Prime Minister Manmohan Singh on Tuesday exuded confidence the Indian economy would grow by 8.5 per cent in the next fiscal and accelerate to nine per cent the following year from an estimated 7.2 per cent this fiscal.

Going forward, the country should step up the pace of economic expansion to above 10 per cent per annum in the 12th Five Year Plan (2012-2017) to generate employment for the youth and remove poverty, the Prime Minister said at a conference on building infrastructure hosted by the Planning Commission.

“We expect to achieve 8.5 per cent growth rate in the year 2010-11... I hope we can achieve growth rate of 9 per cent in the year 2011-12,” he said.

However, the country should do even better, he said.

“For eliminating poverty and providing productive employment for our young population in the near future, we must aim at accelerating the pace of economic growth to above 10 per cent per annum. This is the growth target which we should work towards for the 12th Five Year Plan,” Singh said.

The Prime Minister’s remarks assume importance since the original target of nine per cent growth rate in the 11th Five Year Plan is set for a downward revision to little over 8 per cent.

After growing at over 9 per cent in the three preceding year, India’s economic growth declined to 6.7 per cent last fiscal due to the global financial crisis.

However, due to the three fiscal stimulus packages given by the Government to prop up the economy, the Central Statistical Organisation (CSO) has estimated economic growth at 7.2 per cent in the current fiscal.

Infrastructure investment must be doubled

Prime Minister Manmohan Singh said investment in the infrastructure should be doubled to about Rs 41 lakh crore during the 12th Five Year Plan ending 2017 from the prevailing level, and directed concerned authorities to work out the details.

“Preliminary exercises suggest that investment in infrastructure will have to expand to USD 1,000 billion in the 12th Five Year Plan. I urged the Finance Ministry and the Planning Commission to draw a plan of action for achieving this level of investment,” he said at a conference on building infrastructure hosted by the Planning Commission.

In a foreword to a report on Investment in Infrastructure, Planning Commission Deputy Chairman Montek Singh Ahluwalia also said the country needs an investment of over one trillion dollars in the next Five Year Plan.

“A preliminary assessment suggests that investment in infrastructure during the 12th Plan would need to be of the order of about Rs 40.99 lakh crore (USD 1,025 billion) to achieve a share of 9.95 per cent as a proportion of the GDP,” Ahluwalia said in the report.

The Prime Minister said the 11th Five Year Plan targeted Rs 20 lakh crore for infrastructure development, double the amount achieved in the 10th Five Year Plan.

On Monday, the Planning Commission had said investment in the infrastructure sector in the Eleventh Five Year Plan (2007-12) will be close to the target of USD 500 billion, thanks to a better-than-expected show by the telecom sector.

At the Conference, Finance Minister Pranab Mukherjee said the Government is aware of the unfinished agenda in infrastructure development, which is necessary for a return to a high growth path of over 9 per cent.

On infrastructure bottlenecks, he said, power deficit and the aggregate losses of around 30 per cent due technical and commercial faults are worrisome. Less—than—expected capacity addition in the port sector, a huge investment backlog in railways and low penetration of broadband services were flagged as other concerns.

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