X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Indian Stock Market News, Equity Market and Sensex Today in India | Equitymaster
Investing in India? Get Equitymaster Research  
The challenges for 5 year plans 
(Thu, 12 Jan Pre-Open) 
 
Is it possible to predict external eventualities such as a market meltdown or a rising dollar? Well with these black swan events happening a little too often, India's Planning Commission is actually going to try analyzing them. India was happily chugging along with close to 9% GDP growth for three years before the global financial crisis struck in 2008. Since then GDP growth in India has decelerated. This leads us to believe that India is not completely decoupled from the rest of the world. External happenings do have an impact. Globally, the euro zone is still in turmoil. And even though the S&P 500 saw a good performance in 2011, the American recovery is not on concrete foundation. Oil prices are still high and commodities expensive.

In such an environment, planning large scale investments five years in advance is not just difficult, it may be impossible. Still the Planning Commission has gone ahead with the brave task. It recently released an approach paper highlighting two growth scenarios for India over the next five years. One has a target GDP growth of 9%. The other has a GDP growth target of 9.5%, during the twelfth plan period ending 2017. The Planning Commission revised its growth target downwards to 8.1% for the 11th five year plan from 9% earlier. Achieving an ambitious target of 9% in the next five years may not be an easy task. Wholesale price index (WPI) would need to be at a benign rate of 4.5-5%. The industry growth rate (IIP) would have to be around 9.6% every year during the 12th plan period compared to 7.4% during the 11th plan.

Agriculture needs to grow at a rate of 4% every year and services at close to 10%. Well, achieving these goals will definitely be a challenge. The external environment is deteriorating, and according to the Deputy Chairman of the Planning Commission, Montek Singh Ahluwalia, achieving this target is a bigger challenge now than it was six months ago.
Source: Business Standard
*11th five-year plan numbers are estimates as the plan period gets over in 2011-2012
Well, we believe predicting fluctuation in forex rates and global economic uncertainties is a long shot even for them members of Planning Commission. However, factoring in such risks in long term plans is certainly a balanced approach. This may even ensure better execution rate for the 12th 5-year plan.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

View all commentaries | Archives  RSS
Read the latest Market Commentary
 
BSE-30
 

 
Go
 

Equitymaster requests your view! Post a comment on "The challenges for 5 year plans". Click here!

  
 

Become A Smarter Investor In
Just 5 Minutes

Multibagger Stocks Guide 2017
Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE SENSEX


Jul 26, 2017 (Close)

MARKET STATS