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Ambitious but achievable targets

The target of 10 per cent growth by 2012 set by Prime Minister Manmohan Singh, while presiding over the meeting of the Planning Commission on the approach paper to the Eleventh Plan, is certainly unprecedented. The Commission had targeted an average growth rate of 9 per cent and it is the feasibility of achieving this that invites scrutiny. On the positive side, the GDP growth this year is expected to be above 8 per cent, as in the past three years. Such apparent consistency has led many to believe that the economy has finally moved into a higher growth trajectory. Achieving still higher growth rates, including double digit ones, is therefore well within the realm of possibility. On the other hand, sceptics point out that as recently as in 2002-03, the first year of the Tenth Plan, the GDP growth rate barely crossed 4 per cent. During the Ninth Plan (1997-2002) the economy grew by just 5.4 per cent, sharply lower than the 6.7 per cent growth rate recorded during the previous plan period. Yet even amidst uneven economic growth, there was no shortage of inspirational targets. At the beginning of the Tenth Plan, the Planning Commission's expectation of an 8 per cent average growth invited disbelief.

More than the overall growth rates, it might be useful to look at the assumptions behind those forecasts. Central to the Eleventh Plan strategy is to double the agriculture growth rate to 4 per cent. Reversing the deceleration that had set in — from an average 3.2 per cent growth between 1980 and 1996-97, agriculture growth rate has slumped to around 2 per cent now — is the major challenge before the Eleventh Plan. The argument that agriculture's share in the GDP is declining and therefore its performance will have lesser impact on the economy misses the point that rural economic health is the key to overall prosperity. Inclusive growth, another key Plan objective, is obviously not possible unless there is a rebound in agriculture. That, however, is a daunting task and requires a co-ordinated strategy to make available all the inputs, including credit and irrigation. The steady decline of public investment in the farm sector needs to be reversed. The other major area of concern has been infrastructure, where an investment of Rs.14,00,000 crore would be needed by 2012. Industrial activity has been robust recently. The external economy is strong and investor interest in India has remained high. Industries, especially manufacturing, and services need to grow in double digits. As the Prime Minister put it "we could not have asked for a better start [to the Eleventh Plan]."

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