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If the country has to meet the projected growth of 8 per cent during the 12th Five Year Plan, the Indian economy should mark a growth of more than 9 per cent in the last two years of the Plan period, given that the first year of the period is only posting a growth of 5 per cent, according to Planning Commission deputy chairman Montek Singh Ahluwalia.
The government is currently working out some alternative ways of power pooling in order to solve the issue of price difference between imported and domestic coal to address the power issues, he added.
In an interactive meeting with the industry organised by The Southern India Chamber of Commerce and Industry (SICCI), he said, “...next year the budget says (the growth would be) 6.5 per cent. To be on track, we have to go well above 7 per cent in the year after, that is 2014-15 and then we have to get to over 9 per cent in the last two years in order to average 8 per cent.”
“It is an acceleration of something like 5 per cent to something like 9 per cent, over the four-year period,” he said. However, this is not an unrealistic target, since the country’s underlying growth rate trend is at 7.4-7.5 per cent on average and to achieve a little more steady 9 per cent is achievable.
Current fiscal, the global economy itself was in a bad state and what India saw was a temporarily depressed growth and a one-year performance is not a real measure for the economic growth.
However, the issues on power, especially the bottlenecks in clearances for large projects, along with the availability of water in long-term are some of the matters that are to be addressed through the plan. While the power crisis is very imminent and require immediate attention, water crisis also has to be addressed though there is some more time to address that.
While regulatory clearances like the environmental clearance for power projects and large projects are dragging the projects long-term, the availability of coal and gas are also issues to be looked into. For instance, during the 10th Five Year Plan, 21,000 Mw of capacity generation was added in the country, while it was 54,000 Mw in the 11th Five Year Plan, which ended in 2011-12. Even in that, just in the last year of the Plan period, in 2011-12, around 22,000 MW which is more than the total capacity addition in the 10th plan period, was added to the generation capacity. However, the availability of coal and gas is not up to meet this demand.
Price pooling in gas is also necessary, since the price difference between the imported and domestic gas is much higher. The inability to generate power is a specific new problem that has emerged in the country in the recent years, according to him.
The availability of infrastructure, including quality power, road connectivity, was needed to create a competitive environment to bring small and medium sector companies to the fore and in the fiscal 2013-14, the government was trying to make the infrastructure story look very good, he added.
Ahluwalia said the short-term fiscal measures of the Reserve Bank of India (RBI) would not bring the real solution for the crisis, but could make a feeling among the people that the fiscal space is getting better. He added that the country had to rely on overseas funds for growth for the next two to three years and this would have an impact on current account deficit, which generally would look comfortable at 2.5 per cent. However, the country has an opportunity in attracting more investment since the interest rate in the US and Europe were going to be low for the near future.
Cabinet Committee on Investment
The Cabinet Committee on Investment, set up in January to give clearance to large projects which has been delayed due to various regulatory issues,would clear a number of projects in the next few weeks, he said.
Speaking on getting clearances including the environmental clearances for large projects, which are not easy to get, he said, “My hope is that the cabinet committee on investments in the next few weeks will demonstrate that a number of these projects can be cleared.”
According to latest reports, the government has approved Rs 74,000 crore worth projects in the last two months, mostly in infrastructure and energy sectors.
