India can attain an average growth of nine per cent between 2007 and 2012, Prime Minister Manmohan Singh said on Saturday as he outlined the need to maintain fiscal prudence while raising spending for infrastructure, education and health.
The prime minister also said that India was determined to control inflation to within five per cent in the next five years.
The Planning Commission's five-year economic plan has forecast gross domestic product (GDP) to increase from eight per cent in 2007-08 to 10 per cent by 2011-12, yielding nine per cent average growth during the 11th Plan period.
"This is ambitious no doubt, but feasible," Singh told a meeting of state chief ministers to fix targets for the next five years, or the 11th Plan period.
India's GDP grew 9.2 per cent in the July-Sept quarter and Singh said the economy was expected to grow by eight per cent for the full year ending March 2007.
The commission expected gross domestic product in the farm sector to expand to 4.1 per cent during 2007-12 from 1.8 per cent in the previous five years.
"Growth in agriculture has been less than two per cent since middle of 1990s... agriculture as a whole is in crisis," Manmohan said.
India aims to raise average industrial growth to 10.5 per cent during 2007-12 from 8.3 per cent in the previous five years, and service sector growth to 9.9 per cent from nine per cent earlier.
India has grown at an average of eight per cent in the past three years, and analysts say it will struggle to achieve the 10 per cent growth needed to eradicate widespread poverty, unless it improves creaking infrastructure.
The planning commission says India would need $350 billion in investments to improve its infrastructure by 2012.
The prime minister said India needed a sound macro-economic framework, investor-friendly environment and strong financial sector to attract huge investments from private firms.
The Central and state governments also had to increase spending mainly for improving health, education and rural infrastructure, he said.
"Even so, we must ensure that this level of budgetary support does not come at the cost of fiscal prudence and stability."
India aims to rein in its fiscal deficit to 3.8 per cent of GDP in the year to March 2007 and reduce it to three per cent by 2008-09.