Chennai: Increasing government expenditure and putting it in capital expenditure, addressing sector specific problems and improving the credit system in addition to increasing investment and savings rate will help in addressing the current economic slowdown, said noted economist and former Governor of Reserve Bank of India, C Rangarajan.
Delivering the inaugural address at a two-day international conference on Contemporary Practices of Technology and Management for Economic Growth organised by the VIT Business School at VIT Chennai here Friday, he said that for the economy to grow really fast, the government had to act on savings and investment rates.
Stating that investment rate was the most important factor for driving economic growth, as investment increases productive capacity of economy, he said, “If you want the economy to grow faster, you need to act on savings and investment rates. That is only then you will be able to get a sustained higher rate of growth of the economy.”
If India were to become a high income country, it had to achieve a per capital income of $12,500 and to achieve this, it would require a sustained 9 per cent growth per year for the next 22 years. “This is going to be a daunting task,” he remarked.
He said that India’s per capita today stood at $1,800 and it could reach $3,600 by 2025 while becoming a $5 trillion economy. “Also, please remember that with whatever growth we have achieved so far, 30 per cent of people live below the poverty level. It is only growth which will improve the quality of life of people. Only a faster rate of growth sustained for over two decades will lift country to a higher level and also eliminate poverty,” Rangarajan said.
Speaking on the occasion, VIT vice president G V Selvam said agriculture sector was facing challenges including unpredictable weather, unemployment, migration of rural people, low price for yield and lack of technology and research.
He said the government should focus on enhancing fund allocation for research and on increasing agriculture exports and to reduce the debt burden of farmers.
Over 100 papers are expected to be presented during the course of the two-day international conference. VIT Chennai Pro Vice-Chancellor V S Kanchana Bhaaskaran, VIT Business School dean S K Sudarsanam and Prof R Venkatesh also spoke.