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Unit 3: Eleventh Five Year Plan

‘exclusive growth’ and not ‘inclusive growth’ which is the central theme of the Eleventh Plan. Since Notes
the entire additional employment is to be generated by the unorganized sector, then to treat the
corporate sector as the engine of growth is meaningless. The country should concentrate its attention
towards the unorganized sector as suggested by the National Commission for Enterprises in the
Unorganized Sector (2007) headed by Dr. Arjun Sengupta.
Moreover, the Planners themselves admit, “Permanent employment has decreased, although organized
sector firms may be increasing their informal employment.” The fact of the matter is that even without
any change in chapter VB of the Industrial Disputes Act, organized sector firms have succeeded in
increasing the share of informal employment to about 23 percent, which is a tacit admission of the
fact that the labour laws are observed more in their breach than in compliance, but the Planning
Commission is not tired of in recommending amendment of labour laws to enlarge and improve
employment. But as facts stare us in face, in a labour surplus economy, the tendency to employ
contract labour or casual employment is intended to enhance profits at the cost of cutting wage share
in value added. This is what has happened during the last decade. Inclusive growth requires an
improvement in the share of permanent jobs in the economy and increase in wage share, but what we
witness and what is proposed to strengthened, is precisely the opposite.

In 2004-05, the proportion of the poor was 27.5% - 28.3% for rural areas and 25.7% for
urban areas.

3.5 Critique of the Eleventh Plan

The 11 Plan visualizes “Faster and more inclusive growth” as its objective. This, by itself is a welcome
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development that after a period of a decade and half of reforms initiated in 1991, it is being realized
that the reform process has widened disparities between the rich and the poor, it has slowed down
reduction of poverty to a modest figure of 0.74 percent for a period 1993-94 and 2004-05, it has resulted
in a rise of unemployment from about 6 percent in 1993-94 to 7.32 percent in 1999-00 and further to
8.3 percent in 2004-05. Besides, it has sharpened the rural-urban divide as well as the regional divide
between the fast growing forward states and slow growing backward states. The iniquitous growth
that the reform process had generated was shaking he political foundation of the Indian society and
there was a need for a course correction. Failure to do this would pose a serious threat to the UPA
Government which rode to power on the plank of helping Aam Admi (Common Man).
The question arises : Does the Eleventh Plan really address the concerns which it has chosen to
redress ?
Eleventh Plan has fixed a target of pushing up overall GDP growth to an average rate of 9.0 percent,
this will be achieved by boosting growth of agriculture to about 4 percent after a disappointing
growth of 2.1 percent during the 10 Plan, and by pushing up growth of industry to 10-11 percent
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and services to 9-11 percent. It would be good to recall that industry indicated a growth rate of 8.3
percent and services to 9.0 percent during the 10 Plan. Obviously, in industry and services, the
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11 Plan intends to improve growth rates only marginally, it is only by doubling growth rate in
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agriculture that its target of 9 percent growth is likely to be achieved. This implies that the success of
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the 11 Plan will be determined by the success in achieving growth target in agriculture, moreso,
when agriculture still continues to provide livelihood to 58 percent of our population. To that extent,
the strategy indicates that the concept of ‘inclusive growth’ is a part of Eleventh Plan framework.
Reduction of Poverty - The Basic Issue
But inclusive growth would become a reality only if there is a rapid decline in poverty coupled with
rapid reduction of unemployment in the 11 Plan.
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