Calls for Rs 41-lakh-crore investments in infrastructure.
Prime Minister Manmohan Singh today set the target of achieving a growth rate of 10 per cent during the 12th Plan period (2012-17). He also said investment in the infrastructure sector should be doubled to an ambitious Rs 41 lakh crore during the period — more than double the target of around Rs 20 lakh in the 11th Plan period.
He also reiterated the projections of the Planning Commission in its mid-term review that the Indian economy was expected to grow at the rate of 8.5 per cent in 2010-11 and 9 per cent in 2011-12.
“These rates are well above those seen in the developed world, and reflect underlying strengths of the economy…. I believe we need to do even better… we must aim at accelerating the pace of growth to about 10 per cent. This is the target which we should work towards in the 12th Plan,” Singh said at a conference on infrastructure organised by the Planning Commission.
The issue of growth was also discussed in the full Planning Commission meeting, chaired by Singh, later in the day to assess the mid-term progress of the current Plan. The Commission scaled down its average growth target for the 11th Plan period to 8.1 per cent from an earlier projection of 9 per cent.
Addressing the meeting, the prime minister said the past two years were particularly difficult for the Indian economy due to the impact of the global economic slowdown, exacerbated by lower food production last year.
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Earlier, in his address at the conference, he said infrastructure investment in India should double to Rs 41 lakh crore ($1,025 billion) during 2012-17, with an increased participation from the private sector, though he did say the financial viability of many projects could come in the way of achieving such a target.
Compared to an investment of Rs 9 lakh crore in the 10th Plan, the revised projection of investment in the 11th is Rs 20 lakh crore, almost equal to the initial target. “This (investment) was possible on account of the larger-than-anticipated investment in the telecom sector and oil and gas pipelines,” Planning Commission Deputy Chairman Montek Singh Ahluwalia said.
The private sector share in the total investment in infrastructure is expected to go up to 36 per cent in the 11th Plan period, from 25 per cent during the previous one. The gross capital formation in infrastructure is likely to rise from 5.08 per cent of gross domestic product (GDP) in the 10th Plan to about 7.55 per cent in 11th, compared to the initial target of 7.6 per cent.
A shortfall of 8.7 per cent, or Rs 1,25,266 crore, is expected in public investment, compared to initial targets for 11th Plan. But the Planning Commission expects it to be compensated by a 20 per cent (Rs 1,23,321 crore) increase in private investment.
There has been considerable shortfall in investments in roads and bridges and ports, in which the 11th Plan targets have been revised downwards by 11.3 per cent and 53.8 per cent, to Rs 2,78,658 crore and Rs 40,647 crore, respectively. On the other hand, for telecom and irrigation, the targets have been revised by 34 per cent and 3 per cent to Rs 3,45,134 crore and Rs 2,46,234 crore, respectively.
Regulatory reforms draft Bill
Singh has asked the Planning Commission to prepare a draft Bill seeking stakeholders’ comments on regulatory reforms, amid complaints from certain quarters about the haphazard functioning of the current set of watchdogs.
“An approach paper on the subject was published by the Planning Commission after extensive consultations with experts and stakeholders. I have asked the commission to prepare a draft Bill outlining the next stage of regulatory reforms,” he said.
Electricity distributor
With power being expensive and in short supply, Singh today highlighted the need to provide bulk consumers the choice of determining who would distribute electricity to them, to ensure competition.
“We must also take steps to operationalise open access as early as possible, to enable bulk consumers to buy electricity directly from competing producers,” he said.
Challenges ahead
Singh cautioned that return to high economic growth should not be taken for granted, as the global environment was likely to remain difficult in the year ahead.
“Our strengths can help us return to 9 per cent growth trajectory by 2011-12. However, as the mid-term appraisal rightly emphasises, restoration of high growth should not be taken for granted,” he said.
He said exports were likely to grow more slowly than they did before the crisis.
India had targeted $200 billion worth of exports in 2008-09, but the economic crisis that swept the world put paid to this hope and the country ended that financial year with $185 billion in exports.