Average growth in 12th Plan period may be below 6%

Marred by domestic and external problems, the Indian economy's annual average growth rate may not exceed 6% during the 12th Five-Year Plan (2012-17), compared with the target of 8%.

"Latest estimates worked out by the Planning Commission reveal that it will be difficult to achieve an annual average growth rate of more than 6% during the 12th Plan period," a source said.

The forecasts are being worked out in view of the ongoing process for preparing a draft note for the mid-term appraisal of the 12th Plan, the source said.

According to him, the very poor performance in manufacturing is one of the reasons for the slowing growth, apart from lower exports and other global factors.

During the April-February period of 2013-14, the index of industrial production (IIP), a measure of factory activity, declined 0.1% compared with a meagre growth of 0.9% in the corresponding period of 2012-13.

According to experts, poor industrial growth is one reason for the persistent sluggishness in the economy during the first two years of the 12th Plan period, which started on April 1, 2012.

Advance estimates of the Central Statistics Office (CSO) show the economy is expected to grow at 4.9% in 2013-14. The economy expanded 4.5% in 2012-13, the first year of the Plan period.

In the current financial year, economic growth is projected at 5.5%. Experts say that to achieve an annual average growth rate of 8% in the 12th Plan period, the economy would have to expand at over 12% in 2015-16 and 2016-17, which does not seem feasible.

Earlier, the full Planning Commission had cut the annual average growth rate in the 11th Plan to 8% from the targeted 9% during the mid-term review.

Later, government data showed the economy expanded at an annual average of 8% in the 11th Plan period (2007-12).

The economy's annual average growth rate target and benchmarks for other sectors would be revised by the new government some time in October.