12th Five Year Plan

In his first acknowledgement of what economists and corporate chiefs have been saying for the past few months, Prime Minister Manmohan Singh warned that achieving 9% growth during the next plan period – April 2012 to March 2017 – may be tough in the absence of difficult decisions. In his opening remarks at the meeting of the full Planning Commission, Singh said the panel settled on the 9% growth target, instead of 9%-9.5% as suggested earlier due to the uncertainty in the global economy and challenges at home. The PM’s statement indicates that the global environment — led by problems in Europe and the US — is expected to be uncertain for a while. The PM said in the best case scenario, the growth rate during the five-year period would grow 9.2%. The PM said that health, education and infrastructure spending would get more funding than other sectors, given the resource crunch and the need for fiscal consolidation. The PM’s observations on taking tough decisions come at a time when several issues such as liberalization of foreign investment regime for retail and defence production are held up due to interministerial wrangling. The proposed national manufacturing policy too is held up as labour and environment ministries are unwilling to show flexibility in reducing undue inspection and clearances that are required. The Centre and the states have also been divided on the rollout of Goods & Services Tax from next April due to lack of political consensus. Singh said a broader national consensus was required to push the next round of reforms that entailed legislative changes. Singh also said the government’s flagship schemes such as the rural employment guarantee programme would continue in the next plan. “We need to ensure that resources provided are spent to achieve maximum efficiency in terms of outcomes. We also need to harness private investment in these areas,” the PM said.