The draft of the Twelfth Five Year Plan, for 2012-2017, has been unveiled by the Prime Minister. This Plan is much more than a routine document that the government releases every five years. This Plan is path-breaking in many ways, and charts out a clear roadmap on how the government plans to deliver on its commitments to the aam aadmi, building on the last 8 years. The Twelfth Plan sets ambitious targets for the country’s development, targeting an average growth rate of 8.2% per year over the next five years. But the plan is more than just about growth – it is about inclusiveness, i.e., ensuring that the benefits of growth reach the poor and the marginalized sections of society, especially women, SCs, STs and OBCs; and about sustainability, i.e., ensuring that we ensure that we protect our environment as we growth and develop.

Why Planning?

Many people have called into question the relevance of planning as a concept in today’s day and age. It is true that India today is not a planned economy in the sense that it was in the 1950s-1960s, but planning remains relevant even today because we still have much to achieve, especially in ensuring inclusivess and sustainability. Planning today is not about micro-managing expenditure on each sub-sector of the economy. Instead, it is about setting the broad strategic goals of the country’s development, and ensuring that we put in place the right governance structures, innovative policies and sufficient investments to achieve those goals.

Why Economic Growth?

Some people question why an economic growth target is important at all? Why is 8.2 percent growth target in the Twelfth Five Year Plan relevant for the aam aadmi? This can be explained by this simple math: A person who earns Rs 1,000 today, will be earning Rs 1,480 in 5 years and Rs 2,200 in 10 years if his income increases by 8.2 percent per year. Moreover, it is economic growth alone that allows us to create the millions of jobs that we need to for our youth (we have set a target of 5 crore new jobs in the non-agricultural sectors in the Twelfth Plan). It is economic growth alone that gives the government the revenues which it can spend on social welfare programmes, especially for the poorest and the most marginalized sections of society. Indeed it has been the high economic growth achieved under the UPA government since 2004 that has enabled it to launch monumental programmes like the Mahatma Gandhi NREGA, the Rashtriya Krishi Vikas Yojana, Rashtriya Swasthya Bima Yojana, and more than double spending on other flagship programmes like the Pradhan Mantri Gram Sadak Yojana and the Sarva Shiksha Abhiyan.

Five Big Ideas in the Twelfth Plan

So what is new and innovative in the Twelfth Plan? Five ‘big ideas’ are worth noting.

First, to demonstrate the UPA government’s commitment to cooperative federalism and giving more resources to the States, the Plan calls for the setting up of a Rural Development Flexi-fund (RDF). This Fund, with an initial allocation of Rs. 40,000 crores, will devolve a significant share of central governments funds directly to the States to spend on their state-specific needs and priorities. For example, Bihar may wish to spend more on rural roads, while Rajasthan may wish to spend more on rural water supply – this Fund will allow Bihar and Rajasthan to make those choices for themselves.

Second, the Plan has a major thrust towards the inter-related issues of health, nutrition, water and sanitation. The Prime Minister has called malnutrition “a national shame”, and in the Twelfth Plan the government is putting money where its mouth is. The Plan not only proposes to greatly increase government spending on these priorities, it also calls for major paradigm shifts. In healthcare, it proposes to moving towards a National Health Mission, providing universal healthcare to all Indians, including preventive and primary care, which is often ignored. It proposes reducing child malnutrition by half. It proposes, through a new Nirmal Bharat Abhiyan, bringing a sustainable sanitation revolution by making it a people-driven issue, making at least half our villages open-defecation free in five years, bringing cleanliness to homes and dignity to women.

Third, the Plan makes a firm commitment to fighting corruption and crony capitalism, and ensuring full transparency in resource allocation. It lays down a clear roadmap e.g., competitive bidding for natural resources, legislation for transparent public procurement, citizens grievance redress mechanisms (many of which have already been initiated by the UPA government) to ensure full transparency in governance.

Fourth, the plan for the first time makes a robust commitment to strengthening and empowering the Panchayati Raj Institutions through the Rajiv Gandhi Panchayat Sashaktikaran Abhiyan. The budget for Panchayats in this Plan has been increased by ten times! This is an unprecedented increase – it will strengthen our Gram Panchayats and Gram Sabhas, and build their capacity to ensure that our flagship schemes are better implemented through people’s participation and their benefits reach the aam aadmi. The Abhiyan will also provide additional funds to States that do a better job in strengthening their PRIs.

Fifth, for the first time the Plan makes environmental sustainability a central pillar of our development process – it enunciates clear targets to track progress on the environment front, so that we don’t do just lip service to this goal. For example, the Plan sets a target of reducing the emissions intensity of our GDP by 20-25% by 2020 on a 2005 base year, a clear and credible commitment to combating climate change. Similarly, a target is set for protecting our forest cover.


The UPA government has over the last 8 years delivered on many of key the commitments it made to the aam aadmi. Take for example two simple statistics. Between 1993-94 to 2004-05, the poverty rate in India declined by 0.7% per year, and this rate of decline more than doubled to 1.5% per year between 2004-05 (when the UPA formed the government) and 2009-10. Similarly, economic growth between 1993-94 and 2004-05 was an average of 6.2% per year, which rose to 8.4% per year under the UPA between 2004-05 and 2009-10.

While this is commendable, there is much more to do. To quote Panditji from his speech on the eve of India’s independence: “The ambition of the greatest man of our generation has been to wipe every tear from every eye. That may be beyond us, but as long as there are tears and suffering, so long our work will not be over..” It is this inspiration that underlines the UPA government’s commitment in the Twelfth Plan – with policies that will bring greater inclusiveness, more sustainability, stronger Panchayats, greater transparency and ultimately more prosperity for the aam aadmi.