BHUBANESWAR: Having weathered the meltdown and then the European crisis, Indian economy is ready to hit back with the 9 per cent growth rate in the 12th Five Year Plan. There are challenges stacked against the Government but political cooperation and maturity will be needed during the period of transition, Deputy Chairman of Planning Commission Montek Singh Ahluwalia said here on Friday. He said there is too much focus on what is being called ‘policy paralysis’ since there are phases when many feel politics is creating a gridlock but healthy democracies are passing through this phase. Over the last three years, he said, there is a better understanding of how the economy behaves. After a 9 per cent growth in the GDP, the 2008 meltdown led to a drop to 6.7 per cent and it is now on the up and the country looks to consolidate. “We seem know the lower bounds of growth and we also know we are poised for a better next year,” he said. The Plan panel Deputy Chairman said the slowdown, the Indian economy is going through, is a temporary one and will probably end soon and people will also feel that inflation is under control. There is a lot of strength in the economy and the pessimism is unwarranted, he said. “The year 2011, by any standards, was an exceptional year. In the first half the economy registered a 7.3 per cent growth after which deceleration took place. I think we will end the year 2011-12 with 7 per cent growth which is reasonable to assume,” he said adding it is the current performance which matters and the economy’s faring is not all that bad. However, Ahluwalia said there are major challenges that the country has to address to achieve the 9 per cent rate over the next Plan period. The shrinking public savings, thanks to an expansion of the subsidies, is a major issue. Because of tax concessions and rising subsidies, there is no buoyancy in tax revenue which he said the Prime Minister has iterated needs attention. Terming tax front as a major challenge, he said introduction of Goods and Services Tax (GST) can be a game-changer in how the country moves forward generating more tax revenue. “The GST, if it comes into force, will add 1 per cent to the growth rate. That apart, it will create an efficiency in the system, not just in public saving,” he said. The country needs a little more political cooperation to go forward, Ahluwalia said addressing the annual Nalco Foundation Day Lecture Series. That apart energy sector with high aggregate transmission and commercial losses, scarcity of water, infrastructure and pace of urbanisation will be major challenges during the 12th Plan Period, Ahluwalia said. BL Bagra, CMD of Nalco, and Chief Secretary BK Patnaik also spoke.
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