The announcement by Prime Minister Manmohan Singh, a former World Bank official, came less than a month after India beat most forecasts reporting 8.9 percent growth in the first quarter to June (March-April).

"The 11th plan (2007-2011) is going to be historic in many ways," Singh told a meeting of the national policy-making Planning Commission.

"This is the first time since the planning process began that we will be aiming for a growth rate of 10 percent in the final years of the plan," he said.

India's economic plans hark back to the era when the country followed communist-style five-year programmes.

The country registered growth of 8.4 percent for the financial year to March 2006.

Economists have said that India must achieve double-digit growth to be able to significantly improve living standards in the country of 1.1 billion people where at least a quarter of the population live below the poverty line.

Singh said the ambitious target was achievable on the back of buoyant foreign capital inflow, moderate inflation, brimming foreign exchange reserves and a comfortable current account deficit, pegged at 3.1 percent of the GDP.

"We could have not asked for a better start. We will be finally emerging into the front ranks of fast-growing developing countries," Singh said in a speech giving the finishing touches to India's upcoming five-year plan.

A Commission draft paper on the five-year cycle was critical of India's past performance for failing to address the needs of the poor.

"Our growth has not been sufficiently inclusive and failures in this area are significant," the document unveiled at the meeting, attended by economists and government advisors, said.