Review triggered by poor show in FY12, FY13; final call at NDC The government has decided to slash its annual economic growth target for the next five years to eight per cent from 8.2 per cent earlier. The planning commission has mooted the lowering of GDP growth target given the sluggish performance last year and less than six per cent expected this financial year. A final call on the 12th Plan growth targets would, however, be taken by the national development council (NDC), a body headed by prime minister Manmohan Singh that also has chief ministers and cabinet ministers as members. Plan panel deputy chairman, Montek Singh Ahluwalia, will move the eight per cent growth target before the NDC on Thursday. He cited finance minister P Chidambaram’s latest announcement lowering the target for this financial year to 5.7-5.9 per cent. The Reserve Bank of India (RBI) had earlier projected a target of 6.5 per cent, while prime minister’s economic advisory council (PMEAC), headed by former RBI governor C Rangarajan, had put the growth figure for this financial year at about six per cent. Ahluwalia cited the negative growth story in the euro zone, Japan and less than two per cent growth in the US as contributing factors for lowering growth targets for the 12th Plan period that began on April 1, 2012. He also cited the latest United Nations report that lowered the global growth projections by 0.5 per cent. In this context, it was also stated that China has revised its growth projections for this financial year to about 7.5 per cent against 11.7 per cent GDP growth clocked last year. The approach paper to 12th Plan, approved by the government, had projected nine per cent growth that was subsequently lowered to 8.2 per cent. “Given the latest information we have from the finance ministry, I would pitch for eight per cent”, Ahluwalia told reporters ahead of the NDC meeting. “…We should be going in for a more optimistic scenario. And, probably if we reflect, what we now know (is that) instead of 8.2 per cent, it would be better to pitch it at eight per cent. I would raise that issue in the NDC,” Ahluwalia said. While the approach paper was being put together, the then finance minister Pranab Mukherjee pushed for 9.5 per cent growth target. But, he settled for nine per cent on the advice of Rangarajan. This is the second time that the planning commission will be scaling down the growth projection for the 12 Plan (2012-17). In the 11th Plan, the annual growth rate was 7.9 per cent. Answering a query, Ahluwalia stated that unless there is significant slippage or policy logjam, eight per cent annual growth was a distinct possibility. He did not agree with the suggestion that even eight per cent GDP growth in 12th Plan was a wee bit ‘overtly optimistic.’ He cited the Indian economy’s resilience for bouncing back to high growth rates. On according special status for Bihar, Ahluwalia maintained that the state does not qualify the criteria set for classifying it in the special category. But, recognising the huge development needs in some areas of the state, the 12th Plan will definitely have a special package. If a state is classified in the special category, it will be able to access funds from the backward regions grant fund (BRGF). Bihar chief minister Nitish Kumar had sought such a status for Bihar. He had also approached the prime minister to press the case. The plan panel chief also stated that the committee headed by Rangarajan on estimating poverty would shortly submit its report. He also stated that a major overhaul in the centrally sponsored schemes, pruning their number to about 50, was in the offing given the feedback from different states. At present, around 149 schemes sponsored by the centre are in operation. The overhaul is likely to be completed by April 1 next year. Source: mydigitalfc.com
