Indian Prime Minister Manmohan Singh Tuesday cautioned that return to faster economic growth should not be taken for granted in view of global challenges, even as the Planning Commission lowered the 11th Plan growth target by about one percentage point to 8.
1 per cent per annum.
Infrastructure sector would be the demand booster and revive the economy at a time when exports are susceptible to global pressures, he told the Planning Commission during the mid-term appraisal of the plan that had targeted an average annual growth of nine per cent in the five years ending 2012.
The country needs high investment in infrastructure in the next two years of the 11th Plan for returning to faster growth which remains a challenge in difficult global environment, Singh said.
Presiding over the full Planning Commission meeting for reviewing the current five year Plan, Singh said restoration of high growth "should not be taken for granted" as exports are likely to grow more slowly than it did before the global crisis.
Against the target of USD 200 billion in 2008-09, the country ended that year with USD 185 billion in exports.
This fiscal, exports may aggregate USD 160-165 billion.
"We will need another source of demand to offset slower exports growth and that demand should ideally come from an expansion in investment in infrastructure.
," he said.
The economy grew by an average growth rate of 9 per cent in the pre-crisis period, but slowed to 6.
7 per cent in 2008- 09 in the midst of global meltdown.
Earlier in the day, the Prime Minister had expressed hope that the country could return to the nine per cent economic expansion in 2011-12.
Separately, he had said that investment in infrastructure needs to be doubled to USD one trillion in the 12th Plan period to push growth.
The full Planning Commission, which comprises key Cabinet ministers, truncated average GDP growth target during the 11th Plan period to 8.
1 per cent from the initially estimated nine per cent.
Planning Commission Deputy Chairman Montek Singh Ahluwalia, in his presentation, said that growth in the 12th Plan period could be 9-10 per cent.
Building rural infrastructure, rebound in agricultural growth, along with investment in other areas like power generation would be key to growth, the Prime Minister said at the meeting attended, among others, by Finance Minister Pranab Mukherjee and Food and Agriculture Minister Sharad Pawar.
After a severe drought in 2009, the government is hopeful that the farm sector can turn around with a normal monsoon this year.
"With a normal monsoon this year we can expect a strong rebound in agricultural production," Singh said.
If the schemes on building irrigation and rural infrastructure are implemented in the remaining two years of the Plan, there is a good chance that agriculture growth will come close to the 4 per cent target, he added.
The farm sector growth is estimated to have decelerated to 0.
2 per cent in the current fiscal because of drought and floods in different parts of the country.
A positive feature of the Plan, as pointed out by the Prime Minister, was that previously poorer performing states also showed acceleration in growth.
"The growth performance across states shows definite narrowing of dispersion," he said.
While the Plan had set a target of bringing down the population below poverty line by 10 percentage points, the data relating to the period after 2004-05 would be available only by 2011.