Remaining Tenth Plan period can see 7.5% growth: Montek

India would be able to achieve an average growth of 7.5 per cent in the last two years of the Tenth Plan (2002-07) and an 8 per cent target was the only feasible target for the 11th Plan period, Deputy Chairman, Planning Commission, Montek Singh Ahluwalia said today.

India had the potential to achieve higher growth but policy decisions would be required for it to realise that potential, he said at the valedictory session of the CII Annual Conference today.

The mid-term appraisal of the Tenth Plan, which will be considered by the cabinet tomorrow, had a list of 58 policies the government needed to implement. Infrastructure was a problem, but the government had a roadmap on roads, ports, airports and railways.

The power sector, however, continued to pose a problem as action was needed at the state level.

"In the next two years of the 10th Plan, growth should average about 7.5 per cent and we hope to transit to higher growth of about 8 per cent in the 11th Plan. This, with a double digit growth in manufacturing, will be a credible achievement," he said adding that a 10 per cent gross domestic product (GDP) growth rate was unlikely as that would not only require agriculture to grow at 4 per cent, but also manufacturing to grow at 17-18 per cent on a sustained basis.

A large part of the rural distress seen in the last few years was an outcome of failure of the growth strategy in agriculture post-1996.

An increase in the growth rate to 4 per cent would lead to poverty reduction. This would, however, require government investment in rural infrastructure development, he said.

An increase in agricultural incomes as a result of a doubling of agricultural growth rate to 4 per cent would lead to a half percent increase in GDP.

The associated rise in non-agricultural incomes would raise GDP by a similar amount. The boost to industrial demand would mean that manufacturing growth would reach double digit, he added. India had the potential to achieve a higher rate, reflected in the rising savings and investment rates, fall in government dissavings and a dynamism in the private sector.

However, realisation would require policy decisions. The country did not suffer from a "policy deficit", but it needed to pick on a few policies and implement them.

Inclusive growth would require a major change in the standards of education and health in the country, particularly of delivery systems, he said.

Involvement of the corporate sector, particularly in supporting civil society organisations would assist the process.

"Countries which have achieved 8-10 per cent GDP growth have typically achieved literacy rates of 85 per cent against India's rate of 64 per cent. Also, almost 90 per cent of the children in those countries completed primary school and a major portion of those completed secondary education," he said.