NEW DELHI: India's Prime Minister Manmohan Singh played down hopes Thursday for the once-booming economy's performance, saying achieving annual eight per cent growth to 2017 would be an “ambitious” achievement.
Singh's muted expectations come after the government earlier 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 annual showing in a decade.
“Achieving a target of eight per cent growth, following less than six per cent in the first year, is still an ambitious target,” he told state chief ministers meeting in New Delhi to review the government's 2012-2017 economic plan.
Despite moves to liberalise its economy, India still runs on five-year plans based on the former Soviet Union's central planning model.
Much of the world would envy even six per cent growth. But the pace is not enough for New Delhi, which says it needs at least nine-to-10 per cent expansion to significantly cut poverty and create jobs for a soaring young workforce.
This year's forecast growth would also be far below the near double-digit pace India logged before the onset of the global financial crisis.
“The country faces many challenges to achieve sustainable growth,” Singh added.
Singh said the biggest obstacles to expansion were dilapidated railways, roads, ports and other infrastructure that creates transport bottlenecks and slows production.
“(Improved) infrastructure is the best guarantee for rapid growth,” he said.
The ruling Congress party had long wanted to make history as the first government to usher in 10 per cent growth. It has been forced to row back in the face of deepening global financial worries and stubborn inflationary pressures.
Singh's scandal-scarred government in the past few months has unleashed a blitz of economic reforms to draw more investment and jump-start growth, before facing voters in polls in 2014 and to avert a threatened credit downgrade.