BRGF The Backward Regions Grant Fund Programme (BRGF), launched in 2007, signifies a new approach io addressing persistent regional imbalanees in development ‘The programme subsumed the Rashtriya Sama Vikas Yojana (RSVY).The BRGF Programme covers 250 disricts in 27 States, of which 232 districts fall under the purview of Pars IX and IX-A of the Constitution dealing with the Panchayals and the Municipabilies, respectively. The remaining 18 icts arc covered by other local government stam R such as Autonomous District and Regional Councils under the Sixth Schedule of the Constitution and state specific arrangements as inthe case of Nagaland and the hill areas of Manipur. Objectives The Backward Regions Grant Fund is designed to redress regional imbalances in development ‘by way of providing financial resources for supplementing and converging existing developmental inflows into the identified backward districts, so as to: ‘+ Bridge critical gaps in local inffastructure and other development requicements: that are nol being adequately met through existing inflows, «Strengthen, to this end, Panchayat and Municipality level goverance with more appropriate capacity building, to facilitate participatory planning. deetsion makin implementation and monitoring, to reflect local felt needs, bi + Provide professional support to local bodies Far planning, implementation =n monitaeiags their plans, 7 ‘+ Improve the performance and delivery of critical flanctions assigned to Panchayats ‘counter possible efficiency and equity losses on account of inadequate local capacity. The BRGF programme represents a major shift in appoach from top-down plans to pasticipative plans prepared from the grassroots level upwards. The guidelines of the Programme entrust the central role in planning and implementation of the programme to Panchayats in rural areas. ‘municipalities in urban areas and District Planning Committees at the district level constituted in accordance with Article 243 ZD of the Constitution to consolidate the plans of the Panchayats and Municipalities into the draft diswict plan. Special provisions have been made in the guidelines for those districts in J&K, Assam, Manipur, Meghalaya, Mizoram, Nagaland and ‘Tripura which do not have Panchayats, where village level bodies and institutions mandated under other frameworks such as the Sixth Schedule are to plan and implement the programme. The conviction that drives this new locally driven approach is that grassroots level democratic institutions know best the dimensions of poverty in their areas and are, therefare, best placed to undertake indi rally small, but overall, significant local interventions to sustainably tackle local poverty alleviation. There arc three features of BRGF that make it truly unique among, ives to combat backwardness. First, the approach of putting the Panchayuts and the ities at the centre stage of planning and implementation. Second, no Central funding stream is as ‘untied’ as the BRGE — the funds can be applied to any preference of the Panchayat! Municipality, so long as ie fills @ development yap and the identification of the work is decided with people’s participation Third, no other propramme spends as much funds, nearly 11 percent of the total allocation, fr eapacisy building and staff provisioning, ADCreation of capacity for effective planning at district and lower level is a key-pre requis participative planning. Hence the BRGF contains a specific component for the capacity BAH: Jit Panchayati Raj Institutions of Rs. 250 crore per year. A (ramework that looks upon capassty building in a very comprehensive fashion, encompassing taining, handholding and providing: ‘ongoing support to Panchayat elected representalives has been developed for States to follow. while undertaking capacity building. “the planning process undet BRGF is based on the guidelines for district planning issued by the Planning Commission. The process of integrated development cornmences with each district, undertaking diagnostic study of its backwardness and a baseline survey by enlisting professional planning support, to he followed by a well-conceived participatory district evelopment perspective plan to address this backwardness during the period of the Eleventh Five Year Plan. Such plans would integrate multiple mmes that are in-operation in the district concemed and, therefore, address backward ish a combination of resourees that flow to thé district. District Plans received from the various States indieate thatthe untied fund allccated to the districts are generally being used for filling infrastructural gaps in drinking ‘water, connectivity, health, education, social sectors, electrification, etc. The basket of warks taken up includes construction of school buildings /elass rooms, health sub-centees, drinking water facility, sanitation fieilities, anganwadi buildings, Panchayat buildings, irigation tankalchannels, street lights, link roads, culverts, soil and water conservation measures, ett. The BRGE has adopted the National Capability Building Framework (the NCBE) which envisages strengthening of institutional arrangements, including the infrastructure as well as sofiware support for capacity building of clecied representatives, the functionaries and other stakehoklers ‘af PRis and thereby improving the vigour of grassroots level democracy. ‘The finance ministey in May 2013 set up an cxpert- committee under the chairmanship of Chief [eonomie Adviser Raghuram Rajen to lock into 4 composite development index of states for allocation of money under the Backward Region Grant Fund (BRGF). Rajan committes would Consider exiteria such as the state's positing in national per capita income and human development indicators 19 evolve 2 composite index. The pane! would have five members but ‘experts as special invitees for deliberations. Finance Mnister Chidambaram in 2013- Sspecch said that the criteria for determining backwardness under BRGF are based en ‘of population and length of intemational borders. “It may be more relevant t0 ust ike the distance of the siale from the national average under critcria such as per capita STiteracy and other human development indicators.” of Urban Amenities in Rural Areas (PURA) is a Cental Sector scheme re-launched by ‘of Rural Development (MoRD), Government of India during remaining period of the *Pian wath support from Department of Economie Affairs and the technical assistance of Asian Development Bank. MoRD is implementing the PURA scheme under a Publi¢ Private Barinesship (PPP) Iramework beoween Cram Panchayat(s) and privale seetor partners with active ‘support of the state governments. “The scheme envisages development of rural infrastructure and is the first attempt at delivering 2 basket of infrastructure and amenities through PPP in the rural areas. The primary objectives of the scheme are the provision of livelihood opportunites and urban amenities in raral arcas to bridge the mural —urban divide. 1 wo al ad baad ad Waal acd ad baal ed bd Ged ‘add ‘cd ‘al aEss) Core finding shall be sourced from the Central Sector scheme of PEIRA and complemented by additional support through convergence of different Central Government schemes. The private sector shall also-bring into the project its share of ittvestment besides operationsl expertise. The scheme-would be implemented and managed by the private sector on considerations of economic viability but designed in a manner whereby it is fully aligned with the overall objective of rural development, Inclusiveness and Tnequality Inclusiveness also means greater altention to income inequality. The extent of measured by indices such as the Gini coefficient, which provide a measure of the inequal the distribution on a whole, or by measures thal focus omparticular segments such as the ratio of consumption of the top 10 per cent or 20 per cent of: ation to that of the bottom. 10 per cent or 20 per cent of the population, or in terms of rural-urban, such as the ratio of mean consumption in urban versus fural areas. An aspect of inequality that has come sharply into focus in industrialised countries, in the wake of the financial crisis, is the problem of extreme concentration of income at the very top, that is, the top 1 per cent and this concer is also reflected im the public debate in India Inequality must be kept within tolerable limits (Art38, DPSP). Some increase in inequality in 2 developing country during a period of rapid growth and transformation may be unavoidable and it may even be tolerated if it is accompanied by sulliciently rapid impravernent in the living standards of the oor, However, an increase in inequality with little or no improvement in the living standards of the poor is a recipe for social tensions. As a society, we therefore need to diy as possible to the ideal of giving cvery child in India a fair opportunity in Tife, ‘which means assuring cvery child access to good health and quality education. India, HDI and LHDI: Human Development Report 2013 Over the past two decades, India has seen a big improvement in its human development index score, from 0.41 in 1950 1 00.554 in 2012, according to the latest report by the United Nations Development Program (2013). However, despite this improvement, India avertoek only four of the countries positioned above it in 1990: Swazilund, Kenya, Cameroon and Congo. The rise in India’s HDI score is partly thanks to it starting from a low base (countries with high HDI scores have limited room for improvement), and also a rapid increase in per Capita gross. national income. Despite the improvement, India remains in the “medium development” category, | 36" ina list of 186 countries that stretches from Norway af the top of the “very high human development” category to Niger at the battam of the “low human development” group. In 2011, India wos 134M in the ist, Since 2011, the UNDP report has included an inequality adjusted FEDI, also known as IDI, ‘which aims to capture the fleets of inequality on human development. If there is no inequality the IHDI equals the HIDE, while albig difference between the readings means greater inequality. India’s IHDI score was nearly 36 lower than its HDI reading. The most glaring inequality in india Es in education, the report says, even though it commends the introduction of the Rigi lr edieation Act, Success stories, such =s Coie ly show growth in investment in health and education, ‘with a special focus om “cnable poor people to-participate in growta,” the UNDP report says. India also fared poorly. and gender equality.SRIRA'S [ES Tuclusivenessas Empowerment Finally, inclusiveness is not just about ensuring & broad-based flow of benefits or cconomie opportunities, itis also about empowerment and participation, Itis a measure of the success = ceetnahieved in building a partcipatery democracy that people xe 79 Jonger prepared to Be passive recipients of betiefits doled out by the Govermnens ‘They are slowly beginning to vepand these benefits and opportunitics as rights and they also want #5 how they are cdmministered. ‘This brings to the fore issues of governance, ‘accountability and peoples participation to much greater extent than before “This also covers areas Tike access to informalion avout wovernment schemes, Knowledge of the relevant lass snd hhow to access justice, The rowing concem with governance has also foeused anention 00 corvuption, How to tackle: coruption is now at the contre stage of policy dchates, Empowerment refers 10 increasing the political, sociglgeducational, gender, or economic strength cf acd iduals and commurities. Sociokapies! empawernfent often adresses members of groups har socral diserimination processes have excluded from decision-making Proc ‘theough - for example - discrimination bused on caste, disability, toe, ethnicity, religion, ot gender. Indiz being 2 welfare state has many plans and programmes fOr ths ‘empowerment of the marginalised ‘roups which is the hallmark of a strategy to achieve an inclusive strategy. (The initiatives are discussed in various parts of the Study Material AP AF shen Pradech Scheduled Caste Sub-Plan/Schesuled Tribe Sub-Plan ‘Planning, Allocation and Utilization of Financial Resources Act 2012 stars Pradesh: made istory Tn December by passing a bill io give sisnico) status to the eared eases and scheduled Wibe sub-plans, ensoring allocation of und we these sections in proportion to their population, The law will also ensare total utilization of fimds allocated to recta sections in the planned budget. The state assembly passed “Andhra Pradesh Scheduled Caste Sub Plan/Scheduled Tribe Sub-Plan Planning, Allosation and Uri lization of Financial Resources Be ZOTT making it the first state inthe country 19 have such legislation. The bill was brought 3s the funds were either not being utilized or diverted for other purposes. Inclusiveness through Employment Programmes The 12" FYP says the following about the Mgnroga < Qne of the most important interventions for fostering inclusion during Eleventh Plan was the MGNREGA. While its achievements in et olinating poverty and preventing acute distress during times ‘of drought have been recorded aia appreciated, there are also some complaints agzins MGNREGA, primarily on the grounds Ft ies a dole, involving huge expenditures that could have been sper See productively There are glso complaints thal it is leading to increase in wages of agricultural labour and construction workers, There Is also evidence that wherever lane ‘productivity has improved and greater water security heen delivered, small and sarginal farmers working in MGNREGA sites rine reverted back to faaming and allied livelihoods. There is also evidence that MGNREGA is enabling crop diversification, particularly mo horticulae, ‘wherever it has adequately converged cath schemes of Agricultural Departments. An important lesson from this experience is that itis the quality of assets created, whieh will determine whether MGNREGA cam go beyond the safety ne! to become a springboard for entrepreneurship, e¥<% 3. the lowest income levels. ‘Accelerated growth in recent years hss yielded distnes Benefits to mht and the prosperity which this hae gencrated is visible to all, raising the expectations ofall s=ction* of the population, and creating a demand for fair share ofthe benetits of grow.lah aL ‘Eleventh Plan Achievements on Inelu: The following, are some important indicators showing: the Fleventh Plan sueceeded in fulfilling the objective of inclusive grow the data celate to the NSSO surveys, the time period for comparison is ) Aspiramts are ‘advised to insert the latest data, for example, NSSO-68— ‘revesled in 2013 June) © GDP growth in the Eleventh Plan 2007-08 te 201) iB per cent compared with 7.6 per cent in the Tenth Plan (2002-03 to 2006-07). p27 per cent in the Ninth Plan (1997-98 to 2001-02). The growth rate of 7.9 per eeat im tbe Eleventh Plan period is one of the highest of any country in that period which saw two Blobal crises. ‘Agricultural GDP growth accelerated in the Eleventh Plan, to an average rate of 3.7 per cent, compared with 2.4 per cent in the Tenth 2.5 per cent in the Ninth Plan. The percentage of the population below ty line declined at the rate of 1.5 percentage points (ppt) per year in the peried 2004-05 to 2009-10, twice the rate at whi it declined in the previous period 1993-94 to 200405. (When the data for the latest NSSO survey for 201 I-12 become available, itis likely that the rate of decfine may be close to 2 ppt per year. Indeca!!!!) ‘The rate of growth of real consumption per capita in rural areas in the period 2004-05 to 2011-12 was 3.4 per cent per year which was four times the rate in the previous period 1993.94 to 200405. The rate of uncmployment declined from 8.2 per cent in 2004 05 to 6.6 per cent in 2009- 10 reversing the trend observed in the carlier period when it had actually increased from 6.1 per cent in 1993-94 to 8.2 per eent in 2004-05. Rural real wages increased 6.8 per cent per year in the Eleventh Plan (2007-08 to 2011 12) compared to an average 1.1 per cent per year in the previous decade, led largely by the government's rural policies and initiatives. Complete immunization rate increased by 2.1 ppt per year between 2002-04 and 2007-08, compared to a 1.7 ppt fall per yeur between 1998-99 and 2002-04, Similarly, institutional deliveries increased by 1.6 ppt per year between 2002-04 and 200708 higher than the 1.3, ppt increase per year between 1998-99 and 2002.04. ‘Net enrolment rate at the primary level rose to a near universal 98.3 per cent in 2009-10. Dropout rate (classes 1 WIM} also showed improvements, falling 1.7 ppt per year between 2003.4 and 2009-10, which was twice the 0.8 pot fall between 1998-99 and 2003.04, Ending of gender based inequitics, discrimination and all forms of violence against girls and women is being accorded overriding priority in the Twelfth Plan. This is fundamental to enabling ‘women {o participate fully in development processes and in fulfilling their social, economic, civil and political rights, for more inclusive growth. Environmental Sustainability ‘While striving for faster and more inclusive growth, the Twelfth Plan must also pay attention (0 the problem of sustainability. No development process can afford to neglect the environmental ‘consequences of ecanomic activity, or allow unsustainable depletion and deterioration of natural resources. Unfortunately. the experience of development in many countries, and our own past ‘experience in some respects, Suggests that this can easily happen unless appropriate corrective ‘eps are taken at early stages. The Twelfth Plan must devise a siratczy of development which ‘effectively reconciles the ebjective of development with the objective of protecting the environment. ~~ ;: Es Development cannot tike place without additional energy and the energy. requiremest af development will have to be reconciled with the objective of protection of environment. Te economy depends heavily on coal and hydro power to mest its cnergy needs and the development of each of these energy sources involves potential trade-offs with conservation of Forests and the objective of avoiding displacement of people. We nood to manage: these ‘conificting objectives more efficiently, with adequate compensation for those dispossessed and propriate remedial steps to correct for loss-of forest cover where this is unavoidable. Nuclear energy is another important energy souree for the country, and has the greatest potential over tas nent 20 years, of providing a substitute for coal-based clevtricity. However, here toa) taviroamental and safety issues have arisen, cspecially after the Fukushima accident. ‘These concerns are being addressed The achievement of environmental sustainabi Limpact the life of communities in several dimensions. It will require the need develoy f new cnerey efficient practices in’ urban housing and transport to contain the growth in the demand for energy. It would mean use of Far nore energy efficient technologies in coal-based electricity generation such as the introduction of super critical and ultra super critical boilers. It would require active promotion of energy efficiency in industries, farms and offices, aad the promotion of more energy ¢: Jieient appliances through policies of branding and mandatory standards. Transport policies and related technotogics for more energy efficient vehicles will need to be developed and adopted. ‘The issue of sustainability also has a global dimension because of the threat of climate change caused by the accumulation of carbon dioxide and other Greenhouse Gases (GHG) in the tmosphers due to human activity. Since GIIG emission m any eountry accelerates the process of global warming, this is ebviously an area where 2 global cooperative solution is needed. Ne ‘ouniry will have sufficient incentive to contain iis own cmissions unless itis part of @ global ‘compact, Such a compact in turn is possible only if there isa fair distribution of the bur des: Developing countries have consistenily argued that sinos itis the industrialised countries that have historically contributed the bulk of the accumulated stock of GHG, and are also the most able to pay, they must bear bucden of global mitigation and adjustment. India is participating i the ongoing inlec- national negotiations under the UN Framework Convention on Climate ‘Change, but progress thus far has been minimal. We cannot, however, abstain ftom taking action to deal with climate change until aa ntemational solution is found. ft is known that India will be one of the countries most severe! ifected if global warming proceeds unchecked and as such appropriate domestic action *s necessary, A National Action Plan for elimate change has been evolved with eight component Missions, Implementation of these missions must be an integral part of the Twelfth Plan. Policies should be closely monitored te easure that we achieve the stated objective of reducing the ‘emissions intensity of aur GDP by 20 per cent 10:25 per cent between 2005 and 2020. Resolving the conflict berween energy and the environment is not without cost. It involves additional upfromt costs oth of mitigating the adverse impact on the environment and of ‘witching to more expensive renewable energy sources. These costs must be built into the east and the pricing of the cnergy produced. The reluctance to bear these costs arises largely because the cost of environmental damage is not properly measured. It is only when this is done that the cout of avoiding such damage can be compared -with the environmental benefits to reach 2 fadonal decision on Winether the costs are worth it Pert of the problem is that the conventional vhays of measuring GDP in terms of production do not take aecount of environmental damage ‘aused by production of certain goods which shollld prop-exly be reflected 2s a subtraction from GDP. Only if GDP is adjusted in this way fOr envirsamental costs that growth of adjusted GDP can be called a measure of the increase i S@lal production in the economy, Recognising this 19Sa a . problem, the Planning Commission has commissioned ss) Professor Partha Dasgupta to prepare a template for estimating green would measure national production while allowing for negative effects I the aftermath of recent disaster in Uttarakhand, the State govemment decid Green GDP concepi(July 2013) ‘The capabilities we need to develop to achieve the Gbjestine of Geter, more inclusive and ‘sustainable growth ate to be discussed: human capabilities whseh are im many ways the most important; institutional capabilities and the development of infrastructure which is a general capability enhancer for all agents. Both the Central and State Governments have a large role to play in developing these capabilitics and the Twellils Plan af the Central and State level should accord high importance to this effort. 4 The development of human capabilities must be Bt priarity as proper development of human capabilities will also ensure that our growth is more inclusive in the sense that the marginalised and disadvantaged sections of our society will be more able to access ‘opportunities thrown up by the grawth process. ‘The most fundamental of all human capabilities is life itself and the steady rise in life expectation in the country suggests that significant progress has been made in this dimension. Life expectancy which was only 32 years at the time of Independence is now 67 years. In other words, every Indian can expect to live twice as long as was the casc al Independence! Nevertieless, the level of life expectancy in India remains lower than in many emerging market coon- omies and it is appropriate to plan for significant further improvements i this important dimension The infant mortality rate (IMR) is another dimension of human capability where we are making progress. IMR fell ftom 80 in 1991 10.66 in 2001 and at a faster rate thereafter to 47 in 2010. The Tate of decline was 14 in.the first period and 19 in the scc- ond period. Nevertheless, the level of IMR remains high and we need to do much better for our chiklren. We must strive to bring the IMR down to 28 by the end of the Twelfth Plan, Maternal mortality rates (MMRs) are another indication of weakness in our performance. MMR has been falling over time, thanks to the initiatives for promoting institutional deliveries under the NRIIM. The percentage of women ving birth in institutions with the benefit of skilled birth attendants has increased fram, 33 per ‘ent in 2005 to 73 per cent in 2009. We nced to do even better, and the Twellth Plan must bring MMR down to | per 1,000 by the end of the Plan period. ‘While there has been progress in the dimensions discussed above, the decline in the child sex ratio rings an urgent alam. This is an area of grave concem since it implics that society is denying life 9 female children, and increasingly resorting to female foeticide. The spread of jagnostic and medical Facilities has paradoxically actually worscned the situation, as the fallin chifd sex rate is being seen in the more developed areas and cities. Education India has a young population, and consequently, the labour force, which is expected to decline in most developed countries and even in China, is expected to increase over the next 20 years. This *demogniphie dividend’ can add t our growth potential through its impact on the supply of labour and also, via the falling dependency ratio, on the rate of domestic savings. Besides, a ‘young population brings with it the aspirations and the impatience of youth, which in turn can hecome strong drivers for Bringing about change and innovation. To reap this demograp\ dividend we must ensue that Gur ‘younger citizens come into jhe lubour force with highcr levels ‘of education and the skills lediad to support rapid growth. The SSA has brought us close to the target of universalisation of mary ‘education and the Right to Education Act (RTE) 2009 zy ‘. snakes eight years of elementary cducation a findamental Fi for all the children. The MDM Han creas eneured that celention in schools has improved greatly. However, the Tearming aaa for a majority of children continvé #9 be disappointing ‘Addressing the quality issue i caaeechoals is critical for the effective development of human capabilities and for achieving the Ghjective of equallty of opportunites, The quality of jgachers and, even more important, their eivation and accountability will noed to be improved. Many of the children who are presently eval are firct-pencration Iepmers, and these children ness supplementary instruction. This #s not easy due to shortage of qualified tachers in many schools across the country. New and Mor cutie approaches such as multigradc leaming, which has “heen successfully tried in Tamil ‘edu, could be adopted in such eases. ‘The success of the SSA has put pressure on expanding the capacity of secondary schools and the Rashtriya Madhyamil wha Abhiyan (RMSA) g@@gesses this issue. ‘Although there is dable Foes an providing secondary schoo! access the dropow! ‘between clententary ‘and sccondary schools continuc to be high, and between the secondary and post-secondary stage “fey ae even higher. This isa partienary serious problem for girls, who have to travel longer eee ey reforms in secondary schooling would recive special attention aimed at fostering ctitical thinking and analytical Gills, and preparing students for further education, ‘All this requires innovative approaches, some of which are already in evidence in certain States ‘The last deggele has also seen a huge increase in the demand [et higher education and this is crpedied to increase further a5 mere children complete S00) and more and more jobs are seem fo require higher. level qualifications. However, ow NaNe education institutions also suffer ftom problems of quality. Too many of eur universities producing graduates in subjects that Sa reputed by fhe changingjob market and the quali also #9! SO it should be, Higher reation policy has to be driven by three “E's: expansions °q° ‘and excellence. Of these, the third E, ‘excellence’. is the most difficult to ‘achieve. India cannot hope to be competitive in an saan aly knourledes driven world if our higher eueaion institafions do not come up to the Hah standards of excellence needed 1 be able to be lob ally compotitive. Not even oné Indian aie gy figures in the ‘atest Hist of tbe Lap 200 universities jn the world, We should wark towards ensuring thet there ae at least five by the ‘end of the Twelfth Plan. For this, universilies at the top of the quality hierarchy should be jdentificd and generously supported 50 Uhat they can wach the top league. Cenires of excellence within exists universities shauld be created. A special initiative should bo launched (0 attract 5 ‘aljbre faculty from around the world on non- TEomanent aching assignments. All these initiatives should be pooled inte an India Excellence Tnitintive in the Twelfth Plan. ‘skill Development Sahil Development Mission is being launched to ski at leas’ 450 million individuals by the roe ofihe Twelfth Plan, Skill development programmes i the past have been run mainly by the government, with insufficient connection with Mars demand, ‘To ensure that skills match omsed, special efforts are needed to ensure that employ" ‘and enterprises play an integral role ee coreeption and implermcatation of vocational training prOerom%, including managing Trustial Training lnstintes (Ts) anda the devia of faculty. An cnabling framework is sree) that would attract pevale snvestment in Vocdtions! Training through Public-Private Partnership (PEP). We should try tsps on te reSp°00"5 strengths of the public and private vector entities engaged in till dewelmpment MBBS ‘be required investments, setting up fitst 12 on os ig st et el el ee elrate fis, ensuring fficieney in oporalions and management and enabling post-training employment will be the primary responsibilities of private sector entities while the government vwill provide the enabling framework and the Tequisite financial sup- pact especially in respect of SC, ST, Minorities and differently abled persons and other deprived seetions of society. 12" Plan and Skills The foundations of growth in any economy are alvays based on the skills and knowledge of the human resources. This is « critical element to addressing the challenges and opportunitics for growth in this highly competitive and globalised world. As India moves rapidly towards achieving ambitious economic and social targets, engaging the human resources for skills development willbe critical for ensuring success as a knawledge ¢sonomy. India has seen a rapid growth in the last few years. This growth cannot be called inclusive as it has not been able to bring about development at the graswoot levels. The overall skill gap in the couniry is estimates! at over 10 million per year and growing. For India the challenge magnifies due to unprecedented issues of scalability ie. reaching out to 00 million by 2022 coupled with multiple challenges in implementation. 12° Plan aims lo increase the percentage of the workforce which has received formal skills through vocational education and training trom about 12.0 per cent al present to 25.0 per cent by, the end of the Twelfth Plan. This would mean that abaut 70 million more people have to Be imparted formal skills in the next five years. Priorities are + Accreditation and certification system need revamp ‘© Reorientation of curriculum on a continuous basis to make it responsive to the industry needs + reach out to the millions of dropouts/disadvantaged ones and «resolve the problem of unemployability of even the so called “trained” by continuous: retraining © Disseminating information about the availability and effectiveness of taining programs is crucial. The role Fmployment Exchanges, NCWT and the SCVTs could play is dissemination of information on the nature and quality of taining particularly with respect to enrollment, institutional capacity, completion information and graduate follow— up data from all registered vocational institutions. This will enable the government and the stakeholders to see whether the system is responding to employers” needs and devise, policics accordingly. (National Council for Vocational Training (NCVT) State Councils for Vocational Frainings (SCVTs)) = meet theneed for establishing flexible leaming pathways inicgrated to schooling on one end and higher education on the other through National Vocational Education Qualification Framework (NVEQF). This would mean addressing the issues of vocationalisation of school education through creative means. © imparting soft skills alongside has become highly relevant and has global precedence. = The system of Industrial Training Institutes and Industrial Training Centres need significant expansion and allease of fresh energy to skill in numbers required. © Public-Private Parmerships in financing, service delivery, and provision of workspaces and training of trainers ae being promoted but a robust mechanism to regularly assess them is clearly found Semin: E -. ‘‘of Still Development cruelly depends on other issues Uke 0 of Titeracy at all general state of employes sate of labor markets, Fanctioning of fabour inteisive Peres and industries, ant nppropriateness and sirens of social program. ~ the level of eh: evens cursory aance on these parameters confirms dull development of ‘the 7s workforee. Therefore, an integrated 21 vents have vo join hands ‘pnd support the ongoins policy efforts. fie at the forefront of ™mP" mentation of thes? policies, they must not allow avaper the progress of Hie reapoctive Skil Development Missions. kill development has ‘heen accorded # VETY high priority durin rmbor of fndvstial THini utes (ITs) ithe county Nt fast five years with the ‘addition of 4,000 more inetitutes and capact ta .75 Bak persans aamualy 9 OO motipe expanding workforce in th kill Development ‘Cosporation bas also been activelypparmnering PVATE sector pi nement the process of SHAME: that daunt purssit of yust and all ySDA was set up ip 2015- NSDA (NSDA) by Minister's ‘National, Council on Skill Development (PMNCSP), the Ce TNSDCE) and the Oice of Adviser to the In June 2013, Governmett consityted the National Stil evelopment ABEREY subsuming the PHM ‘ational Skill Development PM on Skill Development ats af the Government of ‘The NSDA yall coordinate and harmonize the skill development efor India and jhe private sector 10 achieve the skilling targets ‘of the 12th Plan and ‘peyond. ft will Inavout to bxidge the socal Tepenal, gender and economle dinide by ensuring that the stalling needs of the ae amaged and margcalized EOS Tike SCs, STS OBCS, eegferealy-abled persons ave EET Nim of unrough the various SK development ‘Coordination Bo women 3 programmes. wile the Cente Ministries and atonal Skill Development COMPOSE ¢NSDO) will continae qo implement. schemes qn their remit, the NSDA ‘will develop and monitor overarching Framework for skill developmsa® anchor ‘onal Skills Qualifications Framework (NSQY and facilitate the setcng UP of professional i bois in adition to the existing ones. of a Cabinet body chalred by 2 person of ie rank: and status autonomous eral and other support staf NSDA will be =" ‘py a Director Gon Minister supp! an, india is iraplemonting the US concept of Trained io moetnewer challenges. Visualizing Community colleges Faced wiin the ask of skiing 500 million you that iis workforce is sanity collezes 10 ensure Gall development to be sof the country’s education S95 develop community college PLS Higher Education Dislogve snetudes this as a priority( 2013). - ' iu mmunity colleges (nce ‘commonly called jumtor colleges) are primarily community college. states. 