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CRITICAL ANALYSIS OF THE 12TH FIVE-YEAR PLAN

CRITICAL ANALYSIS OF THE 12TH FIVE-YEAR PLAN - Sujata Porwal (1)

BACKGROUND

The process of setting up targets for the nation and drafting and implementing policies and programs to achieve the same was known as national planning. The country adopted a method of devising short-term targets to be achieved every 5 years and extensively worked towards achieving them. The five-year plans set up multi-dimensional and diverse targets that were to be achieved. These plans aimed to achieve maximum output by using the country’s resources in a planned manner. 

The 12th five-year plan (hereafter referred to as the 12th plan), also known as the last five-year plan of the country, was active from 2012-2017. At the onset of this plan, the whole global economy was facing challenges about the financial crisis. This problem was further hastened by Eurozone debts that flared up during the wrapping of the 11th five-year plan. These issues had hit the Indian economy as well which was predicted to collapse severely in the year 2012. Some economists predicted it to be the worst year of the decade for the Indian economy. 

The 12th plan had the burden to restore the Indian economy from this catastrophe. The 12th plan had to secure its aim of preventing the long-term erosion of the country’s potential to re-establish prosperity. 

UNDERSTANDING THE 12TH FIVE-YEAR PLAN

The primary aim of the 12th plan, in the backdrop of the ongoing economic crisis, was supposed to revive the Indian economy and push it towards rapid growth. However, a compromise on the sustainability factor was prohibited. 

The eleventh five-year plan had set high standards of economic growth by attaining an average of 8% economic growth. This was the highest economic growth rate of the Indian economy during the plan period. The success of the eleventh five-year plan had established a higher expectation from the 12th plan. However, the backdrop of the economic crisis created major hindrances in the growth of the Indian economy. But it is not fair to blame the global environment for the economic slowdown as certain local constraints were also responsible for causing the slowdown. 

The 12th plan had the major responsibility of restoring balance in the economy of India. The plan devised a tactic to reverse the economic slowdown by reinstating macro-economic balance in the country. The plan also focused on providing long-term remedy by broadening structural reforms that enable continuous medium-term growth. 

A growth of 8% was targeted in the 12th plan. However, the growth in the first two years demoralized the structure of the 12th plan. The growth was a slow as 5 and 6.5 per cent (approximately) in these years, making it extremely difficult and cumbersome to achieve the set targets of 8% cumulative growth during the 12th plan. The economists could evaluate that reaching such high growth parameters in the backdrop of a global economic slowdown will require policy initiatives in different sectors, unlike the usual business approach. Moreover, the same could’ve only been achieved with the cooperation of the centre and state governments.

PRIMARY OBJECTIVES OF THE 12TH PLAN

The tagline of the plan was “faster, sustainable and more inclusive growth” of the economy. The twelfth five-year plan aimed at combining different strata to promote the growth of the whole nation instead of sector-specific growth. Some aims set by the twelfth plan are:

  • Development of education
    • The government aimed at increasing up to 20 lakh seats in higher education for each age bracket to enhance the higher education of the nation
    • Reduction in gender gap observed in the enrolment of school at the local levels of society 
  • Economic growth
    • Significant reduction in the poverty rate (around 10% reduction).
    • Creation of 50 million job opportunities (approximately) in the non-agricultural sector 
    • An estimate of 4% agricultural growth 
  • Health
    • Condense malnutrition among young children 
    • Accessibility to drinking water to the rural populace
    • Reducing mortality rate and increasing the sex ratio
  • Environmental growth
    • With regards to yearly increment in the green cover of about 1 million hectares
    • Creation of 30,000 Mega Watt renewable energy 
    • Electricity availability in villages
POSITIVE CHANGES BROUGHT FORTH BY THE 12TH PLAN

It is noteworthy that the 12th plan acknowledged the ongoing failure of the manufacturing unit of the nation. The employment sector saw a downfall of around 5 million jobs even though the total employment witnessed a surge of about 2.7 million jobs. 

This is termed as the origin of the ‘job-less growth’ narrative. Despite robust growth in the manufacturing sector and satisfactory growth in the GDP, the datasheet of the planning commission described the loss of around 7 million jobs; however, the total employment of the country showed no signs of a major change.

