GDP growth scaled down to 7-8%

The economic growth target has been scaled down from 8.1 to 7-8 per cent annually during 2002-07 in the mid-term appraisal of the Tenth Five-Year Plan.

"The Cabinet on Thursday approved the Mid-Term Appraisal of the Tenth Plan of Planning Commission. The MTA document will now go to the National Development Council," Finance Minister P Chidambaram said after the meeting.

Asked whether MTA has scaled down growth projection for 2002-07, he said "the actual growth in the first three years has been less than what it was approved in 10th Plan."

"In first year itself (2002-03), growth was 4 per cent," he said. GDP grew by 8.5 per cent in 2003-04 and the growth rate is estimated to be 6.9 per cent in 2004-05.

The average growth was 6.5 per cent in the last three years.

To attain 8.1 per cent growth during 2002-07, the economy has to grow by over 10 per cent annually in 2005-06 and 2006-07, official sources said.

MTA has targeted a more realistic target of 7-8 per cent, which is envisaged in the National Common Minimum Programme also, an informed source said, adding the economy has to clock over 7.5 per cent to attain the targets fixed in the MTA.

When contacted, Planning Commission Deputy Chairman Montek Singh Ahluwalia told PTI "the NDC, chaired by the Prime Minister, is likely to meet in June to finalise the targets."

Apart from revising the growth targets, sources said MTA spells out 58 steps that will be the foundation for the future policies of the government during the Eleventh Plan.

MTA also proposes far-reaching reforms in labour, infrastructure, social sectors and further liberalising FDI regime, especially in retail.

Apart from revising the growth projection, sources said MTA has recommended speedy divestment of minority stake of profit-making PSUs.

MTA pitched for sale of minority equity stakes in profit-making PSUs while retaining government holding at 51 per cent so as to yield substantial resources in the years ahead.

Government should fully exploit the room provided by the National Common Minimum Programme for sale of equity stakes in public sector undertakings to address the problems of resource constraints.

Proposing flexibility in labour laws, it said, "It should be considered while protecting legitimate interests of employed labour force."

Favouring FDI in retailing, the MTA document said, "Entry of foreign retailers through joint ventures in India will develop backward linkages to sources of supply and thus develop a domestic supply chain capable of meeting international quality standards."

On the infrastructure development, MTA favoured equity participation by foreign airlines in domestic air transport operations in order to get the necessary expertise.