00 etnutions of higher edveation. *Agier graduating, from a © Kberal arts college For 0 1 hree years to complete two-year publ insficr to a university 4 some students thbachelor’s degree, while others enter the workforce. Community colleges are often geared toward Tocal students and local needs. Students who could not afford eampus or off-she housing at @ four-year college, or for offer reasons cannot relocate, can attend courses while staying in their Jocal community (though some eolleges do offer student housing). Also, community colleges can avork witi local businesses to develop customized training geared toward local needs, whereas a four-year institution generally focuses on state-wide or national needs. Nutrition Poor leaming outcomes in our schools are partly because of poor quality of teaching but they are also partly due to high ineidence of child malnutrition, which reduces learning ability. India has had the largest and the longest running child development geozrarmme in the world in the form of ICDS, but the problem of malnutrition remains large. rales noe available on matauteion, ‘The latest data on child malnutrition are fom the National Family Health Survey (NFIS- 3) conducted in the period 2005-07 which pre-dates the Eleventh Plan. The full impact of the Fleventh Plan programmes on this aspect of human capability is therefore not yet known, Surveys undertaken by the State Governments seem to sugzest that mal- nutrition has fallen in many States. The next Annual Health Survey for 2012-13 wil include data on mal- nutrition and these data will provide a reliable basis for assessing what has happened since NFHS-3. Meanwhile, the ICDS programme will be expanded and comprehensively restructured in the ‘Twelfth Plan to make it more effective. Malnutrition is also 2 problem among adults, especially women. The incidence of anemia and lowbody mass among women is very high in the country. The causes of this persistent malnutrition are not welll understood. The availability of food, especially better quality food: provlucts such ax fruits, vegelables and dairy products is significantly better today than it was im the past. Nevertheless, the incideace of mal- nutrition remains high. ‘There is a nced to bring this dimension of human capability t0 the fore front of policy attention. The Food Security Ordinanes promulgated in July 2013 (discussed elecwhere) will address some of these issues, but the problem of nutrition is actually much more complex and a multidimensional approach is necessary, Health, Health is another criieal dimension of human capability, which needs much greater attention in the Twelfth Plan. At present, less than 30 per cent of outpatient and less than half of inpatient health care capacity of the country is in the public sector, and the majority of the population relies on private health care provision which often imposes # heavy financial burden. It is, therefore, essential to expand public sector capacity in health care especially in the rural areas. The NRHM, launched during the Tenth Plan, made an important start in expanding health care facilities in rural areas, While additional infrastructure has been created, there are large shortages of personnel, especially specialists in rural health facilities, reflecting the fact that wained human resources in health are in short supply and it takes many years to set up new medical colleges to thai the required number of doctors. Ideally, the public health care sysiem must be expanded to adéress the health needs of the vast majority of citizens, recognising that upper-income groups may opt for private health eare. The Twellth Plan will therefore $86 the transformation of the NRHIM into a National Health Mission, covering beth niral and urbail afeas. Unlike rural residents, those in urban areas have access 10 private health care prowinler But private health care is costly and large qumbers of urban residents especially stam Gwellers eannot afford it, An important component of the National Health Missict will be the Uteem Health Initiative for the Poor, providing public sector primary = .selected low-income urban areas. vee orage of healcare provessionals ia {Me SOU and their supply in this sector. We ed ropidly if we want t folfill our commitmmery we ing. and. waining programmes for ealimaass gare facilities in There is a massiv therefore be expan Thawfore plan for an expansion of professionals, particularly in the public S600" institutions. Finally, atiaiament of good healt outcomes 5 ot just 2 mater of providing ourative CAS We rire io give much greater attention (0 PUBIC health which has traditionally : replect. We also necd to foeus much more &” provision of clean drinking water end s tio, ‘which can _make a major contribution © proved health, This was the expenense ie Pr dstrialised countries over a hundred Yeas 2605 fond this isalso truc for us today sine longer-term objective of Health Policy mrt to the provision of Universal Health Cas (UBC), whereby anyone who wanis i acyured of access to a well defined set oF health iritlements. Puuiing a UHC systerr in place ‘vile fae, bot we need © SH building: appropriate architecture Drinking Water and Sanitation The problem of providing safe drinking walt is particularly a plans have erephasised progearmmes forex Fave not bad as rmuch success, 25 desired. ye accelerating and serious problems of water quality Peer is that rurn drinking, wer Sobers 0 not Mquifer management. Excessive dal ‘groundwater for irrigation is aay tables eausing drinking, watec hand PUMPS 1 Gry aud fowering of the water table is also causing $3 the water non-potable. A sustainable Tinity and ebernical pollution, makin tion to the rural drinking water problem Tas 10 be found as part of a holistic approaet for aquifer management ation and clean drinking wwater sve critical 430" aay other, Without proper sentation the incilenes se dianhocal diseases due to contaminated Geinking water will not come down, and Wilnow elequate water supply, improved sanitation fs rneraiynot possible. It is, therefore, 60809 sr nlopts habitation aporoach to saitation une eeattronatisc the integration of water SURDIY wh gantation in each habitation. The problem fof sanitation in urban areas is also Very serious since almost all our cities, including even the MGoee covtals and rnajor metros, have 2 TEE DEES of the population (45 per cent in Delhi) (pot enonected 19 the sewer system. (Hoan a eeopment most give top priority 10 plat. SE for shee aor sewerage 25 an integratod whole ting nie ‘gecount the likely expansion of the ‘ahan popalstion. "gphancing Human Capabilities through Tnformati Fee ability to access information is an importa Tack of ready access information is often a mart impediment #1 being of the people, With improvemet jin literacy and education, information technology, we are in a position provide our people with aeeess to Frctoding obtaining bir records, land retorts, payment records for The rapid spread of mobile telephony: fnclading if rural areas has facili jpnovations which directly benefit the ordiaaey “cligen. Farmers in some parts of ths ¢ounisy °° able to subscribe 10 ‘commercial serviecs which del fiver relevant information for a particular crop fo the farmer through Short Message Service (sas). The hospitals in Bengslura get an SMS alert ‘ahen the next vaecination is due, 16 ute in the rural areas. Successive anding the coverage of rural drinking w= but they The incidence of ‘slipped back” hubitations appears 10 ave emerged in mummy areas. Part of he fully rmcgrated with national system of Ieading to lowering of jvants of health and are complementary to in efforts to improve the well: ‘and developments in information, Such innovations parents of babies bere in manicipalSRIRAM need © be encouraged. Yet another human capability thal is important is the ease snd effectiveness of establishing identity. The Aadhar project, which provides a unique identification (UiID) number, backed by biometric data eaplure, to establish, identity unambiguously. is a major Step forward. Identity can be difficult to establish, especially Tor the poor, when they move from their place of origin, whether by choice or by compulsion. The UID project has already enrolled 250 million persons. Experiments with using Aadhar to make payments under MGNREGS electronically into no frill bank accounts which can be arcesssd through mobile phones have begun in 51 distics. It will soon be possible for large-scale use af the Aadhar platform to make ‘various types of government payments due to individuals in-a seamless manner electronically avoiding problems of misuse and leakage. The Asdhar plotform will also facilitate a shift fromgthe physical delivery of subsidised: commodities through the Public Distribution Sane to a system of cash payment. iff desired. Some States have indicated that they would be interested in such ashi. ‘target to mave the rmajor subsidies and beneficiary payments to a cash basis linked to the end of the Twellth Plan period would be a major step towards improving efficieney, {Followed up in the Chapter on PDS and Food Security. Read ahead) x Development of Institutional Capabilities The Twelfth Plan also necds to focus on developing the capabilities of our institutions ‘he increasingly complex ancl demanding tasks expected of them. We have three 1¢¢ (Legislature, Executive and Judiciary) and three tiers of government ( Panchayats/ULRs). The capabilites of thesc institutions to deliver on their mandat= ‘greatly improved. The gaps are most evident at the lowest level of PRIs and ULB: "gained personnel are lacking and the training systems are also inadequate. Implementation Capability Planning Commission says that the capacity to implement is low at all levels of government. The gouemment simply does not function with the efficieney that iS required im the tweny-first entary. This is partly because of the luck of motivation at various levels, but it is primarily Fecance govemmental systems and procedures are largely process-driven. They are not outcome ‘oriented. Accountability is often viewed as adhering to procedures with no incentive to depart from procedures to secure better results. Unless this weakness is overoome, mere provision of ‘more funds for programmes implemented in the same old way willl not help, ‘Where implementation rests within ane ‘Ministry, there are problems of (i) insufficient attention 10 evidence-based anafysis in the design of policies and programmes, (i) insufficient concurrent ‘evaluation that would give foodhack on outcomes achieved and (iii) lack of willingness or ability to bring about systemic changes needed to improve outcomes. [Even when it is known that & change in procedures will help, it takes very long to bring about that change. ‘The problem is rectly multiplied when the cffectiveness of @ programme depends, as it often does, on actions ‘hat have to be taken by several different Ministries. Inter-ministerial consultations take far too long, and more importantly, are typically not oriented 2 resolving problems. This is because ‘each Ministry works in a silo, applying its own tules and procedures. The effort is to seek a “consensus if possible, with litle ability to overrule positions taken by individual Ministries in the interest of a holistic problem solving approach. Resolving conflicting stands by consensus is of course desirable if possible.“but beyond a point, it may not be possible, and some systems for ‘conflict resolutionrare needed. To deal effectively with these problems it may be necessary to redesign governmental decision- imuking systems. There has been a reat deal of Sys-tem redesign in the private sector in response aEs io the new environment created by economic reforms. A similar redesign of govermment 35 1 ed. For example, the CCL that was setup earlier 8 "2015 has demonstrated its usefulness. Tt ee ody the Prime Minister and inclading all key Minis and to amend the Transaction of aaa ales so that statutory clearances under vacions 9°, for all infra- structure projects above a given size are given by the Board, taking into accovnt the views of all Mir jstries. The ‘allocation of business rules could provide that such clearances: would be issued by the Cabinet aareerarit based on the decision of the Board. This “ould be a systemic change which would Scorn iste consideration of complex sues ane gay pecelerate decision-making. Several ther changes are discussed in Chapter 6 including 't particular the noed for great reliance on Sndustry specialists With domain knowledge ‘Delivery of Public Services Delivery of public services in many States is hampered, ‘eak institutional capacity. Thus, although public bospitals may have trained doctors SES tnd public schools may have nF jeachers, néither of these institutions will have administrators who aré trained in the operation of health eare or educational institations. seetrat step am reforming publie service delivery 1s (0 devise mechanisms for measuring the ciuent of public satisfaction swith publi serviees ane publicising the results. the Public ABIES Centre at Bengalora has done excellent work in enducting systematic surveys of public perception or satisfaction with various PES of public services ranging from water and veaitation, bealth and education, public transport, police and 30 on. Such surveys pert odically enameled produce valvable information for the political jeadership on where performance is felt tw be poor and where itis improving: eee svalvement of citizens’ organisations can Help focus goverment attention on these problem areas. The Delhi Government's periment with Bhogidhari is example of citizen Meeieement and consultation operating, through Resident Welfare Associations. (To be expanded ahead) Regulatory Institutions ‘An arca where the Tack of institutional capability is beginning (© manifest itself is in our expanding system of regulatory ‘bodies. As arcas that were earlier dominated by the public sector awe been opened up for private aperators, often Tompeting among themschves of With existing public Sector operators, independent regulatory institutions have been established to oversee the reeioning of the players in the system. The effectiveness fr rogulaiory organisations depends CHieally upon the quality of the personnel muna the insiituions and the deeree of i Sctablished, Too many of the regulatory agencies are ‘tafled by former bureaucrats ethers is not cnough induction of specialists wih Germain knowledge. A thorough review of ee regulatory systern established in different cocoon ws neqded to determine the weaknesses of she system currently in place ‘and recommend ways of correcting them. This is especially true as the next two five year Plans are likely to se= faster change in the global eeanomy and in the rmcture of the Indian economy (00. By July 2013, GOL is in the process of seiting Of coal, road and civil avi By bate Wo policy, regulaterationaie tris with al ctake holders in mind: keep 00 yealthy and public interest is protected in n regulators that mapetition the operation of the sector. Development of Infrastructure Infrastructure provides the basic capabilities everywhere. A distinet .