Revised growth target ambitious, will test Centres ability, says Montek

Written by fe Bureau | New Delhi | Updated: Dec 27 2012, 07:52am hrs
Planning Commission deputy chairman Montek Singh Ahluwalia has termed even the revised GDP growth target of 8% for 12th plan as ambitious and said it would test the Centre's ability to restore the economy on a high growth path amid an uncertain global environment.

"I would say that even 8% average (growth), if you work it out based on 5.8% for current year and 7% in the next year (2013-14), will mean more than 9% growth for the last three years of the Plan. That's quite an ambitious target," Ahluwalia said, ahead of Thursday's National Development Council meeting.

The Planning Commission had earlier decided to adopt 8.2% growth target for the current plan but decided to revise in the wake of fresh estimates coming from the RBI that put growth at about 5.8% for current fiscal and the finance ministry's estimate of 5.7%- 5.9%, which would be the lowest in the decade.

Without making any changes in data on resource mobilisation, the commission presented three scenarios of growth for 12th Plan.

The first and most optimistic scenario talks about a growth rate of 8% when all the prescriptions given in the Plan document is adopted. In the second scenario, the growth is pegged at 6-6.5% and in the worst-case scenario of a complete policy logjam, the figure is put further down between 5-5.5%.

This is the second time the commission has scaled down growth projection for the 12th Plan (2012-17). After initially estimating the growth rate at 9% in the Approach Paper, it lowered the target to 8.2%t in September 2012. The issue will be taken up on Thursday by the country's highest policy making body NDC , which is headed by Prime Minister Manmohan Singh and comprises cabinet ministers and chief ministers of all states. The NDC meeting has been convened to approve the 12th Plan.

Ahluwalia said he would push for lowering of the growth rate as the situation has turned negative over the last few months with global growth rate also pegged downward by 0.5% .

The NDC meeting would also be used by the commission to bring states on board over its plan to restructure centrally-sponsored schemes (CSS).

The Centre is planning to restructure CSS next fiscal, reducing their number to a mere 49 from 147 this financial year based on the recommendations of a committee headed by Planning Commission member energy B K Chaturvedi.

While the exercise is in line with the strategy to cut the CSS share to 35% in the 12th Plan from a peak of 42% in the last Plan, the weeding out or merger of a large number of the schemes will also allow the government to spend more on select flagship schemes ahead of the 2014 elections.