$1-trillion investment target for core sector may not be met

New Delhi: The planning commission has said the $1-trillion investment target for the infrastructure sector in the XII Five-Year Plan that began this year may be difficult because of the lower-than-expected growth over the plan period.

The XII Plan will run from 2012 to 2017. The Planning Commission has already said that 9% average growth it had assumed initially for the plan period will not be possible .

"The earlier ($1 trillion) figure was based on the 9% growth target and if the growth target is less, it (investment target) does not have to be same number," Planning Commission Deputy Chairman Montek Singh Ahluwalia told reporters on Monday.

"Obviously, if the five year perspective is lower than 9%, then investment requirement would also be lower. I don't think that $1 trillion should be seen as a sacrosanct figure. I don't regard the $1 trillion figure as some kind of figure written in stone," he said.

"The figure was given two years ago when the rupee-dollar exchange rate was 44. So we are calculating, what is needed in rupee. So the dollar equivalent of that is bound to change," Ahluwalia said. Ahluwalia said 9% growth would be difficult in the current context.

"Given the situation around the world and our own domestic current growth prospects, I think achieving 9% for five year average, is just not going to be feasible," he said.

Meanwhile, the government has appointed banker Deepak Parekh as the new head of the High Level Committee on Financing Infrastructure after Rakesh Mohan, former deputy governor of the Reserve Bank of India, stepped down.

The high-level committee was set up in November 2010 to review existing policies and suggest necessary changes in the investment framework in the high-priority infrastructure sector.

Parekh, who is the chairman of housing finance major HDFC, would serve in an honorary capacity with the rank of a minister of state. When originally set up, the committee had a tenure of 18 months, which may have to be extended now.