¢ economy expanding sppart system for other sectors of th other Fine characteristic of infratructre i that while it 18yy areas imports can meet the gap between demand and supply, d bbe made good through imports- for example, power. Infr lvough development of the relevant infrastuetuce apaeity l= the domestic cconomy. Furthermore, Good quality infrastructure is important sot Sally fee Sister growth but also to ensure that growth is inclusive. Small businesses spread thromghost he Country need access to -good quality and reliable infrastructure services to compete effectively. Lange enterprises can often develop their own infrastructure as they often do with eapive power, and being large can even Jocale themselves ab initio where other infrastructure & Better, that is, nearer ports and near transport hubs. Small enterprises om the other hand. 12" Five year Plan (2012 ~ 2017) and inclusive FYP aims to achieve faster, more inclusive and mable growth in India. The plan broadly classified under sections — macroeconomic framework; sustainable development; wat land issues; environment, forestry and wildlife; science and technology: innovation: governan n and regional equality. Financing the 12. plan ¢stimates resource availability of Rs 80,50,1 crore With the torge! GDP growth rate of 8 percent. This implies public sector resources of 11.8 percent of GDP companed 10 10.96 percent of GIP expended in the 11" Pra. ie 5 The key achievements of the 11” plan (2007/8 to 2011/12) as stated in the draft 12" plan document have been given above. is 12 FYP and faster and more inclusive grawth Shri. Chidambaram (In his lucid styl The theme of the | Ith plan was faster and more inclusive growth and the theme of the 12th plan is also faster, more inclusive and sustainable growth. it the initial years of economic reforms and liberalization, the emphasis was on growth Having demonstrated our capacity to grow at a higher rate, the emphasis rightly shified to more inclusive growth. We need to define what inclusive growth is. It , inclusive growth can’t be d in any one parameter. Higher per capita income can be achieved by small section shaving very high incomes while people at the bottom continuing to have lew incomes, still statistically one can say we have a higher per capita ineome, Inclusive growth can’t be merely the GDP number. The GDP number can be eoniributed by a few states leaving out half a dozen poor states. The GDP number can be contributed by 2 few sectors teaving out sectors which employ unskilled or low skilled people, The 12 FYP lists the following as indicators of inclusive growth. First is lower incidence of poverty. Poverty must decline at a higher rate. The second is, growth must be reflected in day to day lives of ordinary people ax only ifthe members of the family especially the children have access to school and higher education and it is reflected in better health outcomes particularly infant mortality rate and matemal mortality Another measure of inclusive growth is the quality of education and by the skills 2 person juices. Skill development is an important measure of inclusive growth. And finally, social inequalities between the marginalized- SC/ST, women etc necd to be corrected. Prime Minister's specch in the ST* NDC mect in December 2002: excerpts related to 12 FYP and Inchusiveness As we begin our Twelflh Plan journey. it is worth noting that we do so with an economy that has many areas of strength. = Ehieved an average of 7.9 percent growth in the Eleventh Plan period, despite the fact that ‘were two global crises in this period. ‘This growth has also been mach more inclusive than 19,the percentage of the population below the official prune fine declined by about 2 pereestaas points per year after 2008-05, which is 100 aa 8 half times faster than the rate of decline: aoveen 1993-94 and 200405. This baste finding that poverty declined fasler would bold even the poverty line is revised. ‘Agrealtorprowih accelerated ftom 2.4 percent ia he ‘Tenth Plan to 3.3 percent in the Elevently Pea Teeal wages in agricalture have growm.at 6.6 perseat pes Yost recent years, compared rit only Lo percent per year in the period before 2004-05. Beter tural performance is a8 Jimporeanc reason why poverty declined faster. pr tfat used wp gram slowly in earlier periods have dane ict better. The average gro Sia pe five poorest tates execeds the national average for (he HO time in any Plan period. f Tc ewe muy be reaching the stage when the tem gBIMARU ‘States” can be relegated to history While these developments indicate the stren eeonorny, itis also truc that the CUuneSey a ic citation te dificalt, The. comimamgrisis m0 the global Smet has reduced aereyabere. I is expected to be zzt0 in the Eurozone and Japan ‘andl emerging market econo have also slowed down. . ‘The global slowdown, combined with some domestic cons! rants, has meant that our growth Rat the Brgwed down. Our frst priority must be o reverse this ‘lowdown. We cannot change te diobal economy, but we-can do something about te domestic ‘constraints which have contributed to the downturn. ‘The most immediate problems we need t0 jon problems affecting Large projects, including particularly power prot ys ih getting Vrearatiees and feel supply agreements. W ff steps 10 deal with. this eablem, including the establishment of a ney Cabinet ‘Committee on Investment under Ty (Chairmanship. can doeyment makes cle, the high growth scenario Will definitely not materialise if We follow a “business as usual” policy. The Plan idenifes © mune! of arcas where new initiatives dnd polfey innovations are needed. Many ofthese ore t7e08 ‘where the principal responsibility & ae eee tke Slates. 1 Jook forward to hearing the views of Hon'ble Chief Ministers om these suggestions. SEE yoed 10 vecelerate growth, we do not view growth 36 end in itself, Our seal Gbjective aust be to improve the condition of Hives ‘of the aam aadmi, which is why We trmphesise that growth, must be inclusive. ze nwo vensons wy capid growth is necessary (0 achieve BTeAS, inclusiveness. First, itis trossrery to generat the revenues 10 finance Our Many Progra of inchisiveness. If growtit Tiows down, neither the States nor the Centre will have the resources needed to implement setuciveness prograrames. We will citer be forot to aH HESS programmes, or be pushed inte sarang a higher fiscal deficit, which will ave ober negative conssah NCE rd growth also comnibutca cert to iacusiventss HOSS it provides greater access to treome and employment opportunities. Policies aitied ar stimulating growth in agriculture and i vediumn and small industries, combined with steps © promot ‘education and skill development, Gul prnduce a growth process which is inberently mors inclusive, The Twelfth Plan StHtezy wah ine many elements which will ensure that growth a5 jnclusive as possible. | welcome ‘your comments on this strategy. ve foo aved to pay special atention to spars between socio ant groups such as SCs, Sis, OBCs and minorities. These groups lag: Behind the °=St ‘of the population in key socio= a nie indicators, Fortunately, the gapease cain batt POSS “jinich this is happening is veenetiehitory and certainly does not maaililemessatos: ‘Y° need to consider how we can do botter. 20V1 | — —— ~ =~ oe a ~~ ae ee ae ~ — ~~ — ~— ~~ ~~ = —_ Gender inequality is another important aspect which dese represent half the population and our society has not : ‘socio-economic status is improving, but gaps persist. The emergemce Bilis spoces. wihich is an absolutely essential part of social emancipation. is 4 threats to thei safely and security. [have in mind the brutal attack om = ‘only 2 few days ago in the capital and other such reprehensible incidents elsewhers We must reflect on this problem, which accurs in all states and regions of our country. aad ‘requires greater attontion both by the Centre and the States. In this particular case, the culprits have been apprehended, amd the law will deal with them expeditiously, Goverment has decided to review the present laws and examine the levels of punishments in cases of aggravated sexual assault. A fice of eminent jurists, headed by the ream hatce of aa, ie 18, Verma, aslPeonstnted for hs purpote. Let me state categorically that the issue of safety and security of women is of the highest concem to our Government. Commission of Inquiry is being set up to look into precisely these issues in the Capital. There can be no meaningful development without the active participation of half the population and this participation simply cannot take place if their security and safely are not assured, | urge all Chief Ministers to pay special attention to this critical area in their states... ‘Agriculture is an area of critical coneem. Although the share of agriculture in GDP has fallen to only 15%, sbout half of the population still relies on agriculture us its principal ineome source Wheat happens in agriculture is therefore critical for the suecess of inclusiveness, We need to build on the success of the last Plan by increasing land productivity in agriculture so that. we not ‘only meet our rising demand for food, but also increase incomes of these dependent on agrieulture. Paradoxically, we should not aim at increasing total employment in agriculture. In fact, we need to move people out of agriculture by giving them gainful employment in the non agricultural sector. It is only when fewer people depend upon agriculture that per capi in agriculture will rise significantly and sufficiently to make farming an attractive proposition Agriculture is a state subject and most of the policy initiatives needed are in the realm of State Governments, The Minister of Agriculwe, my colleague Shri Sharad Pawar will be dealing with these issues in some detail and I look forward to the reaction of Chief Ministers on this important subject. Growth in manufacturing should be at double digit levels, but this bas yet to take place. The Plan mentions many new initiatives aimed at strengthening performance in the manufacturing sector. Small and medium industries are particularly important as they generate more employment. Both the Centre and the States must give prierity attention to creating an eco-system in which these industries can grow and flourish. Better infiastricture is the best guaraniee for mpid growth of the cconomy. Infrastructure development is heavily capital intensive and both the Centre and the States are severely constrained by resource availability. The central govemment, and many state governments, bave been successful in promoting infrastructure development through PPPs. India has the second largest number of PPP projects in inftastructure in the worl. It will be necessary to continue this thrust in the Twelfth Five Year Plan. ‘The Eleventh Plan paid special attention to the North East and | am happy to say that North Eastem states have responded well. GDP growth in a number of states was higher than the national average. We pli step up the pacs of investments in infrastructure, particularly roads, rail, airports, Waterways and power transmission systems to support and stimulaic economic activity in this vital region off eur Country. | am hopeful that as a result of our Look East Pol ‘his region will fast gateway to trade and economic activity with our neighbours, Thave mentioned that ‘Centre and the States face resource constraints, Both therefore 21have to make determined efforts to mobilise resources t0 fund the Plan, The Plan document points out that we need to increase the tax ratio as a percent of GDP through a combination of tax reforms and better tax administration. Early implementation of the Goods and Services Tax (GST) is critical in this context. | hope we will have the co-operation of the Statcs to introduce GST as quickly as possible. The Plan also draws attention to the need to control subsidies. Some subsidies are a normal and deed essential part of any socially just system, but subsidies should be well designed and effectively targeted and the total volume must be kept within limits of fiscal sustainability. Failure ¢0 control subsidies within these limits only means that other plan expenditures heve to be cut or the fiscal deficit target exceeded. The Finance Minister will be addressing these issucs in his intervention. ‘A common complaint against govemment programmes is that they suffer from leakages, corruption, delays and poor targeting. The Central Government is taking a mijor step to deal with this problem by shifling several beneficiary origall@thSchemes to a direct transfer mode, using the AAadhaar platform. This will begin to roll out for selected schemes in selected districts im the course of January 2013. In due course, » wide range of benefits like scholarships for students, pensions for clderly, health benefits, MNREGA wages and many other benefits will migrate to direct transfer into bank accounts using Aadhaar as a bridge, This is an innovative step which will be watched by the entire global development community. The Central and State Governments must work together to makc this a success. Many Siate Governments have said that Centrally Sponsored Schemes are often ineffective because of rigid guidelines. The Deputy Chairman has already pointed out that we are taking steps to rationalise the Centrally Sponsored Schemes along the lines recommended by the BK. Chaturvedi Committee, including, proposals to introduce greater flexibility in these schemes. 1 ‘am sure these changes will be widely welcomed. There are two arcas I wish to mention which pose a major challenge for our economy and these are energy and water. Energy is 4 eriieal input for any growth process and our domestic energy resources are not sufficient to. meet our country’s growing needs. We import ofl, natural gas and in recent ycars even coal. IT we wish to keep our energy import requirement within reasonable limits, we must emphasise encruy cificiency to moderate demand and we must increase domestic production of ‘energy. Energy pricing is critical for both objectives. If domestic encrgy prices are toe low, there ‘will be no incentiveto increase energy efficiency or to expand even supply. ‘Uafeetinstely, energy is underpriced in our country. Our coal, petroleum products and natural are all priced well below international prices. This also means that electricity is effectively ‘specially for some consumers, Immediate adjustment of prices to close the gap is T realise this, but some phased price adjustment is necessary. Energy experts are that we cannot expect to achieve rapid, inclusive and sustainable growth if we are not to undertake a phased adjustment ia energy prices to bring them in line with world prices. “The Central Government and the states must work together to create awareness in the public that ‘we must limit the extent of energy subsidies. [look forward to hearing the comments of Hon'ble (Chief Ministers on this complex issue. “The management of our water resources poses severe challenges. We are rapidly approaching the position where the total demand for water in the country simply cannot be met by available supply. As with energy, we have to respond by increasing water usc efficiency and alsa by expanding supply in a sustainable manner. The Plan document outlines a comprehensive steategy for dealing with this problem, starting ‘with a serious effort to map available ground water supplies aquifer by aquifer. Available water 21D also needs to be allocated to different uses through a Water Regulatory Authority. This is an area ‘where action ligs largely in the domain of State Governments, The development of our country is necessarily a cooperative endeavour involving many stakeholders. It involves both the public sector and the private sector. the Central Government and the State Governments. It also involves the common people particularly those participating actively in devising new ways of addressing old problems. Critical views 11th Plan: Exelusion and Deprivations Despite an average 7.9 per cent growth in GDP during the 11" Plan Period sometimes peaking to 9 per cent- the performance of India in terms of the Human Development Index (indicative of inclusive growth and the extent of population benefitiagifom development) saw a downward slide to 136" position among 186 countries. While“@ handful are reaping benefits and have entered the billionaires elub, many are going into into deprivation and disempowerment. By various other indicators, India's inclusive growth has shown weaknesses (In the class). ‘A serious effort is necessary to quantify inclusive growth on fines of IHDI (inequality adjusted HDI) with the help of indices like the Cocfficient (the measure of income inequality). Acco-sing to a report of OECD (Organisation of Economie Cooperation and Development) released in