Growth target? Yawn!

As a result, the performance for the first three years does not seem to have affected the forecast, or ‘target’, for the next two years — 2005-06 and 2006-07 — which is 7-8 per cent. Since the ‘target’ is based on expectations of a normal monsoon, it could easily be lower if the monsoon does not come up to scratch. In fact, expected GDP growth in 2005-06 was — until the beginning of this monsoon — 6.6 per cent. However, somewhat poor monsoons have pulled forecasts down to 6 per cent. Consequently, instead of a growth of 3.1 per cent, agricultural output is expected to fall by 0.7 per cent. In case this forecast is correct, it is unlikely that the Planning Commission ‘target’ of 7-8 per cent will be met this year either. In most modern market economies, while various agencies — both government and private — forecast economic growth, the Soviet planning vocabulary of ‘target’ is no longer used. In India, too, since the government does not, thankfully, control the behaviour of individual economic agents, this vocabulary is inappropriate. Since prime ministers, who are the chairpersons of the Planning Commission, cannot announce a step down in target, regardless of rising oil prices or poor monsoons, these numbers will continue to be meaningless. Perhaps the sleepy response from the country’s chief ministers at the NDC was then a most appropriate one.