Bangalore, August 31:Global recession and drought will bring down India’s nine percent growth target for its 11th Five Year Plan (2007-12), Planning Commission Deputy Chairman Montek Singh Ahluwalia has said.
“We set a growth target of 9-10 percent for the 11th Plan. Though we began well in the first year (2007-08), the global meltdown impacted the growth rate in the second year and a drought this year will hamper it even more,” Ahluwalia told IANS here.
The robust nine percent growth rate in 2007-08 slipped to 6.7 percent last fiscal and is projected to fall to 6.5 percent this year.
“If the growth rate for two consecutive years is about 6-6.5 percent on an average, the economy has to grow by 11 percent in the remaining two years of the Plan period to achieve the nine-percent target, which I don’t think is possible,” Ahluwalia said.
The commission will revise the growth target when it meets in December for a midterm appraisal of the 11th Plan, with a better assessment and a course correction this fiscal.
“We will see what adjustment needs to be done during the midterm appraisal. We should not regard the decline in growth as a failure or weakness, because contributing factors like global meltdown and a weak monsoon are beyond our control,” said Ahluwalia, one of India’s key economic policymakers.
The first meeting of the reconstituted Plan panel Tuesday in New Delhi, under the chairmanship of Prime Minister Manmohan Singh, will set the tone for the midterm appraisal of the 11th plan after factoring in India’s economic health.
Admitting it was difficult to meet a five-year target when the external environment changed midstream, Ahluwalia said the priority was to ensure the growth path was on sustainable ground.
“Our economy is going through two difficult years and the world economy will take a year more to recover from the global recession. The measures taken by the government during the past eight months are aimed at a stronger economic performance though we have a lot of work to do,” he said.
Clarifying that planning was not a mechanical exercise undertaken once and adhered to it for five years, Ahluwalia said a midterm review was essential for course correction.
“Global recession and drought are unforeseen events that disrupt growth momentum and the cyclical nature of many economic sectors. Midterm appraisal will allow us to redefine priorities and review policies.”
A weak monsoon and slowdown are feared to limit the growth rate of the gross domestic product (GDP) to less than seven percent this fiscal.
“Though drought will be a problem this year, we expect a strong rebound in the farm sector next year. But for the weak monsoon, the growth rate would certainly have been above seven percent this fiscal,” Ahluwalia said.
Even as a drought looms large, with loss of farm production, lower income for farmers and fall in demand for goods and services, he said food stocks were adequate.
“With five million tonnes buffer stock as strategic reserve, the government should be able to manage food grain shortage arising out of lower production and monsoon blues.”
–Agencies