December 2011, top 10 per cent wage camers in India now make 12 times more than the bottom 10 per cent. India spends an abysmal 5 per cent of its GDP on social protection schemes as compared to more than 15 per cent by Brazil, and during the last two decades India’s Gini Coefficient has climbed from 0.32 to 0.38 with 0 being the ideal score. Structural composition of GDP and inclusive growth As per economic survey af 2013 the share of agriculture in GDP is at all time low (13.9 per eent during this year) but itis still the most important sector in terms of employment share. Ow the other hand, the manufacturing and services activities which are contributing more than 85 per cent to GDP and getting a lion’s share of total capital formation are employing less than half of the total workforce. The higher growth and capital formation in the above two sectors have failed to transfer the workforce from low productive activities (agricultural and allied) to high productive activities (manufacturing and services). For growth ta be inclusive it must create ‘adequate livelihood opportunities and add to gainful employment in rural arcas too-The 11" five year plan aimed at generating 58 million work opportunities. But the NSSO survey has reported ‘an increase in work opportunitics to the tune of only 18 million between 2004-05 to 2009-10. “The growth raic of employment in the organised sector (public and private combined) is only 1.9 per cent in 2010. The recent data shows that only 15.6 per cent of India’s workforce has regular jobs whereas remaining $4.4 per cent are either self-emplayed or working on casual basis. Social Indicators ‘Social sector spending in India needs fo be increased for inclusive growth In India, public spending on health as percentage of total public spending is 4.1 per eent, which is about 1.2 per-cent of GDP. 12th five year plan projected 1.95 per cent of GDP as public health expenditure by the end of the [2th plan which is tess than the overall norm of 5 per cont suggested by World Health Organisation. Jn primary education, we are well behind the other nations which have comparable level of economic growth and per capi ieome. During 2011, the mean year of schooling in India was 4.4 and fernale literacy mate twas lewwer than the overall average, Publie expenditure on education as percentage of GDP 2of pereeat in 2011-12. -~ 23clusiveness and environment: 12" Plan The 12" EYP has the following important suggestions for sustainable growth Recognition of a number of serious environmental problems facing Indis, such es ee scarcity and pollution, and soil degradation due to averusc of chemical fertilisers: Giagnosis of environmental governanee issues such as non-enforcement of conditions under which environmental clearances are given to development projects, alienation, displacement and dispossession of tribal communities including by the government while using its ‘eminent domain’ powers, and inadequate decentralisation to panchayati raj and other local community institutions. Recommendation to give environmental orientation to some scctors, such as “green! manufacturing’ (energy efficiency, recycling), urban sustainability (“energy efficient buildings, management of solid waste and a shift sgppyblic transport”), and tourism that if ecologically sensitive and community-based. ‘A. mumber of specific steps to address environmental problems, such as rainwater Farvesting and groundwater recharge, assistance to rainfed farming, reduction of freshwater use in cities by enhancing recycling and reviving traditional. waterbodies, more sustainable methods in agriculture including ecological fertilisatior and non- pesticide management, encouragement to community seed banks and to miliets including their use in ICDS and Mid-day Meal schemes, environment-friendly and culturally selevant housing under the Indira Awas Yojana, and others. Recommendations on some important governance or institutional steps, such as 2 ‘Commons Policy” with secure tenure and management rights © communities using them, creation of Water User Associations t0 involve communities, mechanisms of conilict resolution relating to land and water, 2 National Water Commission to monitor compliance of envigoumental and other conditions, cumulative environmental impact assessments in vulnerable regions, forest produce-gatherers’ collectives: to optimise retums, speedy implementation of PESA and Forest Rights Act (FRA) in specially Gisadvantaged areas, and convergence of varigus government schemes and departmental ‘or ministerial priorities. MSME sector and Inchisive growth in 12" FYP- ‘he averaze growth rate during the 11th Plan period was 7.9 per cent, lower than the target of 54, Despite two global crises, one in 2008 and another in 2011, it must be noted, 7.9% growth ‘as occurred which is slightly more than in the 10th Plan namely, 7.6 per cent, thanks to MSME Sector which has consistently registered higher growth than the overall growth of Industry ‘Sector. On an average the growth rate of MSME was 13 per cont every year in the period of 11th plan which itself indicates au fond MSME Role in Indian Economy. Therefore, ‘MSME has a focus attention in 12th Plan document. Plan Document says: “The Growth of the MSME Sector must be a central foeus of India's Manufacturing strategy. ‘This is the foundation for a strong Manufacturing Sector providing more employment with less capital. It is the entry point for the workers and calreprencurs whe move through it to large-scale cnterprises, Whereas much Govt. attention is given to consult with and address the issues of farger enterprises, the development of the MSME Sector must become more central to the deliberations about the challenges of Indian industry and the Indian economy. The seetor must be viewed mot as a statie and weak sector, requiring constant support and protection, but as an 24 5 sl id ad oad ld el a od el ed ed ed ed ead edERs: integral par ofthe industrial system with upusxed mobility for individual units within SME Plan-‘The Plan outlay for MSME is nearly doubled and is second highest i the outlays for various industry ministries & departments. The following table speaks about the outlays. Census indiestes that in Manufacturing, among the MSMEs, 94.9% are Micro, 4.9% are Small and just 0.2% are Medium, I is but natural that with almost everyone is Micro, he entire Spending ought to be for ‘Capacity Building’ and fo ensure thal Micros grow inte Small on large See ac hat by the end of Plan period, in the year 2017, we have at least 10% Medium and 25% Small Enlerprises in Manufacturing. To achieve such 2 transformation the role of “enabling environment is critical. a Noting “key challenges ke finance & credil, technology infrastructure, marketing, eottmendations to that effect, which arc not fresh, sre being made to ercate enabling Civironment, Report of PM Task Force on MSMEs has narrated it in details. The 2013 Deing Business Report which is on SMEs isan eye opener. 12th Plarr document says on — Industrial Policy, Business Regulatory Framework.7 “In India, Industrial Policy becomes assaulted under a stifling system of ‘bureaucratic control throush Irunses, There is no doubt that these controls were highly dysfunctional and needed, to be dismantled.” 2,"Inie Key objectives of streamlining of business activities through the regulatory Famewors should be: * Low compliance cost for doing business in India + Simple regulatory cuvironment, saving time & energy for the business: and + Ensuring fair competition The country mast improve regolatons and implementation in many subjects to make Indi generally a more attractive country for doing business.” Doing Business 2013: There is vast number of Business Regulations at different levels of in existence in the country. There arc instances of contradictory as well as overlapping regulations on aceount of these being administered by the different tires 28 wel! as layers off Bet Lack of priodie review clauscs in regulations and lagk of Regulatory Lmpact Analy @RTA), Lack of defined mechanisin for consultation between Govt. and Industry. Road Map. A variety of stratogies and recontmendations and rightly so, have been made document of 12th Plan for the robust growth of MSME Sector on he issues of Credit & Finance ‘Technology up gradation Infrastructure Development Marketing é& Procurement and + Institutional Structure |All these have been, time & agin deliberated at various fore. Introduction of Insolvency Ack Liberalisation of Labour Latws Changes in Apprenticeship Act, amending MSMED Act, Restructuring DICs etc. base insisted, Clusters. development is further stressed, and Clusters Stimulation Cell ended On ‘Single Window established with appa ‘common mi . > decentralized Single Window System should be ‘spread. The Single window System, governed by 2 than being a coordination office, be endowed withent delegation of powers from all concemed: ‘peluding Cental, State, Local and Sector regulators. This would BelP reduce the stict-Op een ctesses by providing all requisite approvals and ficensey if any. through the i dow Spstem,” A team of Business Facilitation Officers is also advised. access to eelevant information and suffici MSME Definitions ‘The Government of India has enacted the Micro, Small and Medium Enterprises (MSMUD) Act, 2006 in terms 0F wil the definition of mcr small and medium enterprises as under: (a) Enterprises on: specified below: © Armicto enterpeise is an enterprise where favesoment in plait and machinery does not exceed Rs. 25 lakh; YS (Gi) A sall entorprise is an enterprise where the rent in plant and machinery is more than Re, 25 lakh bul does not exoocd Rs. 5 erores and aeons quteprice is an enlerprine Where the investment in plant and machinery 15 mors than Rs.5 erare but docs not exceed Rs.10 crore. weservation of goods a5 gaged in the manufacture or production, processing oF P tn gaze of the sive enterprises, investment in plant and machinery is the original cost excluding, Tand and building. the definitions a {original cost excluding land and buil lated to the service tendcred or as may ‘or the services sector, Investment in equipment aiher items not directly rel ding and furnivore, fittings and ‘be notified under the MSMED ‘Act, 2006 are specified below): enn mmicro enterprise isan enterprise where the investment In equipment does not exceed Rs. 10 lakhs «A atnall enterprise is an enterprise where the investment in equipment 15 "ors than Rs.10 skh but does not exceed Rs. 2 crore; and «A medium enterprise isan enterprise where the investment in equipment igmore than Rs. crore but does nat exceed Rs. 5 crore, Sen and Dreze Vs Bhagwati and Panagariya Te acaant years thre iso debate between those who say dt reforms benefitted the country and those who oppose the view saying tha the benefits ere not. adequate. Some belive that poverty, illiteracy and il/-hestth afMlict India because its leadership ignored them in favour of growth for its own sakes that the economic reforms that focused en growth fone failed to help the poor, expecially the socially disactantzged, (hat an) EE! claimed in ‘poverty alleviation derive from the use of progressively lower poverty Tines; ‘and that even if Bains Have been made, with ane in two children sulTering Sem malnutrition, reforms have done precious little to improve health outcomes Jasdish Bhagwati and Panagariya, do not agree with the above view. «opposite view. Follawing two paragraphs represent their point of view: titled: “Putting Growth In Its Place.” Sen and Preze have thi a articulated in an article 26elle Le | TEA 145 “The progress of living standards for common people, 2: minority, has been dreadlulty slow so slow that India’s social indication = ai” For instance, according to World Bank data, only five countri sca (A n, Bhutan, Pakistan, Papua New Guinea and Yemen) have # lower “youth rate” than India (World Development Indicators 2011). To lake some other examples Gmily four countries (Afghanistan, Wbodia, Haiti, Myunmar and Pakistan) do worse than India im child mortality rate; only three have lower levels of “access to improved sanitation® (Bolivia, Cambodia and Haiti); and none (anywhcre—not even in Africa) have a higher propostion of undenveight children. Almost any compesite index of these and related indicators of healih, education and nutrition would place India very close to the battom ina ranking of all countries outside A frica. Growth and Development ool So which of the two stories—unprecedented success or extraordinary failure—is eamect? The, answer is both, for they are both valid, and they are entirely compatible with each other....economie growth is not the sume thing as development, in the sense of a general improvement in living standards and enhancement of people’s well-being and freedom. Growth can be very helpful in achieving development, but this requires active public policics to ensure that the fruits of economic growth are widely shared, and also requires—and this is very important—making good usc of the public revenue generated by fast economie growth for soxial services, especially for public healthcare and public education, i aSS Infrastructure Infrastructure is basic physical and organizational structures needed foc the growth of oonumys T-represents the goods and services necessary for an coonoiy' #0 fanetion, It Includes Toads, bridges, waler supply, sewers, electrical grids, telecommunieations, and s0 forth Viewed funcizonally, infrastuctare facilitates the production of goods and services, and also the etibotion of Tnished products to markets, as well as basic social services such as schools and hospitals: for example, roads enable the transport of raw materials to a factory. Hard” nffastructure refers to the large physical networks necessary for the functioning of a modem industrial nation, Whereas “soft” infrastructure qefers to all the institutions which are required to maintain the economic system , health, am such a5 the financial system, the education system, { government, and law enforcement. and social standards of a country the health care system, the system of ‘Various types of Infrastructure ‘Transport infrastructure Road and highway networks, including structures (bridges, tunnels, culverts) Mass transit systems (Commuter rail systems, subways, tamways, and bus transportation) = Railways (rail yards, railway stations), level exossings, signalling and communications systems, = Canals and navigable waterways requiring continuous maintenance 4 Seaports + Aimorts, including air navigational systems (dredging, ote.) gy infrastructure «Electrical power network, including focal distribution. «Natural gas pipelines, storage and distribution tereninals ‘= Pexoleum pipelines © Speciatized coal handling feeilities for washing, storing, and transporting coal. “Goal mines, oil welts and natural gas wells may be classified as being part of the mining and “ulusirial sector of the economy, not part of infrastructure, aeneration plants, clectrical geid, substations, and ‘Water management infrastructure © Drinking water supply = Scwage collection, and disposal of waste water = Drainage systems + Majer irrigation systems (reservoirs, imigation canals) + Major floed control systems ‘Communications infrastrueture E + Postal service, including sorting facilities * ‘Telephone netvvarks (land lines) including telephone exchange systems 2 + Mobile phone networks+ Television and radio transmission stations. + Cable television physical networks including receiving stations and cable distribution networks Z + The Intemet, including: the intemet backbone + Communications satellites + Undersea cables ‘Major private, government or dedicated telecommunications networks, such as those used for internal communication and monitoring by major infrastructure companies, by governments, by the military or by emergency services, as well as national research and eduention networks Solid waste management a + Municipal garbage and recyclables collection Solid waste land ils Solid waste incinerators and plasma gasification facilities(Plasma gasifiestion is 2 process which converts organic matter into synthetic gas, electricity, and slag using plasma.) + Materials recovery facilities + Hazardous waste disposal facilites “Types of soft infrastructure Sofi infrastructure includes both physical assets such as highly specialized equipment, as well as non-physical assets such as the body of rules and regulations: various systems, the financing of these systems, as well as the systems and led and specialized professionals are trained, advance in thear ice, and are disciplined if required by professional associations training, accreditation and disciptine). Unlike hard infrastructure, the essence of soft infrastmeure is the delivery of services to people. Governanee infrastructure Economie infrastructure + The financial system, including the banking system, financial institutions, the payment