Planning Comm sets 9 pc growth rate for 12th FYP

The Planning Commission is likely to peg the growth target for the 12th Five Year Plan (2012-17) at 9 percent despite the ongoing global financial turmoil, the full Plan panel meet is to be presided over by Prime Minister Manmohan Singh in New Delhi on Saturday.

"India has a capacity to grow at 9 per cent... by 2025 India will be the third largest economy after China and the USA in terms of gross domestic product," Planning Commission Deputy Chairman Montek Singh Ahluwalia told reporters in New Delhi on Friday.

The full Planning Commission meet scheduled for Saturday, will consider the draft Approach paper for the 12th Plan that will seek to raise the annual economic growth rate to 9 percent from 8.2 percent estimated in the current five year period (11th Plan). The full Plan panel meet is to be presided over by Prime Minister Manmohan Singh.

The Approach Paper provides a broad framework of the government policy to be pursued in the five-year period to achieve the desired growth rate.

The document will be placed before the Union Cabinet for consideration before being taken up for discussion and final approval by the country's highest policy-making body, the National Development Council (NDC).

The NDC, which is headed by the Prime Minister, comprises Union ministers and state Chief Ministers.

Replying to a question on impact of global financial problems, Ahluwalia said that these may have implication for the short term but "we are planning for the five year period."

Regarding the current fiscal, he said that economic growth could range between 8 to 8.3 percent.

Elaborating further about the country's growth potential, Ahluwalia said, "In our view, given state of the World and given the many difficulties we will face if we try to accelerate growth, we are in favour of choosing 9 per cent growth rate (for 12th Plan)."

"Some people say that it too optimistic. I do not think it is fair," Ahluwalia said.

On uncertainties due to global financial turmoil he said, "There are a lot of difficulties across the world but we are not making the Plan for this year. We are talking about what should be our target in the next five years beginning 2012-13."

"Assuming that there will be a return to stability in the global economy, even if the industrialised countries do not grow as rapidly as they are growing, Indian economy has the capacity to achieve 9 per cent growth rate. I think that it (9 per cent GDP growth rate) is feasible but difficult," he added.

About the agriculture he said we need to concentrate on the sector.

"In the current Plan we would record 3 per cent average annual growth in farm sector against the targetted 4 per cent and we will be aiming 4 per cent in the 12th Plan."

He also pointed out that there is need to deal with the problem of subsidies particularly those, which are not direct. He citied example of diesel, kerosene, LPG, fertlizers and power sector.

"The state electricity boards would suffer losses to the tune of Rs 70,000 crore in the current fiscal which are not sustainable in the longer run", he said.

The Commission will also stress on the need for more attention to urbanisation in the country as the population in cities would further increase. At present 31 percent of the population of the country lives in urban areas.

About the USD one trillion envisaged investment in the infrastructure sector, he said, "We have recommended that at least 50 per cent of the investment in infrastructure sector should come through public private partnership."

On environmental issues delaying projects, he said, "Some balance has to be struck."