ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Decoding the Growth Target

The Planning Commission has announced an average gross domestic product growth target of 8% for the Twelfth Five-Year Plan period. This article disaggregates the 8% growth target into what could be achieved through a business-asusual approach and what would need an added effort. It outlines a simple Cobb-Douglas production function model that decodes India's growth over the last two decades and helps outline alternate paths to the 8% target. The article also discusses a variety of "extreme" paths of growth which depend heavily on one particular input at a time. It then goes on to outline a more plausible and balanced path, and discusses the key challenges surrounding it.

I am grateful to Montek Singh Ahluwalia, Arunish Chawla, Raghuram Rajan and Arvind Virmani for many helpful comments and suggestions.

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