system, exchanges, the money supply, financial regulations, as sell as accounting standards and regulations + Major business logistics facilities and eystems, including warchouses as well as warchousing and shipping management systems + Manufacturing infrastructure, including industrial parks and special economic zones, plus the public safety. zoning and environmenial laws and regulations that govern and limit industriat activity, and standards organizations + Agricultural, forestry and fisheries infrastructure, ineluding specialized food and livestock transportation and storage facilities Social infrastructure + The health care system, including hospitals, the financing of health care, including health insurance, +The educational’and research system , + Socia? welfare systems, ineleding both government support and private charity for the poor, people in Jistress or vietims oF abuse © Spors and recreational sali such as parks, sports facilities, the system of sports 29Teagues and associations + Cultural infrastructure, such as concert halls, museums, libraries, theatres, studios, and specialized training freilities + Business travel and tourism infrastructuré Critical infrastructure The term critical infrastructure has been widely adapted (0 distinguish those infrastructure: Clements that, if significantly damaged or destroyed, would cause score disruption of the dependent system or organization. Storm, deluge of eathquake damage leading to loss of certain teaporation coutes in a city, for example bridges erasing» river, could make it impossible for ppannle to evacuate, and for emergency Services to operate; Ress rouies would be deemed critical infrastructure. oa Critical infrastructure is aterm used by gavernments to describe assets shat are essential for dd econemy. Most commonly associated with the term are fovilities lectricity generation, transinission and distribution; gas produetion, transport and distribution: projects are different fom conventional construction projecis in (erm of project Gevelopinen, implementation, and managernent, The administrative and approval cesses in the case of PPP projects are also different. rable essentially when a robust business model can be developed. the partners i a the beart of any PPP contract design and is project, Roth partners should ‘an allocation of risks botween ‘risk allocation between ‘complex. than that of 2 conventional construction “understand the various risks involved and agree to Me many important economic, social, politcal, legal, aed administrative aspsets, which fe cartally assessed before approvals of PEPsare considered by the goverment. PPPs Meaaus limitations which should also be taken into account while they are ered. The major limitations include: “Net all projects are feasible (For various reasons: politic eto). The private sector may not take it al, Tegal, commercial viability, terest in a project due to perceived high risks or may ck technical financial or snanageral capacity to implement the project “=A PPP project may be more costly unless additional casts (@ue © higher transaction and ffoancing costs) can be offset through cfMicieney gains. E: sfen, the success of PPPs depends on regulatory efficiency a7Features of PPP Projects + Promise of better project structure and design. . + Better service delivery, especially if performance based fiayment is Rail Corporation has been certified by the United Nations as the ies Sed system in the world to get "carbon credits for reducing gresbous Bas qa reducing pollution levels in the city by 630,000 tonnes every year xt of India and the Government af Del joinly set up the Deli {DMRC) registered in 1995 undes the Companies Act, 1956. “Fhe Murai Monorail is a monorail system under construction in the city of Mumpas part fs msior expansion of public transport in Mumbai. The projest is being impl Fumisi Mesopolitan Region Development Authority (MMRDA), with 2 consortium of 1 toabro (L&T) and a Malaysian infestructure firm Seomi Engineering. It will be the ‘monorail in India Construction began in 2009. The first Jipeis scheduled vo bbe completed soon, PPP in Ports The government has encouraged private scc- for pauticipation ip por development and operations. Forcign direct investment up to 100) per cent ig permitted under the automatic Toute fe port development projects. Private investment has been envisaged on PPP basis im ports of pee Taide, Parudip, Vizng, Ennore, Chennai, Tuticorin, Cochin, New Mangslore; ‘Mormugso, Mumbai, INPT and Kandla. PEP in Power ‘To attract private sector participation, government has permitted the private sector to S88 upeval, as or liqud-based thermal, hyde, wind or sola projets with foreign ‘equity participation up to Foo per gent under the aulomalic route. The goverment has also launched Urea Msg Pewee Projects (UMPPs) with on initial capocity of 4,000 M\W to attract "160-200 bition of private eee ee Out of the total nine UMPPs, four UMPPs at Mundra (Gujarat), Sasan (Madhya Pradesh), Krishnapatnam (Andhra Pradesh) and Tilaiya Dam (Iharkhand) Taye already been erated The reining five UMPPs, namely in Sundergarh District (Orisa), Cheyywr (Tami! Nadu), Girye (Mabarashtra), Tadri (Kamataka) and Akattara (Chattisuath) art 964% ‘be awarded To cezate Transmission Super flighways, the government has allowed private sector pare pation ro ttagemiscion sector. A PPP project at Shajor in Vlaryana for transmission of electricity was viaee cd ander the PPP mode, Further, to enable private participation in distribution of slecticity, especially by way of PPP, a model framework is Being developed by the Planning ‘Commission. ‘PP! Railways cee inet reignt-Corsidor Corporation of India Limited (DPCCTL) has been set up for imple mening the Dedicated Freight project and the Ministry of Ratlways would explore the possbilics of allracting private investment in some segments of tis project, Indian Railways cose srcided to redevelop 50 rilway stations in the metropolitan cities and major tourist cents Fe ath, Jaipur, Chandigarh, Patna Bypanahalli, Bhubneshwar, Mumbai CST, Howrah and so eee nerid- clase stations through PPP. The proposal 1 sct up of production ons for on afacturing of electric and diesel locomotives at Madhepura and Mashawra respectively and ponsenger enaches at Kanchrapara through PRP fs already been approve Fart movement ee raaines trans has already beta opened to the pavate sector, and this has acquired more than 3s per cent share of the market. Construction of an elevated met ral project in Mumbai is ‘being underiaken through PPP.PPP in Micro Irrigation ‘A scheme for selting up Micro Irrigation Systems (MIS) through: PPP will B= faunched in pursuance ofthe government's objective to enhance irrigation efficiency productivity and farm Freomesby employing more efficient means of irrigation im integrated clusters. The absence of Srganised operations in the farm sectne would be overcome by fasmers coming together for the ‘purpose of implementing this scheme through a single entity im every lage. The exi Pheidies which are provided by the Central and State Governments for on-farm MIS equipment snd solor systems ‘ould be availed of under this scheme. Similadly. budgetary support would tcontinve 10 be provided for the development of infrastructure. PPP in MIS would help in dou- bling the irrigation efficiency as compared to flow inrigation. PPP in Storage of Food grains ‘A scheme for setting up modern storage facilities through PPP under the VGF has becn formulated in parsuance of the Government decision: to create 2MMT of modem storage Eaulitios in the form of silos. This would enhance food security, reduce wast- age and improve the quality of stored food grains, ior will be constructed and operated under the PPP mode across several states. Land for const “and operation af silos would be provided on licence to the private entity cand up to ‘per cent of the total project cost will be provided as VGF. For storage ‘of foodgrains at the ‘Sa, the Concessionaire will be cnlitled 1o Teceive a recurring storage charge which shall Be P ‘on adherence to performanes and maintenance standards. It is expected that im the Sins ‘capacity of 2 million MT of silo capacity would be ereated under the PPP mods, in Social Sectors Feith Plan lays special emphasis on the development of social sectors in view Of) ‘on human development and gusty of life, especially of the undesprivileged sections targets set in the Plan cannot be met out of public resources alone. Tt is; therefore, that resources have 10 be attracted from the private sertor to ensure that targets, Ea terms, are met by the end of the Twelfth Plan period. social sectors, it may not be possible to adopt the user-sharge-based concessions, although fay not be completely ruled out! However, concessions which would provide reitt- » ofservice costs could attract considerable private investment. The main advantages of Tag the PPP approach in ths social sectars woul! be cnbanced investment, reduction in Sand cost over-runs, improvement in efficiencies and better quality of performance. in Education efor sexting up 2,500 schools under PPP mode is being rolled out in the Twelfth Plan S porpose of the scheme isto meet the govern- ments objective of establishing world-tlass for providing quality eduestion to underprivileged children who cannot afford 10 pay the fee that good private schools charge. t is expected that the scheme will help in creating for providing quality education to 40 lakh children, out of which 25 lakh will be from be underprivileged category. T5104, The respective rights and obligations of the private entity and the government will be Godified in an agreement with the former undertaking to deliver the agreed sorvice on the fesment ofa unilary charge bythe government. Recurring tition support would be provided for Bp to 1,000 students from under privileged categories at par with the amount that the Central Government spends on a-sindent in Kendriya Vidyalaya. Thore would be mo eapital support and fend would have (o be procured by the private cnlty. Infrastruenire support shall be madeby the government for the under- privileged students at the r= Of 25 tuition support. The concession would be for a period of 10 ‘years. There bidding, Predetermined ertcria relating to capacity and track record Of Hi ss will be taken into-account in selection of the private entities. = for 2,300 PPP schools should be viewed as ty Tears ib empower and enable non-government players to engage in providing world-class Tracaten, expecially 1 children from low-income families. The objective shows be ro combine Gee mapecve crengihs of the public and private sectors to camuplement exch ote? in pursuit of the chased goal of good education forall In particular, adoption of the PPP made ‘would lead to ‘pid expansion of aecess to world-class education by low-income families PPP in Health Care Services &, eee Seare Governments are experimenting with delivery of health services through diferet severe Planning Commission is also in the process of preparing a scheme for setting oP sreelary and tertiary care hospitals Uhroogh PPPS at various District Headquarters. te principle cbjentive ofthe scheme iso create a health care delivery mecharisn ‘comprising multi- recciaty hospital to meet the growing health care noeds of the pair, and for supplementing faman eesourees in the sector by selling up muesing, schools and! medical colleges. ft is expected that in the ‘Twelfth Plan, the pro- posed scheme will be rolled out by the ‘Government, and a 200-bed district-level hospital would serve @ ‘catchment area of about $10 Fon (20 lakh for 2 300-bed tertiary care hospital). Ths will help families from the arvomeally disadvantaged groups get access to guilty cath care through Rospials $* Ap Ce eine, expecially those who afe covered under the Rashtriya Swaihys Bima Yona (RSBY)- PPP in Skill Development Ae part of the government's fniative to augment the programmes for skill development, the Prime Minister had announced sctting up of 1,500 ITs through PPP in wnservee! blocks. The jective i 9 ereate centres of excellence in vocational education especially for the youth from Peccitome families in order to improve thei prospects of guinfl employment. The programme vill be expanded to cover a total of 3,000 blocks during the Twelfth Plan ‘A major proportion of the costs ineurred by. an ITI are of a meurring nature, and it is there- fore, proposed to provide support for the recurring expenditure incured by an ITI towards training a (rom underprivileged familics. Further, iti proposed to provide capital grat fo NSS & par of the gost of creating the infrastructure for seting up the ‘Ts. It is expected that 30 Iekh Youth, iaeluding 15 lakh youth from socially and economically disadvamaged groups would be seer into vocational taining and will acquire skills through the IITs set up under this scheme. (Read along with the Chapter on Inclusive Growth) Financial Support to PPPs in Social Sectors ‘A scheme for financial support ‘to PPPs in the social sectors js being formulated as part of the sFaclfn Pan initiative enhance investments and overage in social sectors, and also fo expand the role of private participation. ‘The scheme envisages that capital investment and recurring costs to be incurred by a non- government enity onthe delivery of services (o EWS families, based on a concen agreement aeetn government (or astanstory zuhority) anda nen- government cnfty, oll Be provided by the mapective State Governments, who in EaRWill be eligible for Viability Support Funding (VSF) from the Central Government. 46| Rael Capacity Building in the States ‘The State Governments generally do not have dedicated staffresounees Serhandling PPP projects or for building the requisite capacity. Such capacity is ratte fer Ganceptualising project proposals, engaging consultants, interacting with and supervising Gomsultants, analysing and processing their advice for goverament approvals, intersetimg wath prospective investors, executing the project documents and monitoring implementation. Therefore, the Planning Commission may need to provide financial assistance (ACA) to the Stato Governments for the setting up anodal Secretariat for PPP in each State. The aforesaid PPP Secretariat in cach State would be responsible for identifying areas in the respective States arnenable to PPP, concepluulise the papjects, initiote and approve feasibility studies, appraise and approve bid documentation, ules and so on. This would enable capacity building in the States. The total expenditure on this scheme over the next five years ‘would be limited to about "100 crore. India Front-Runner in the PPP Race: ADB ‘According to a study by the Economic Intelligence Unit of the Economist commissioned by ‘Asian Development Bank (ADB), while UK and Australia have been categorised a5 mature ‘economies, India is positioned in the Feague of developed economics like Republic of Korea and Japan on implementation of PPP projects for infrastructure development, India has outscored «x and Japan to rank second on PPP projects performance among the Asian nations and fourth in the Asia-Pacific nations. As per the Report, PPP development in India has been driven. by strong political will und advances in public capacity and processes. The Report states that PPP projects have a huge level of overall acceptance and use in India. it states that government agencies have a relatively high leve! of proficiency in PPP prajects and that as a result of iniroduction of Model Concessian Agreements, the risk allocation has bem improving. In terms of finance, matters have improved, with a variety of initiatives (such as the creation of the Viability Gap Funding and the India Infrastructure Finance Company Limited) enabling greater participation of private finance in infrastructure, To conclude, the gains of private participation in mecting the policy objectives of the Government have been significant during the Fleventh Plan. These initiatives will be expanded and reinforced during the ‘Twelfth Plan, especially in social sectors such as health, education, Kill development and s0 on with a view to meeting the investment targets, while also ensuring inclusiveness. It is envisaged that by the ond of the Twelfth Plan, not only will there be °$5:74,663 crore Worth of investment in inftastructure sectors, but also that PPPs would have successfully forayed into the sacial sectors ta promote universal aceess, while ensuring quality in the delivery of services. Financing Infrastructure Traditionally, infrastructure development used to occur thraugh the public sector. However, given the scarcity of public resourees, and the need to shift scarce public resources into health and education, efforts have been made to induct private participation in the development of infrastructure. These efforts have met with a fair degree of success. As of 31 March 2012, 390 PPP projects have been approved involving