News: India PM says 9 pct average growth in '07/12 feasible

(RTR 09/12/2006) New Delhi - India can attain an average 9 percent growth between 2007 and 2012, the prime minister said on Saturday as he outlined the need to maintain fiscal prudence while raising spending for infrastructure, education and health.

Manmohan Singh also said India was determined to control inflation to within 5 percent in the next five years.

The Planning Commission's 5-year economic plan has forecast gross domestic product (GDP) to increase from 8 percent in 2007/08 to 10 percent by 2011/12, yielding 9 percent average growth during the 11th Plan period.

"This is ambitious no doubt, but feasible," Singh told a meeting of state chief ministers to fix targets for the next five years, or 11th Plan period.

India's GDP grew 9.2 percent in the July-Sept. quarter and Singh said the economy was expected to grow by 8 percent for the full year ending March 2007.

The commission expected gross domestic product in the farm sector to expand 4.1 percent during 2007/12 from 1.8 percent in the previous five years.

"Growth in agriculture has been less than 2 percent since middle of 1990s... Agriculture as whole is in crisis," said Singh, also the chairman of the commission's economic forecasting panel.

India aims to raise average industrial growth to 10.5 percent during 2007/12 from 8.3 percent in the previous five years, and service sector growth to 9.9 percent from 9 percent earlier.

India has grown at an average of 8 percent in the past three years, and analysts say it will struggle to achieve the 10 percent growth needed to eradicate widespread poverty, unless it improves creaking infrastructure.

The planning commission says India would need $350 billion in investments to improve its infrastructure by 2012.

Singh said India needed a sound macro-economic framework, investor-friendly environment and strong financial sector to attract huge investments from private firms.

The federal and state government also had to increase spending mainly for improving health, education and rural infrastructure, he said.

"Even so, we must ensure that this level of budgetary support does not come at the cost of fiscal prudence and stability."

India aims to rein in its fiscal deficit to 3.8 percent of GDP in the year to March 2007 and reduce it to 3 percent by 2008/09.