FE Editorial : 8% growth, 100% effort

Though the Planning Commission has done well to lower its annual GDP estimates for the 12th Plan to 8% from the 8.2% it was looking at in September and the 9% before that, as PM Manmohan Singh pointed out, even achieving this isn’t going to be that easy. Given a likely 5.5% growth in FY13 and a 6.5% one in FY14, this means growth in the remaining 3 years of the Plan ending March 2017 has to be a bit over 9% per annum. Keep in mind the last time India clocked that kind of growth was in FY06 to FY08, when savings rates rose from 32.4% of GDP in FY05 to 36.8% of GDP in FY08 and investment levels to a high of 38.1% in FY08—today, they’re 32.5% and 35.1%, respectively. At that point, global growth was respectable—5.3% in 2006 and 5.4% in 2007, today it is 3.3%. Apart from the fact that global growth is important from the point of view of India’s exports drive, it is also critical in terms of money flows to corporate India.

Look at the composition of where this 9%-plus growth is going to come from, and the picture gets more daunting. Even if you assume agriculture grows at as much as 4% and services at around 9%, this means industry has to grow at 12% per annum for the next 3-4 years. Industry grew at 3.2% this year and 3.4% in FY12—the only time it

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