an investment of 3,05,010 erore. According to 2 report published by the World Bank, India has boen the top recipient of PPP investment since 2006 and has accounted for almest half of the investment in new PPP projects implemented in the first half of 2011 im developing countries, An Asian Development Bank report statcs that India stands in the same Femgee as developed economies like South Korea and Japan onimplementation of PPP projects and the Model Concession Agreements prepared i India ame uscd in our PPP projects have also been commended. “The total investment in infrastructure sectors in the Twelfth Plan is estimated to be S57 tak crore, whieh is litle more than ane tilion dollars at prevailing exchange rates (about RS.60 fra US Dollar in mid-July 2013). ‘The share of private investment in the total mvestment in infrastructure rose from 22 per cent in the Tenth Plan to 36.61 per cent in the Eleventh Pian. It will have to increase to about 48 per cent during the Twelfth Plan if the infrastructure investment target isto be mel. These projections have also been validated by the high level commit tee on ingiastructure set up under the chairmanship of Shri Deepak Parekh. Its interim report that was presented in October 2012 is given elsewhere in this Chaplee) The commitice has however qualified its projections as dependent on several policy initiatives that the government would necd to take for ensuring this level of investment. ‘The Twelfth Plan lays special emphasis on the developi@eat of social sectors in view of their impact on human development and quality of life. Unlike the case with other infrastructure, experiments with PPP in the social sector have’ been more limited. Many States have experimented with PPPs in health and education. The Central Government has approved setting up of 2.500 Madel Schools in PPP mode and a proposal for setting up 3,000 [Ts through PPP is under consideration. These snitiatives will be strengtioned during the Twelfth Plan. Resort to PPPs in the social sector often raises concerns about the comemercialisation of services that are normally expected to be provided free or highly subsidised. These are important concerns but they can be addressed by welldrafied concession agrccments and strict monitoring to ensure that PPP concessionaires abide by their commitments. This must be reinforced with penalties for non compliance. While extending the concept of PPP to social and urban sector projects, the need for ‘people's’ participstion in the design and monitoring of PPP schemes heoumes crucial, Local citizens are direct stakeholders in such projects and therefore their support becomes crucial, Therefore, some cities and States have begun to shape PPPs in the cial and urban sectors as People—Public-Private Partnerships (PPPPs). This is a valuable ‘novation which sbould be applauded, ‘Take out financing In the Union Budget speech for the year 2009-10, the Hon'ble Union Finance Minister stated “To stimulate public investment in infrastructure, we had set up the India Infrastructure Finance Company Limited (IIFCL) as a special purpose vehicle for providing long term financial assistance to infrastructure projects. We will ensure that IIFCL is given greater flexibility to agaressively fulfill its mandate. Takeout financing is an accepted international practice of ‘eleasing long-term funds for financing infrastructure projects. It can be used to effectively ‘address Asset Liability mismatch of commercial banks arising out of financing infrastructure ‘projects and also to teee up capital for financing new projects. Objectives of the Takeout Finance Scheme “To boost the availability of longer tenor debt finance for infrastructure projects To address sectoral / group / entity exposure issues and asset-liability mismatch concems of Lenders, who are providing debt financing to infrastructure projects. To expand sources of finance for infrastructure projects by facilitating participation of new entities i.e. medium / small sived banks, insurance companies and pension finds.EPC EPC Comacts refers to an Engineering, Procurement and (Comstraction contract. In an EPC Contract, the EPC contractor undertakes total responsibilities fix the project upto the commissioning stage for a pre-agrocd consideration. While conecpiaally. EPC contract may look similar to turnkey contract, it goes a Tittle further than 2 turmmkey Contract as in an EPC contract the EPC contractor undertakes total responsibility aj well as liability for the commissioning of the project whereas in a turnkey contract, the contractor is generally responsible for selling up of the plant. Road projects with less truflic density, whieh are unviable on toll mode, may be ‘executed through engineering, procurement and construction (EPC) contracts.According to a high-power commitice headed by HDFC Chairman Deepak Parekh, this will help speed up road ‘construction projects in the couatry. The conventional ¢ contracts are prone to high cost and time overruns. ‘Viability Gap Funding The scheme aims ai supporting infrastructure projects that are economically justified but fall short of financial viability. Support under this scheme would be available only for infrastructure projects where private sector spansors are selected through a process of competitive bidding. The total Visbilify Gap Funding under this scheme will not exceed twenty percent of the Total Project Cost; provided that the Gavemment or statutory entity that owns the project may. if itso decides, provide additional grants out of its budget, but nat exceeding a further tweaty percent of the ‘Total Project Cost. “The government will provide a Viability Gap Funding (VGF) which shall not exceed 20 per Gent ‘of the Total Project Cost; provided that the Government or statutory entity that owns the project may, itt so decides it will provide additional grants out ofits budget, but not exceeding a further 20 per cent of the Total Project Cost. VGF under this scheme will normally be in the form of = capital grant at the stage of project construction. Proposals for any other form of assistance may ‘be considered by the Empowered Committec and sanctioned with the approval of Finance Minister on a case-to-case basis, The project should be implemented i.e, developed, financed, ‘consiructed, maintained and operated for the Project Term by a Private Sector Company to be selected by the Government or a statutory entity through a process of open competitive bidding: provided that in case of railway projects that are not amenable to operation by a Private Sector Company, the Empowered Committee may relax this eligibility criterion. The project should provide a service against payment of a pre-dctermined tariff or user charge, The concemed Government/slatutory entity should certify, with reasons: That the tariff-user charge eannot be inereased to eliminate or reduce the viability gap of the PPP; That the Project Term cannot be increased for reducing the viability gap. Thus, Viability Gap Funding means a grant one-time provided by the Public Sector (Central Gavernment / State Government) for Financial Support to PPPs in Infrastructure, with the objective of making a project commercially viable, It is a Plan Schome administered by the Ministry of Finance. Suitable budgetary provisions are made in the Annual Plans on # year-to-year basis for the scheme_ Recenlly, # govemment appointed commitice headed by the Department of Economic Affairs (DEA) Secretary Arvind Mayaram today approved viability gap finding (VGF) of Rs 1,458 crore for development of Hyderabad Metro Rail. 49wE Sciting vp of Infrastructure Debi Funds (IDF) was announced in the Union Bulges fis 2000S These are aimed at accelerating and enhancing flaw of long term debe for funding infrasuctare Sprojects in the country. They will also act as a catalyst to channelize domestic savings. IDFs Mrenid provide a vehicle for rofimancing the existing debt of infrstructure projects which sre fended ravstly by commercial banks. This would create fresh headroom for commercial banks feed enable them to take up a larger number of new infrasinucture projects. ‘An IDE ean be structured cither as a company or as a trust. If sct up as a trust, it would be reaulated by SEBI under the Mutual Fund Regulations. [Fset up as a company. the IDF would be cMuctmred as a Non-Banking Finance Company (NBFC) and will be under the regulatory premight of RBI Guidelines with enabling provisions je already been issued by the Reserve Bank af India and SFB ‘An IDF-NBEC would issue either rupee or dollar denominated bonds and invest only in debt cpaurties of Public Private Partnership projects which have a buy-out guarantee and have ‘onpleted al least one year of commercial operations. Such projects are expecta to be viewed as Towvisk investments and would, therefore, be attractive for risk-averse insurance and pension funds. Establishment of Infrastructure Deb Fund through PPP model is taking place in India A Memorandum of Understanding (MOU) was signed, recently for setting-up India's Tirst Infastrucinre Debt Eund(IDE) structured as a Non-Banking Finance Company (DF-NBFO). .d is jointly promoted by ICICI Bank, Bank of Baroda, Life Insurance Corporation (LIC) corp Finance (India) and it is tilled Infradebt Limited. Ratings agency Crisil assigned TAA" ratings to India Inffadcbt Limited, the country's Brst infrastructure debt fund under the non-banking finance company structure which isa PPP. Inffadebt Lid, the IDE, would seek to raise debt capital from domestic as well as foreign revues and would invest in infrastructure projects under the Public-Private Partnership model ‘hat have completed one year of operations. The IDF will expand and diversify the domestic and international sources of debt funding to meet ‘the large financing needs of the infrastructure ect, thereby giving an inpetis to the creation of the infrastructure necessary to drive India’s growth. higher credit rating would enable TDFs to access longterm funds for infrasructure secior at competitive rales cc The Cabinet cleared setting up of the Cabinet Committee on Investment for fast sracking decision om big projects on in December 2012 December, Prime Minister heads this super fnvestment body which will fast track clearances for mega projects. ‘The proposed body will nat bea substitute forthe Foreign Investment Promotion Board (IPE). TPE i for clearance of foreign direct investment proposals. and if the iavestment is. upto ‘Rs.1200 crores, its decision is final. For FDI beyond the Rs.1,200 crores, CCEA permission is required. PM will be the chairman of fhe committee ané he will nominate its members, ‘The esbinet ‘committee on infrastructure will be dissolved and all the powers will ‘be vested with the Cabinet Committee on Economic A(Tairs (CCEA). The proposal to set up 4 high-level body for according speedy clearance to infrastucture projesis 50 a a a a a | eee es pm ed eee vealt eaet aed teal anal wal wand nae all pea a |entailing, investment in excess of Rs 1,000 SERS ‘Chidambaram who had proposed selling UP NIB wo 6 could alco be called Cabinet Committeg of “The proposal, however, had evoked sharp citicism from said that NIB would ditute its powers seitjronment Mistry said that the proposal Ses °% pave bee mooted only for the benefit of Targe firms and investors, while Raving 29 provision for redressing the consems of affected people. Fyapnee Minister said there wore over 100 projects, each involving investment of Rs. 1,000 crore Eimfvore, that have been delayed for varios Teasans. “The main purpose is {© OVErSEE and oe oemcar lrge peojects which will give a illip ‘hdis’s economic growth. Our problem is not onceptualfsing projects. Our problem Tiss in getting omega aa getting the project off the ground within & reasonable time r & ‘The functions of the (to identify Key projects required to be it plemented on & time-bound basis, involving w Neuman of Rs 1000 cr or more, oF any othe: critical projects, 85 may ified by the ‘Comnmnittee, In soctors such as infrastructre, manufacturing, 03 Gi). fo preseribe time limits for ive te Mise approvals and clearances by he Wes efPpeyartmentsconcemed m respect OF ROR in identified sectors: (i) to monitor the progress send prevents ancuing the time prescribeditaken 19 obtain rech approval cach approvaliclearance nd del ifany: Ge) to mview implementation of projenk et been delayed beyond the stipulated timeframe, including issues causing delay in grant ofelearance/approvals; {u)_tarevicw the procedures followed Py Trisaie/Depariments to granirtuse approssls and clearances; (ui) to take decision regueding acantrefusal of approval/learance of specifig projects that a= unduly delayed , ifdeemed necessaryt (oii) To eonsider and decide measures required for expeditiously _granting/refusing: approvalsclearaces im identified eectors ding. simplification of rules/procedirs tehowed by the respective Ministries Departs for decision making; and require statutory authorities to dischors Tonetions aad exercise powers under the 1 reat lawfregulation within the proseriped ine frames for promoting investment and ceonomie growth. Acwordingly, all the concerned Ministries/Departments have been requested review projects, fee publi and private sector Having Invest vor Re 1000 cr or more that aré pending on ‘ceount of delay in a ording clearanceslapprovals and to formals and cireulate the P foe the consideration of the CCL, afler due ever mnntsterial gonsultations, in espect of such delayed proeets. 1 the Administrative Mivuy? Department feels that » proposal needs to be sidered by the Committe of Seeretaris IHS it should send a note/propost! for consideration by the Committee of Secretaries tothe Cabinet Seoretariat “Tae CCI took up the task to debotlenesk stalled projects involving cumulative investmest of Rs. ‘Tt lakh crore, Investmenivof Rs 69.000 crore Fos already been made in these stalled projects. This clearance would facilitate Sama favestment of Rs. 92,000 crore. These jnitiatives include saree of enviroment tam: had been passed in all the States to abolish intermediaries: All of thems ‘common: 1) #bolition of intermediaries between ‘of compensation to the owners. But there was no ation. Therefore, the Zamindari Abolition Act was challenged im ‘the Supreme Court. Bul the Government accomplished the tsk of venuree bringing nearly 20 million cultivators into direct contact wilh Se tukh hectnces were distributed to landless agriculurists after the TF tthe Zamindari Abolition AcL. The abolition also had a favourable F country. By eonferring the ownership of land to the tile the Governmet Mo improve cultivation. This paved the way for inerease in effcicney and Gmmportant step towards the establishment of socialism and the Governm | Italo ushered in cooperative farming. + of the legislation was, however, eoasiderably reduced forthe following red The wet did not benefit sub-tenants and share croppers, as they did not have rights on the land they cultivated. Many landlords managed to retzin considerable land areas under the various pea} the vs, Benami holdings became the order ofthe day inmany Siates The problems of transferring ownership rights from the actual cultivators of tenants the sub-tenants, share cropper, therefore, remained far fram resolved. te land reforms remain incomplete and wafinished. sof the major negative features of agrarian transition in India is te continued « aaa ncte bands of the upper strata of the rural society. This has not undergone S03 change: spect five decades, despite the reforms. In fact, leasing in ‘by the affluent farmer is Hay be infeed thot the steps taken by the Government have not moe SY significant impact ste agrarian structure to reduce, letalone eliminate the inequality in 1 distribution of land oF oer ford to lend the poor the access tothe Land. Its also true that the land roforms did sr serionsly joopardisc the interest ofthe landholders. The structs! impediments to production equitable distribution. of rural esmuress are very mach in exisense Social, political and ic power sill rests with theelib group who were cite prior 10 1247 also, {On the question of increasing productivity, its difficult $0 assess the exact contribution of land Tefornis because productivity Inmsibsem more related fo the technical revolution ushered in = “Yndian agricultural sector. élof success was ‘gach as the abolition of interm feeere gjstems, and the imposition of ceilings on lnndholdings. Fut the progress 3 Se mex There are reany factors responsible for the tardy progress but important sane fhe feck of adequate direction and determination, luck of political wil, absence of pressass: ‘below, inadequate policy instrument, logal hurdles, absence of correct-up-dated land ‘the [ack af financial support. Most studies indicate that inequalities have incteased, rather than decreased. The mumsbes landless laborers has riscn. In the opinion of some, after liberalization, privatization, sass