Such job-less growth only benefits a part of the society because jobs are the primary source of distribution and redistribution of wealth in an economy. The growth of a small chunk of people shall not define the growth of the economy as a whole. 

Therefore, the 12th plan aimed at creating and developing necessary skills in the ‘urban poor and rural migrant’ populace of the country to fit them in the mould of job requirements. The growth of the manufacturing sector was also enhanced with the motive to convert it into an engine of growth of the economy as a whole. 

It also made relevant changes in the structure and planning of the industrial policy to boost and facilitate progress. The 12th plan is said to have imprinted upon India’s approach towards industry and manufacturing units to lay the foundations of ‘an era of planning’ that endures in the present scenario as well. 

Falsification in labour, land, and capital and a shift of the manufacturing market of India was considered to be the primary causes of turmoil in the employment sector. The 12th plan recognized these differences and advocated the revival of the market by providing necessary training to skill the Indian workforce and enable them to take advantage of the ‘lost opportunities’ to rebuild the Indian economy. 

The efforts to enhance economic infrastructure during this plan were also cherished. The road network saw rapid development and expansion during this period. Moreover, civil aviation and shipping were developed to incorporate the emerging needs of the society. 

LACUNAE

The issue with regards to the loss of jobs could not be effectively handled in the 12th plan. An estimated loss of 9 million jobs was observed during the 12th plan. With one of its primary objectives being the creation of job opportunities, this was viewed as a major failure of the 12th five-year plan.

The Azim Premji University analysis estimated this loss of about 9 million jobs calling it one of the highest ‘job-loss in the history of the country. Various economists also suggest that India de-industrialized its economy at a very premature stage. Moreover, it is not apt to call the process de-industrialization since India couldn’t industrialize in the first place. 

Despite several efforts, the growth rate of the 12th plan could not reach the satisfactory standards that were expected from it. 

The mix of a capitalistic and socialistic pattern of the society created confusion and hence couldn’t deliver the expected outcomes. Even after more than half a century of planning, the target of accomplishing a socialistic pattern could not be achieved in the 12th plan. 

Another primary objective of the 12th plan about the equal distribution of wealth could not be achieved. Rather, in the aftermath of the 12th plan, the socio-political gap seems to have widened between the rich and the poor. The percolation of benefits of economic development continues to remain a utopian dream in the growth trajectory of Indian society. 

SUGGESTIONS 

One of the primary suggestions is to demolish the hands-off approach of the Indian government and to adopt measures that enable the government to directly get involved in the growth and development of the country. Close coordination among the government officials and producers will lead to effective changes and the achievement of the short-term goals. A similar pattern of coordination is observed in some of the rapidly developing economies of Japan, China and, South Korea. 

Owing to the economic slowdown during the period of the commencement of the 12th five-year plan, the government should have made efforts to provide incentives of domestic growth to the domestic markets to revive and re-establish them with a growth perspective. 

In the words of the Chief Economic Advisor, Mr. Arvind Subramanian, rather than putting efforts in revival of the unskilled manufacturing units in Indian markets, the country shall aim at enabling their workers to become eligible for industrialization by acquiring the desired skills. 

The ‘Aatma-Nirbhar Bharat’ campaign that has been recently launched in May 2020 shall have taken shape at an earlier point in history. Reforms like ‘Make in India’ were the demand of the economy during the 12th plan since the only hope of revival was through providing necessary skills to the Indian labour. 

Author(s) Name: Sujata Porwal (Symbiosis Law School, Pune)

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References:

  1. https://niti.gov.in/planningcommission.gov.in/docs/plans/planrel/fiveyr/12th/pdf/12fyp_vol1.pdf
  2. https://niti.gov.in/planningcommission.gov.in/docs/plans/planrel/fiveyr/12th/pdf/12fyp_vol2.pdf
  3. http://nhm.gov.in/images/pdf/publication/Planning_Commission/12th_Five_year_plan-Vol-3.pdf
  4. https://economictimes.indiatimes.com/news/economy/policy/the-end-of-five-year-plans-all-you-need-to-know-about-this-big-policy-change/articleshow/58162236.cms?from=mdr
  5. http://megplanning.gov.in/draft-appraoch_12plan.pdf
  6. http://ficci.in/SEDocument/20217/FICCI_Final_inputs_forXIIPlan.pdf

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