8216;Policy logjam may pull down growth to 58217;

The Plan emphasises that the ideal Scenario 1 called Strong Inclusive Growth,which is the 8.2 per cent growth scenario,is not a foregone conclusion, the agenda note says. The commission has blamed several internal constraints,macro-economic imbalances,slowing down of major investment projects in energy and transport because of implementation problems for hindering the economy and causing growth projections to be moderated.

The projected 8.2 per cent growth rate in the Twelfth Plan period Scenario 1 can be realised only if early steps are taken to reverse the current slowdown and also other key constraints that will otherwise prevent the economy from returning to a higher growth path are redressed through appropriate policy decision, the commission has said.

Failure to do this could lead growth rates slumping to 6-6.5 per cent in what the note calls Scenario 2.

There is also a Scenario 2 called Insufficient Action in which some policy actions are taken but,they are partial and not effectively implemented, the note says. In this scenario all the virtuous cycles do not kick in and the country will have to be satisfied with growth between 6-6.5 per cent,it says.

The note goes on to caution the government against the current policy paralysis and says that the persistence of such a scenario would push the Indian growth story back to 5 per cent levels. In Scenario 3 called Policy Logjam,there is a big slippage in policy response,vicious circles begin to kick in and public impatience mounts. Growth will slip to five per cent in this scenario with a great loss of inclusiveness, the note says.

The commission has said that the country needs to make much larger investments in infrastructure sectors such as power,telecommunications,road transport,railways,airports and ports and also strengthen the capabilities and outreach of the financial sector to boost growth in the next plan period,a point underlined in the draft plan.