globalization (LPG) we are taday at # juneture where Tand mostly for the urban, educated elite who are also the powerful decision makers has become. more a matter of housing, imvssimeni, and infrastructure building; land as 2 basis of livel subsistence, survival, social justion, ‘and hurnan dignity has largely been lost The balance of power in rural India is so heavily weighed against the landless and the poor that iinplementing Fand ceiling laws is dificult. It i cleat thal without massive mobilisation of te final poor and a deepening of democratic governance in rural India, very little can be achieved m this @reotion. West Bengal, with more than half of India’s ceiling surplus land beneficianes. provides an example of what could be achieved. Its land clstribution programme called (Operation Barea has been hailed as asucoess. ‘though half of India’s population continues wo depend on agriculture as fs primary source of livelihood, 83 per cent of farmers operate holdings of less than 2 ha in size, and the average holding size is only 1-23 ha. This is offen in fragments and unirigated. There are also those who are entirely landless, although agriculture is their main source of livelihood. They have Jnadequate financial resources {© purchase and often depend on leasing in small plots, on sepetire terms, For short periods, simetimes only for onc season. Hence many fare insecurity of Tesure and the growing threat of land alienation and pressures from urbanisation, industrlatisation and powerfal interests. “They are unable to take advantage of the eeonomies of scale, or invest in costly Inputs such as jgrigation, technology or machinery. They have limited access to formal credit, Hence they have fov resources for land imprevement or crop insurance or adequate inputs (seeds, fetlisers, and se on), They are often ignored by extension agencics and scldom receive information on new icchnolowies or training in skill-intensive agriculiutal prectices ‘Absentee landlerdism is high in some regions (especially the Fill states and rainfed areas), causing huge tracts of cultivable fallows to lic idle, Unfortunately, most tenancy Jaws have daiven tenancy underground or made iteven more informal. Micro-studies from diferent states Show that the proportion of feased-in land is significantly higher than reported by bath the NSS dnd Census. In some cases, itis as high as 20-25 per cent of the gross cultivated ares. ‘Tenancy Contacts are oral and for short period. The proportion of leased-in land is higher in Srrcultrally developed regions compared to backward regions. All classes of houscholds Paricpate in the leage market both as lessors and lessees. However, while in backward Pescoftural regions, the traditional pater és more common wherein the small and marginal dees dominate the lease market as lesstes and farge and medium farmers ax lessors, in serculturally advanced regions, the Lease-maeket isn slate of transition where al classes of 62households participate. The trend towards reverse tenancy is more pronounced in these regions. ‘There is, therefore, a strong case for legalising tenancy and allowing leasing-in and leasing-out Jand with adequate safeguards to pratect the interests of small and marginal farmers. Liberalisation of the lease market does not mean abrozation of existing tenancy legislations. These must be suitably amended to per- mit leosing-in and leasing-out of land, while making, ownership rights non-alienable and secure, fixing tenure, recording of lease and allowing Tandowmers to resume land for cultivation after expiry of lease. Reforming tenancy laws would allow ail sections to appropriately participate in the lease market depending upon their resource endowment. Studics have, shown that in states like Punjab and Haryana, large and medium farmers who lease in land {aimsimall and marginal farmers invest in modem inputs, reap economies of seale and raise farm productivity. Ihe small and marginal farmers who lease out their land also gain in terms of occupational mobility and higher incomes. In other states like Bihar and Orissa, with low wages and fewer employment opportuni- ties, small and marginal farmers lease in land, enlarge their holding size and thus afford a reasonable level of living with all attendant benefits of tenancy like borrewing from financial institutions. The medium and large farmers in these slales migrate to urban arcas to take non-fanm employment opportunities without any risk of losing their land. When their liveliheods become secure in the non-farm sector,they could sell their land. Liberalising tenancy also helps i consolidation of holdings as farmers prefer to lease out rather than sell the piece of tand finconveniently located. Long-term tenancy contracts would also help raise productivity. These constraints are further compounded for tribal and women farmers. Increasingly. men than women move out of agriculture, there is a shifl toward the feminisation of agriculture Many wornen also serve as de-facto household heads. However, women farmers typically have fittle direct access to lund and highly unequal access to inputs and other services. Environmental factors further disadvantage poor farmers. Water tables have been falling and Soils depleting. All this is happening against the backdrap of climate change. The key question is: how car these consiraints be transformed into opportunities? Can the disadvantaged Farmers attain sustainable livelihoods and become India’s advantage for both higher growth and more inclusive development? ‘The Way Forward The Twelfth Plan Working Group on Disadvantaged Farmers, including Women has proposed ‘several mechanisms for casing the land constraint faced by the landless and land-poor: Land Transfers by Government to Disadvantaged and Women (D&W) Farmers: There should be a comprehensive assessment of all land available with the government, including ceiling surplus land, uncultivated wasteland, and so on. Unofficial estimates by organisafions such es Ekta Parishad suggest much more land is available for distribution than reflected in official estimates, Allsuch available land should be distributed to groups of D& W farmers rather than to indivédual families. The land so di sithcr be registered in the group's name, or it could be given to them under a very lemgterm lease arrangement. The recommendation of the Eleventh 63plan that all rural families without homesteads be allotted land im the woman's name ees to BE implemented in all Sttes, to be used for shelie and supplementary Livelihoods, although the arroant allotted could be subject to availabilty. Some States have Taken important initiatives in ie dicetion. Kerala has had a loagstanding programme of giving NSD rights on land on ie pomestead stands, ins land reform programme, Some 446 lakh aericultural labour pret alae benefited fron this the percent- age of landless families declined from 15-7 per cent a LD to 48 per com in 2002-03. These schemes provided fand for shes and also for supplementary livelihoods (for example Kitchen gardens, S031 ‘and poultry rearing). The West Bengal and Orissa governments bave also allotted homestead plovs Tand= less families. Orissa parce allotting 4-10 cents and West Bengal has alloted up to 16 cents. Facilitating Land Purchase ‘Apart from distributing all surplus tand ‘available with sno Gevernment to D&W farmers, schemes aren ibe iastinted to enable the landless and land. poor to themselves purchase and. The Traelfth Plan Working Group on Disadvantage! Farmers, including Womeh recommends a loan- ccom-grant geheme with 50 percent being given asa low infer st ican and $0 per cent being given as a grant, to help groups of fndiees or near landless women and men purchase land aietively. ‘the land purchased can be registered in cxual ports in each group sngmber’s name, fut aupport is needed to help the group iaprove the land, and even eutials ‘tas a group. A case in point is a scheme started in the 1980s by the Government of Andhra Pradesh, under setick pooe dalit women formed small groups to buy land collectively for Jas farming, with suppor fom the NGO Deccan Development Society. Many women's £10 0P in Medak District saPP vamage of the schorte. The land was equally divided and registered in the names of individual women. But they are cultivating jointly by pooling it Facilitating Land Leasing ac ivciy is a significant mechanism for bringing tm fallow or Fitts used land ‘under ne ices ead providing land acess tothe land-poor. Thiswill need both legal changes and institutional innovation. “Legat changes: Tenancy sould be lgalised and regulated to provide Soot to the tenant wl tiap protecting the landowner's right. The contachual period should be long enough to secouage investment in land. Legalisation should aso protec the landowner’s rights so that she Feo ar incentive to lease oul the land which might othervise remain underutilised. A group peeasing in and use of th Hand should be built nto the system, 95 «lst financial and Sreressgeal support fer such cultivation. In other words, lensing by ome! Self Help Groups {GHGe) or groups constivied of male or female headed disadvantaged farmer faiilies, oF on cooperatives, or other forms of group farms should be permitted, Sub-leasing within Fe group to individual members should be banned. Financial and institutional support should alco be provided for group cultivation. Publie Land Banks; ven legal guarantee may be insufficient to mitigate the landawner’s fear of fosing hisher tile, especially since many of the Iessors ar: ‘themselves small and marginal Prem Enasting a kw to recognise tenancies could freeze the informs and lease market in the short roa. To guard againsithis, the Twelflh Plan Working Group Oe Disadvantaged Farmers, seriding Women pro- poses the eatin of a Public Land Bank (1B) 3 the panchayat level deere d regulate and rationalise land demand and supply ‘he PLB would take ‘deposits’ of 64Lobes be fr fey fn Pf fy Fy Py fs Pfs fe ayy Pf a bs yb fs aH fs Ba Jand from landowners wanting to lease out their land, with the Sy that they could with- draw their deposit when they wanted. The deposit could be for ont Sean Gm Year. OF three years and more, The PLB would ease out the land under its command 4 Spestally designated categories of ‘Gisadvantaged farmers, such a8 marginal farmers, women, dalits and tribals. whether leasing 2s individuals or in groups. These lessees would get 2 guaranteed lease, fined after assessing land quality, and in a consolidated plot where possible, Instiuatiaaal finance and other support could also be provided. ‘There can be several incentives for farmers to deposit their land in the PLB: (i) ¢ minimum rent ftom the PLB oven for fallow land: (id) an additional ‘topping up’ rent for land that_gets eased out; (ii?) development of the land in terms of sition and so on, via MGNREGA ‘or other means. (iv) government guarantee to prot owner, with owners being free to wsithdraw their land from the Bank with due notice For the Tessees, it would provide D&W formers access to land for which they cannot always compete in the open market. The PLB should provide a guaranteed lease and, where possible, a consolidated plot of reasonable size. This would, in itself, improve thir ability to move up the value chain and taking advantage of new opportunities. Group Farming: An integrated Approach to Ease Multiple Constraints To ease the constraints D&W farmers facc in access to land and other inputs, and to enable them to take advantage oF new market opportunities, we nesd an integrated approach to problem resolution. The most comprehensive solution would be group farming with individual land ownership. There ar sevéral successful examples of group cultivation in India from which lessons can be leamt and the programme expanded to other states. The best known example is of the Kudumbashre= project launched in 2007 by the Kerala Govemment; but initiatives in Andhra Pradesh are also of note, ‘The Kudumbashree project initially facilitated land leasing by small groups of women, typically. women’s SHGs. In March 2010, an additional step was taken under which SHGs undertaking. ‘group farming can be rogistered as Joint Liability Groups (JLGs) a National Bank for Agriculture nd Rural Development (NABARD) scheme and given financial and technical support. The state government also provides support for land preparation and reclamation (linking it with MGNREGS in some districts). There are some 38,000 JI.Cs in Kerala today, covering 2.5 lakh svomen, Such collective/group farming is carried out in all 14 districts of Kerala, covering ground 24,000 ha in 2010-11, Of this, 30 per cent is fallow land which is about 9 per cent of the total current fallow land in the state. Fach JLG has 4-10 women members from poor families, avho lease in land, and also pool small plots owned by members. Leases range between 1 -and 3 years. Rent on fallow land is low. The main crops cultivated are paddy {almost one-third the jereage), tapioca, vegetables, banana and pincapple. Group farming through joint leasing has rought substantial uncultivated land under farming, revived agriculture and employment. ‘The Andhra Predesh Mahila Samatha Society (APMSS) is another significant case of successful group farming by women. In 2001, APMSS begun implementing # five-year Gol-UNDP Supported Dry Land Agricalture Project by mabila sanghams in five districts. The project covered 500 villages, with women farming in groups on jointly leased in or pooled personal land. In 2005, United Natiois Developmest Programme (UNDP) involvement ended but the programme continued under SPMSS. Many of these groups survive today. There are about 175women’s groups in five districts, involving 4,376 women farmers, beloazmE marginal farmers and landless labourers. The groups mainly cultivate paddy walle ‘and use non- chemical farming practices. All farm operations ate shared and the) distributed among the women. Group farming has greatly increased food security among the participating households, which would not have been possible on an individual basis. However, the groups need sustained technical sup- port at the field level which had been provided dur. ing the project period with UNDP funding. ‘The Kudumbshree and APMSS models could be tried on a pilot basis in other States, adapted to Iocal contexts, The group enterprise model should algo be replicated for other agricultural sectors, sueh as fisheries (for example, group piscigillume), poultry or livestock management, Group farming could also be integrated with MGNREGS for improving sgricultural land. For jnstance, MGNREGS has been used productively for land preparation or reclamation to support ‘group farming in Kerala (under the Kudumbshree project). Such efforts to imegrate group farming with MGNREGS need to be encouraged to leverage such schemes better for improving land resources fir agriculture. jon for non-agricultural use aster industalisation is both desirable and inevitable; s0 is faster urbanisation, Land is an exseatial requirement for these structural changes to proceed unimpeded. Government also needs to acquire land for a-variely of public purposes, including human development and infiastructure projects. Recognising that all the land needed for development cannot be obiained in a purely ‘voluntary manner, there is need for a fair land acquisition law which resorts to compulsory ‘scquisition only where itis unavoidable and in @ manner that seeks assessment of social impact as participatory as possible. while also ensuring that both fair compensation and Resettlement and Rehabilitation of the dislocated persons. Independent estimates place the number of peaple displaced following development projects in india over the last sixty years at 60 million, and only a third of these are estimated to have been secetied in 2 planned munncr. Most of these people are the assetiess tural poor, marginal (Gamers, poor fisher- folk and quarry Workers. Around 40 per cent of those displaced belonged to ‘Adivasis and 20 pet cent to Dalits. Given that 90 per cent of our coal, more than 50 per cent of “Goest minerals and most prospective dam sites are in Adivasi regions, there is likely to be _ sonfinuing tension over issues of land acquisition in those areas. “Yhese problems have arisen in large part because the legal framework under which land has been sscquired is outdated. It i based on the principle of feminent domain’! under which the State ean foreibly acquire land for a public purpase at prices which do not refleet the market price nor ‘provide any premium to reflect the fact that the acquisition is forcible, “The way forward is to move away trom the colonial perspective of treating peaple as “subjects”, which is inherent in the doctrine of emincat domain, towards a vision’ of eitizens, whase rights j are guaran- teed under the Constitution, Ultimately, we have to go beyond narrow legality to seek broader legitimacy.