More petrol, power, LPG price hikes coming soon, says PM at National Development Council to boost 12th Five Year Plan
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This is the second time that the Planning Commission has proposed reduction in the average annual growth target for the 12th Plan. It was first scaled down from 9 per cent to 8.2 per cent and now to 8 per cent.
Noting that India imports oil, natural gas and even coal, Singh said some adjustment in price was necessary to moderate demand of these products and curb imports.
"Energy pricing is critical for both objectives. If domestic energy prices are too low, there will be no incentive to increase energy efficiency or to expand even supply", Singh said, adding the centre and the states need to work together to create awareness in the public about the need to limit energy subsidies.
Energy experts, Singh said, were unanimous that the country cannot expect to achieve rapid, inclusive and sustainable growth if it did not undertake a phased adjustment in energy prices to bring them in line with world prices.
He further said failure to contain subsidy would mean either cutting plan expenditure in other sectors or exceeding the fiscal deficit target.
Describing the current economic situation as "difficult", the Prime Minister said the first priority of the government would be to reverse slowing growth rate.
"The continuing crisis in the global economy has reduced growth everywhere... Our first priority must be to reverse the slowdown. We cannot change the global economy, but we can do something about the domestic constraints which have contributed to downturn," Singh added.
India's economic growth has declined to a nine-year low of 6.5 per cent in 2011-12. For the current fiscal, it is estimated at 5.7-5.9 per cent, which would be the lowest growth in the last decade.
Terming the scaling down of growth for 12th Plan to 8 per cent as a "reasonable modification", Singh said, "achieving an average of 8 per cent growth following less than 6 per cent in the first year is still an ambitious target... The high growth scenario will definitely not materialise if we follow 'a business as usual' policy."
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