Achieving 8% growth an ambitious target: PM

Centre and the states on Thursday agreed to the five year growth agenda for the economy till the year 2017 that includes the thorny issue of raising oil and electricity prices and giving more freedom to states on using Central funds.

But Prime Minister Manmohan Singh accepted that the agenda for an eight per cent annual gross domestic product (GDP) growth is an ambitious one. The 12th Five Year Plan, he said, will not be able to meet its target of high growth scenario "if we follow a business as usual policy", he said in his speech to the chief ministers of all states and his Cabinet colleagues at the National Development Council (NDC) which approves the Five Year Plan.

The plan aims to raise agriculture growth to 4 per cent but also generate 50 million new jobs in the non-farm sector and a 9 per cent of GDP to be invested in the infrastructure sector.

Low energy prices have crippled investment in the sector while lack of employment in the manufacturing sector has forced half of India's 400 million workers to remain tied to farms, the plan notes.

"We need to move people out of agriculture by giving them gainful employment in the non-agricultural sector. It is only when fewer people depend upon agriculture that per capita incomes in agriculture will rise significantly and sufficiently to make farming an attractive proposition", said Singh.

On energy prices, the deputy chairman of Planning Commission Montek Singh Ahluwalia claimed the chief ministers have generally endorsed that energy prices should gradually go up and subsidies needed to be pruned to free more resources to be used for development.

"Growth outcomes will depend upon the extent to which we are able to take the difficult decisions needed to intervene at key leverage points to generate inclusive growth. I would like to emphasise that achieving an average of 8 per cent over five years, following a first year growth of say 5.8 per cent (2012-13) and say something over 7 per cent in the second year, will involve a sharp acceleration in the last three years of the plan," Ahluwalia said.

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