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Slow economic growth in the first two years of the 12th five-year plan (2012-13 to 2016-17) is expected to crimp average annual growth rate during the plan period to around 6.5% even if last three years produce 8% a year economic expansion, said think tank National Council of Applied Economic Research (NCAER).
Original plan document for the 12th plan pegged economic growth rate at 8% a year on average. This is set to be reviewed later.
NCAER said that the average annual growth rate of close to 6.5% can only be achieved if growth in the final three years of the 12th five-year plan (2014-15, 2015-16 and 2016-17) is 8% per annum.
“The accelerated growth will require policy reforms that would enable productive investments and improvements in productivity,” the report said.
India's economic growth declined to a decade low of 5% in 2012-13, which was the first year of the 12th five year plan. The current year is not likely to produce even 5% growth rate, according to most independent economists even as the government is hopeful of over 5% growth rate.
The economy grew at a four-year low of 4.4% in the first quarter of the current financial year. The finance ministry expects the second quarter to yield higher growth rate than the first quarter. The growth rate is expected to pick up from the second quarter of the current financial year.
The boost to economic growth rate will come from lag effect of policy measures taken by the government as well as base effect. The third and fourth quarters of 2012-13 had delivered 4.7% and 4.8% growth respectively. On the other hand, the first and second quarters of 2012-13 had produced 5.4% and 5.3% growth respectively.
In the previous plan as well, the growth rates drastically cut to 8.1% from 9% a year on an average. In actual, the growth rate delivered was 7.9% a year.
