As the global economy slips into further uncertainty, the Planning Commission on Wednesday said it was likely to lower its average annual economic growth target for the 12th five-year plan (2012-17) to 8.5 to 8.7 per cent, as against the 9-9.5 per cent contemplated earlier.
“We had projected 9.5 per cent (growth) for the 12th Plan and then we scaled it down to nine per cent... But, on Wednesday, I don’t feel it will be nine per cent... But we will definitely move to 8.5 per cent, 8.6 per cent, 8.7 per cent,” minister of state for planning Ashwani Kumar told reporters here.
The Commission had always believed that even nine per cent average annual growth would need strong policy action.
The minister said the frequent disruption of Parliament by opposition parties and lack of consensus among the parties had prevented the government from taking many measures. “Political instability does create doubts in the mind of investors. Hence, opposition members should play its part in reducing this instability,” he said.
He acknowledged that decision making should be streamlined and made faster to promote higher growth.
Recently, the Prime Minister's Economic Advisory Council also talked about erosion of investor confidence. For the ongoing plan (2007-08 to 2011-12), the Commission had initially expected the economy to grow at an average of nine per cent a year.
However, after the ripple effects of a global financial crisis, the Commission had lowered the growth rate to 8.1 per cent. For the first four years of the plan, average growth came to 8.15 per cent.
The finance ministry is expected to lower the growth estimate for the current year from the initial projections of nine per cent after the first quarterly GDP figure is out on August 30. Even if the growth rate falls to 8.1 per cent, the Commission's target for the current five-year plan would be met.
Ashwani Kumar said despite the trouble in the US economy and downturn in the euro zone, the Indian economy would grow by 8.2 per cent during the current financial year. He exuded confidence that the Indian economy, with its strong fundamentals, would weather the storm created by the downgrade of US credit rating by Standard & Poor’s.
