NEW DELHI: India's Premier Manmohan Singh played down hopes yesterday for the nation's once booming economy, terming a plan for achieving eight percent annual growth an "ambitious" goal.
Singh's muted expectations came after the government this month cut its growth forecast to just under six percent for this financial year — putting Asia's third-largest economy on track for its worst performance in a decade.
"Achieving a target of eight percent growth, following less than six percent in the first year, is still an ambitious target," said Singh, 80, in an unusually downbeat message ahead of the new year.
He was speaking to state chief ministers reviewing India's 2012-2017 economic plan which aims for eight percent annual average growth. Despite liberalization steps, India runs on five-year plans based on the old Soviet Union's model.
The Congress government's "first priority must be to reverse this slowdown," said Singh, who is keen to get the economy moving again before the 2014 polls.
"We cannot change the global economy but we can do something about the domestic constraints which have contributed to the downturn," he said, warning India can no longer "follow a business-as-usual policy".
Singh's scandal-scarred government in the past few months has shed its policy inertia and unleashed a blitz of new reforms to draw more investment to jump-start growth.
Much of the world would envy even six percent growth but India says it needs at least nine-to-10 percent expansion to significantly cut poverty.
The government's forecast for the fiscal year to March of 5.7-to-5.9 percent growth is far below the near double-digit pace India set before the onset of the global financial crisis.
A top adviser to Singh, Montek Singh Ahluwalia, cautioned at the same meeting against "policy logjams," saying India's growth "could be stuck at five-to-5.5 percent" if it fails to cut suffocating red tape, streamline its patchwork tax system and speed approval for long-delayed infrastructure projects.
Congress has long wanted to make history as the first government to achieve 10 percent growth. But it has rowed back in the face of the global downturn and stubborn inflation that have kept interest rates high and curbed investment.
India's troubles comes as fellow emerging market giant China's growth hit an over three-year low of 7.4 percent in the three months to September, but new figures have fueled optimism the worst is over.
A top industry body warned separately that because of slower growth India could fall 70 million jobs short of its flagship plan to create 100 million new manufacturing posts by 2022 to absorb the nation's ballooning young workforce.
"Given the moderate growth forecast by top management of manufacturing companies, the National Manufacturing Policy targets for 2022 might be missed by a wide margin," the Confederation of Indian Industry said.
India PM calls 8% growth ‘ambitious’
