Plans, in the current Plan there are specific monitorable targets, which will need to be attained
along with the growth target.
The Incremental Capital Output Ratio (ICOR) of the economy was expected to come down
to about 3.6 as against 4.5 during the Ninth Plan. This decline in ICOR was achieved mainly
through better utilization of existing capacities and suitable sectorial allocation of capital and its
efficient utilization. The growth target, therefore, would require an investment rate of 28.4 per
cent of GDP. This requirement was to be met from domestic savings of 26.8 per cent of GDP and
external savings of 1.6 per cent. The bulk of the additional domestic savings will have to come
from reduction in Government dis-saving from -4.5 (2001-02) to -0.5 per cent (2006-07) of
GDP. The average growth rate in the last four years of the 10th Plan (2003-04 to 2006-07) was
little over 8 per cent, making the growth rate 7.7 per cent for the entire 10th Plan period. Though
this was below the target of 8 per cent, it is the highest growth rate achieved in any Plan period.
The Eleventh Five Year Plan (2007-12) provided a comprehensive strategy for inclusive
development, building on the growing strength of the economy, while also addressing
weaknesses that have surfaced. It set a target for 9 per cent growth in the five year period with
acceleration during the period to reach 10 per cent by the end of the Plan.
The Twelfth Plan fully recognizes that the objective of development is broad-based
improvement in the economic and social conditions of our people. However, rapid growth of
GDP is an essential requirement for achieving this objective. The Approach Paper to the Twelfth
Plan, had set a target of 9 per cent average growth of GDP over the Plan period (2012 to 2017).
That was before the Euro-zone crisis in that year triggered a sharp downturn in global economic
prospects, and also before the extent of the slowdown in the domestic economy was known.
Twelfth Plan envisaged that the current slowdown in GDP growth can be reversed through
strong corrective action, including especially an expansion in investment with a corresponding
increase in savings to keep inflationary pressures under control. However, while our full growth
potential remains around 9 per cent, acceleration to this level can only occur in a phased manner,
especially since the global economy is expected to remain weak for the first half of the Plan
Inclusiveness as Poverty Reduction
Distributional concerns have traditionally been viewed as ensuring an adequate flow of
benefits to the poor and the most marginalized. This must remain as an important policy focus in
the Twelfth Plan. It is worth noting that the record in this dimension of inclusiveness is
encouraging. The percentage of the population below the official poverty line has been falling
but even as that happens, the numbers below the poverty line remain large. According to the
latest official estimates of poverty based on the Tendulkar Committee poverty line, as many as
29.8 per cent of the population, that is 350 million people were below the poverty line in 2009-