PlanCom says growth to be 5.3% in FY'14

The Planning Commission  expects India's economy to clock a growth rate at 5.3% for the current financial year, a shade higher than a decade low of 5 per cent in the previous year. However, any growth above five per cent in 2013-14 would send right signals to investors at this moment of time, when independent analysts have projected the economy to expand sub-5%.

Senior officials in the Planning Commission said economic growth could be higher than six per cent at 6.5-7% in 2014-15, and over 7 to 8% in 2015-16. In the last year of the 12th five year plan (2016-17), the growth rate could touch 8%, they said.

The 12th five year plan document had projected the economy to grow by 8% a year on an average in the plan period (2012-13 to 2016-17).

With the first year of the plan yielding just five per cent growth rate and even if one takes 5.3% growth rate projected by the Planning Commission on the face value,  the next three years would have to grow by close to 10% on an average to yield average annual growth rate of 8% during the plan period.

The Commission officials said when the economy is down in the first two periods, investors are not as much interested in the average annual growth rate, but how much the economy would grow in,  say last two years. The moot question is when would investment cycle would pick up.

"If you are growing at 8% plus in the last two years…they will say wow India is back in track. Well, everybody who is thinking about India is not thinking of the record in the 12th plan they are thinking …if we get back to 8% plus in the last two years of the plan, India will comprehensively have established as having a 8% plus growth potential," they said.
 
Officials countered a query on domestic policy paralysis affecting economic growth, saying, ",After all, China is expected to grow at 7.5% this year and they grew at 11.5% in 2009. So if China has slowed down…why do you think India will not slow down?"

They said if every one else was growing at the projected rates and India dipped, then policies were to be blamed. But, this is not the case, they added as global economic situation had squeezed demand and affected capital flows.