This paper attempts to review the recent performance of the economy and lists the priorities and challenges for the Twelfth Plan. The Indian economy will enter the Twelfth Plan period in an environment of great promise, but the next five years will also be a period of major challenges. The economy has done well on the growth front during the Eleventh Plan, but, going by the information that is at least currently available, not so well on inclusion. Much of what needs to be done to accelerate gdp growth during the Twelfth Plan will be done by the private sector, but the central and state governments have a crucial role to play in providing a policy environment that is seen as investor-friendly and is supportive of inclusive growth. Four critical challenges facing the economy in the Twelfth Plan, which are perhaps more serious than they were at the start of the Eleventh Plan, are those of (a) managing the energy situation, (b) managing the water economy, (c) addressing the problems posed by the urban transformation that is likely to occur, and (d) ensuring protection of the environment in a manner that can facilitate rapid growth. In addition, the efficiency in implementation of projects on the ground needs to be greatly improved.
