Planning Commission likely to cut average GDP growth to 6 percent for 12th Five Year Plan

Amid rising concerns over the prevailing economic slowdown, Planning Commission, in its mid-term review of the five year policy document, is likely to cut Indian annual average economic growth rate target to around 6 to 6.5 percent for the 12th Five-Year Plan (2012-17) from 8 percent projected earlier.

Planning Commission is of the view that owing to the ongoing economic downturn, it would be difficult to achieve the 8 percent average economic growth in the 12th Plan period. The Indian economy grew by average rate around 5 percent in first two years of the Plan, therefore, the country has to maintain a rate of around 10 percent in remaining three financial years of policy period to achieve the targeted 8 percent, which is almost impossible. Earlier, in its last mid-term review for the 11th Five-Year Plan, the Commission had cut the annual average growth rate target of 9 percent to 8.2 percent. However, only 8 percent average annual economic growth was achieved during the previous five-year plan.

At present, Indian economy is struggling with slowdown and first April-June quarter growth slowed down to four year low at 4.4 percent. Further, all macro-economic indicators have deteriorated with current account deficit (CAD) widened to a record high of 4.8 per cent of GDP in the previous fiscal. Further, rupee value has depreciated over 13 percent against dollar in 2013, which has become a cause of concern for the country, as India is structurally an import intensive country.