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BW Businessworld

'Maintain Healthy BoP To Achieve Growth Target'

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The government will have to take corrective measures to maintain healthy balance of payment in order to achieve the economic growth targets of the 12th Plan period (2012-17), President Pranab Mukherjee said on 28 December. "I do feel that it is correct decision that to have little ambitious target around 8 per cent GDP growth ... would feasible," Mukherjee said while addressing at a function here in south India.
"But we shall have to keep in mind that the balance of payment (BoP) crisis can assume larger (proportion) if correct measures are not taken now. Planning commission and finance ministry will have to address these issues," he said.
The President said gross capital formation was projected at 37 per cent of the GDP in the 12th Plan and it was projected that 35.1 per cent would be from gross domestic savings and external support would be 2.9 per cent.
"If our domestic rate of savings come down from 35.1 per cent, the implication would be our external support will have to increase from 2.9 to 3 per cent and 3.5 per cent. That means our balance of payment crisis would aggravate which we cannot afford. And one of the major reasons of balance of payment crisis is high volatility of currency," he said.
India will have to find out an innovative solution to address problems such as energy, food and health securities besides right to education, Mukherjee said. "We shall have to keep in mind in democratic set up if we cannot provide these to the people it would lead to social unrest. And that will have serious repercussions." 
On the manufacturing sector, Mukherjee said the sector growth has come down to 2.5 per cent which will have serious implications. "And manufacturing sector growth will have to be ensured.
Then Indias economy will have a balanced growth development. The sector will have to achieve 25 per cent of GDP that will provide jobs that will provide employment. That will give resources."