The Five-Year Plan has lost significance because the share of public investment has declined to 25 per cent of total investment. It is important that greater attention be paid towards improving the climate for private investment.
The 12th Plan document attempts to lay down a framework for promoting private capital formation. However, it should have focused more sharply on the measures required for improving business and investment climate. The Plan has spread its scope across the entire range of sectors. This results in spreading resources and policy attention far too thinly, and unachieved targets and underutilised resources.
The Plan has used innovative methodology for co-opting inputs from the civil society and private sector. I hope this has resulted in some tangible improvements is the design and execution of the Plan schemes. The Plan’s target of eight per cent rate of GDP growth over the five-year period, appears to be optimistic in the light of the 5.5 per cent GDP growth expected in 2012-13 and at best a 6.5 per cent growth in 2013-14. To achieve an average annual eight per cent growth for the five years, the last three years would have to chalk up a nine-plus rate of growth. This does not look feasible, unless some major reforms are undertaken. It is critical to initiate a series of steps that will eliminate unnecessary regulations that vitiate the investment climate, and seriously and urgently implement all the provisions of the New Manufacturing Policy. I am not sure if the 12th Plan document gives sufficient emphasis to this and, thus, falls short of the expectations.
Senior independent economist