Eleventh Plan may target 10% growth

PM chairs Plan Panel meet today to set rate.

The Planning Commission might make a pitch to Prime Minister Manmohan Singh tomorrow for a 10 per cent GDP growth target during the Eleventh Five-Year Plan period.

Singh, who is also the chairman of the Planning Commission, has more than once talked of raising the growth bar to 10 per cent per annum. Double-digit GDP growth will be a quantum leap over the 8 per cent set by the Atal Bihari Vajpayee-led NDA government.

At a meeting of the full Planning Commission here tomorrow, the growth target for the Eleventh Plan is likely to be set at 9 per cent.

However, given that the commission's approach paper states that even 10 per cent growth is achievable, the decision could well be to raise the bar higher. The first draft of the approach paper in July had targeted a growth rate of 8.5 per cent for the Eleventh Plan.

The meeting will take note of the accelerated growth in recent years. The average growth rate in the last four years of the Tenth Plan period (2003-04 to 2006-07) is likely to be a little over 8 per cent, taking the growth rate for the Tenth Plan to 7.2 per cent. However, this is below the targeted 8 per cent rate.

The commission, which has discussed options of starting the Eleventh Plan in 2007-08 with a bang, is likely to proceed on the assumption that gross budgetary support for the first year of the Eleventh Plan period will be Rs 210,728 crore, translating into a 22 per cent increase over 2006-07 (Rs 1,72,727.85 crore).

In adopting the new growth target, the Planning Commission is likely to recognise that the most vulnerable period will be the first two years of the Eleventh Plan, during which the possibility of a cyclical downturn is complicated by the effect of oil prices and the lack of sufficient flexibility in fiscal management.

Other macro-economic indicators consistent with a 9 per cent target include an average growth in agriculture of 4.1 per cent (against an actual growth of 1.7 per cent during the Tenth Plan), industrial growth of 10.5 per cent (actual 8.3 per cent during the Tenth Plan) and services growth of 9.9 per cent (actual 9 per cent during the Tenth Plan).

The projections take into account the growing role of private investment through public-private-partnerships and a higher rate of private savings seen in recent years.