9% GDP, 20% export target. What are these guys smoking?

Aim for the sky to fall at the treetop. This is the adage the Manmohan Singh government seems to be following, never mind that it has consistently missed even the treetop over the last two years: on growth, on reforms, on exports.

The successes registered under this strategy relate to inflation, fiscal deficit and current account deficit, where the government aimed for the treetop and hit the sky in 2011-12.

But aiming high remains the goal. Even as GDP growth in 2011-12 fell to 6.5 percent (the tree-top), the Planning Commission has written in a growth projection of 9-9.5 percent (the proverbial sky) in the 12th five-year plan (2012-17), never mind that no one is projecting even 7 percent this year, the first year of the plan.

And the commerce ministry, wants to push export growth to 20 percent in 120 days, according to The Times of India.

And how will these miracles be achieved? When the whole world is slowing down?

report in Business Standard says while “the Planning Commission is not going to dilute the (growth) target of 9-9.5 percent average annual economic growth…” it is likely to “add a strong rider.” That means inserting an excuse for not achieving the target. The rider is that “the country will have to resort to fiscal discipline if it is to meet nine percent growth rate.” For good measure, the newspaper mentions the need for strong “political will” (what’s that?).

Ditto for the export target of 20 percent growth in 120 days, which is apparently the brainchild of SR Rao, the new Commerce Secretary, the previous one having retired hurt to head the Telecom Regulatory Authority of India after several export policy mishaps (including the dishing out of dubious data).

The Times says the new export strategy doesn’t have any concrete measures as yet (then what were they burning the midnight oil for? one wonders), but the approach is to focus “less on sops” and “more on removing hurdles to growth”. The ideal is fine, but are they going to achieve in 120 days what they couldn’t over two decades of procedural liberalisation?

Perhaps, we are being too cynical, but we couldn’t resist taking a potshot at one gem of a quote given by the newspaper: “Exports have to be the default mode,” one of the commerce ministry officials is said to have pontificated.

Well, exports have been in default mode for some months now. In April, export growth was 3 percent; in May -4.16 percent.

We rest our case. What were the guys in the Planning Commission and the commerce ministry smoking?

(curtsey : first post)

Rupesh Yatesh Dalal
Head Research Department


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