"All democratic countries have an element of social security system. There are education related, health related programmes ... it is wrong to call them doles, these are investment in the delivery of services," Ahluwalia said at the India Today Conclave here.
He said that use of term "inclusive growth" raises confusion as many people think that the government just wants to give doles and do not care about growth.
"But this is something which is wrong. The role of growth has been very clearly spelt out in our official document ... Government is quite willing to see the private participation in the delivery of services," he said.
He, however, said that government plans to bring down subsidies in the 12th Plan period (2012-17).
"Other areas we call them as doles is fewer subsidies. Our view in the Planning Commission is that it is an area of clear weakness.
"In the 12th Plan, we have quite categorically said if you want to invest in the core sectors-- health, education and infrastructure--one of the things that has to do is to bring subsidies down."
He said that food subsidies might have top priority, but subsidies for energy are not functionally contributing to the growth.
Properly managed programmes can fund rural infrastructure and it is very crucial for the economy to bring down the subsidies, he added.
On growth, Ahluwalia said that government is focusing on inclusive growth. "That means, there should be high growth in the agriculture sector because that's where 50 per cent of the population derive their living from."
The percentage of people depending on agriculture for their living is going down, which is a sign of success, and it needs to be brought down further, he said.
"Same growth rate for the country as a whole, but the poorer states growing too slowly is not good enough. I think one of the important success of the 11th Plan (2007-12) is that what used to be called as Bimaru states are now growing quite rapidly. Bihar which is the poorest, is actually growing faster."
He said it is equally important that growth should generate employment as that is the kind of growth that produces better results in manufacturing.
However, in the last few years it is not happening as," We are currently facing a problem of growth slowdown and an specially bad manufacturing performance."