Panel sets GDP growth target for 12th Plan at 9-9.5 per cent

The full meeting of the Planning Commission, headed by Prime Minister Manmohan Singh , on Thursday decided to set a gross domestic product (GDP) growth target of nine to 9.5 per cent for the 12th five-year plan for 2012-17.

Planning Commission deputy chairman Montek Singh Ahluwalia said that whether the target will be in the range of nine to 9.5 per cent or an exact number is an open question at this point and will be decided as work progresses on the draft plan. The country is estimated to have recorded an annual GDP growth rate of 8.2 per cent during the 11th plan (2007-12), which is below the target of nine per cent. The performance was impacted by the global economic meltdown and a severe drought.

Clearly, the Planning Commission is going in for a realistic target, given the resource constraints, and has pegged the target below the double-digit GDP growth figure that has been cropping up as a desirable goal for the long term to remove poverty. The Prime Minister in his concluding remarks after the discussion said, "The Planning Commission presentation has rightly emphasised the importance of working within the overall target of fiscal consolidation. This is an important constraint we must realise."

Ahluwalia explained that resources were limited as the fiscal deficit target of the government will have to be kept in mind while chalking out the plan outlay. "The fiscal deficit has to be progressively reduced from 4.6 per cent of GDP to three per cent by 2014-15 and this would have to be kept in mind while preparing the plan," he added.

Ahluwalia said that the increase in the Centre's gross budgetary support to the five-year plan would have to be modest, depending on the resources available. Reliable sources said, the Planning Commission's presentation has put the annual increase in the gross budgetary support at a mere 1.3 per cent of the plan. Ahluwalia said agriculture would be a thrust area for the 12th plan and there was scope for increasing the growth rate of the sector to four per cent.
According to the Planning Commission presentation, some of the challenges that the Indian economy faces include accelerated inflation, global pressure on food and oil prices, quality of governance and weak manufacturing performance, which can be given a boost by liberalising the policy on foreign direct investment (FDI).

Courtesy: Mail Today