New Delhi: In view of continued economic slowdown, Planning Commission may reset annual average growth rate target to 7 percent for the 12th Plan (2012-17) in the mid-term review of the five-year policy document.
According to sources, the Commission has already started the process of mid-term review of the 12th Five Year Plan and is considering reducing the target as it may not be possible to achieve the targeted 8 percent growth in view of global and domestic factors.
The Commission will take into account the key data on industrial production and exports released by the government on Friday to arrive at a conclusion.
In a clear signal that Indian economy is not out of woods, the data revealed contraction in industrial production and exports coupled with near double digit retail inflation.
While the Index of Industrial Production (IIP) contracted by 1.6 percent in May, the lowest factory output in 11 months, the trade figures suggest 4.6 percent decline in exports in June. The retail inflation inched up to 9.87 percent in June mainly due to rise in vegetable and fruit prices.
As per the CSO's estimates, the Indian economy grew at decade low rate of 5 percent in the 2012-13, the first year of 12th Five year Plan. Besides, the government is expecting economic growth of around 6.1 to 6.7 percent this fiscal -- the second year of the five year policy period.
According to experts, if the economy expands at around 6 percent in the current fiscal then it would have to grow by 9.66 percent in the remaining three years of the 12th Plan which seems unfeasible.
They said that annual average economic growth rate target of 7 percent in the 12th Plan is likely as average growth of 8 percent per annum in the remaining three years of the policy period could be possible.
The Commission has earlier also scaled down the annual average growth rate of 9 percent envisaged in the 11th Plan (2007-12) to 8.1 percent in view of the global economic meltdown that began in 2008.
According to official estimates, India achieved an economic growth rate of around 8 percent during the 11th Five Year Plan period.
During the recent annual Plan discussions' with Chief Ministers, Commission's Deputy Chairman Montek Singh Ahluwalia had sought inputs from states for the mid-term review.
The Commission is almost through with the annual Plan outlay discussion with states. It has already approved outlays of 28 states for the current fiscal.
The Commission is likely to complete the process of approving state Plans with finalisation of outlays of Uttar Pradesh and Chhattisgarh by this month.