Eleventh Plan: Performance

The Planning Commission (PC) had attempted the mid-term appraisal of the Plan, which was considered and approved by the National Development Council in July 2010. The appraisal document reviewed the developments and provided a comprehensive assessment of the performance of the economy during the Eleventh Plan period so far, in different sectors, together with suggested mid-course corrections. It has drawn attention to the problems in some selected areas and identified constraints that would be of relevance for the balance period of the Eleventh Plan and also for the Twelfth Plan. These include inter-alia:

(i) Restoring dynamism in agriculture,

(ii) Managing India’s water resources,

(iii) Problems in achieving power generation targets,

(iv) Issues pertaining to urbanisation, and

(v) Special problems of tribal development.

In respect of agriculture, the mid-term appraisal notes that though performance of agriculture and the rate of growth in the Eleventh Plan is likely to be better than that in the Tenth Plan, it may, however, not reach the target of 4 per cent per year. The need to focus on agriculture and other critical issues mentioned above would require concerted action by the Centre and the states.

The Review by the PC regarding the Poverty Estimates is also important when the issue has become a matter of debate in the country. The Planning

Commission is the nodal agency for estimating poverty in the country, both at the national level and across the states. It estimates poverty on the basis of poverty line defined in terms of monthly per capita consumption expenditure. The Commission has been estimating poverty line and poverty ratio since 1997 on the basis of the methodology contained in the report of the Expert Group on ‘Estimation of Number and Proportion of Poor’ (known as Lakdawala Committee Report). The Head-count poverty ratio has been estimated by using the above mentioned poverty lines from a large size sample survey of household consumption expenditure carried out by the National Sample Survey Office (NSSO) with an interval of 5 years approximately.

The Planning Commission constituted an Expert Group in December 2005 under the chairmanship of Prof. Suresh D. Tendulkar to review the methodology for estimation of poverty. The Expert Group submitted its report in December 2009. While acknowledging the multi-dimensional nature of poverty, the Expert Group recommended moving away from anchoring the poverty lines to the calorie intake norm, adopting the Mixed Reference Period (MRP) based estimates of consumption expenditure as the basis for future poverty lines, adopting MRP equivalent of urban Poverty Line Basket (PLB) corresponding to 25.7 per cent urban headcount ratio as the new reference PLB for rural areas. On the basis of the above methodology, the all- India rural poverty headcount ratio for 2004–05 was estimated at 41.8 per cent, urban poverty headcount ratio at 25.7 per cent and all India level at 37.2 per cent. It may however be mentioned that the Tendulkar Committee’s estimates are not strictly comparable to the present official poverty estimates because of different methodologies. As has been indicated in the Mid-Term Appraisal of the Eleventh Five Year Plan, the revised poverty lines and poverty ratios for 2004–05 as recommended by the Tendulkar Committee have been accepted by the Planning Commission. The Tendulkar Committee has specifically pointed out that the upward revision in the percentage of rural poverty in 2004–05, resulting from the application of a new rural poverty line, should not be interpreted as implying that the extent of poverty has increased over time. These estimates, as reported by the Committee, clearly show that whether we use the old method or the new, the percentage of the population below poverty line has declined by about the same magnitude.

The performance on the Fiscal Scenario, according to the Planning Commission, the expansionary fiscal measures taken by the government in order to counter the effects of the global slowdown were continued in 2009– 10, and this led to further increase in the key deficit indicators. The fiscal deficit of the Centre, which was 2.5 per cent in 2007–08 increased substantially to 6.0 per cent in 2008–09 and further to 6.4 per cent in 2009– 10, but it declined to 5.1 per cent in 2010–11 (RE) and the Budget Estimates for 2011–12 put the fiscal deficit at 4.6 per cent of the GDP. Similarly, the revenue deficit of the Centre increased from 1.1 per cent in 2007–08 to 4.5 per cent in 2008–09 and further to 5.2 per cent in 2009–10 and declined to

3.4 per cent for 2010–11 (RE). As per 2011–12 (BE), the revenue deficit is projected at the same level of 3.4 per cent of the GDP. The increase in the deficit levels of the Centre owes to revenue foregone on account of reduction in indirect tax rates and enhanced public expenditure in order to boost demand in the economy amidst global meltdown.

The issue of Price Stability remained resonating for more than half of the Plan period. To ward off the crisis of rising prices, the government needed to announce several tax concessions at one hand, while it could not pass the burden of the costlier imported oil prices on the masses. That would have resulted in ultimately putting the exchequer in a fund-crunch mode, at the end, creating a short-supply of investible funds in government’s hand, hence, causing the Eleventh Plan to perform at the levels below its target.