The Hindu Business Line : Economy growth below true potential: Chidambaram

Ahmedabad March 31 Dispelling notions that the Indian economy may have "overheated", the Union Finance Minister, Mr P Chidambaram, has called for a greater than the average 8.6 per cent growth rate of GDP, saying the country's potential was much higher.

"I am acutely aware that our economy is growing at a rate below its true potential," he told the 42nd Annual Convocation gathering at the Indian Institute of Management-Ahmedabad (IIM-A) here Saturday evening.

Wealth creation

He expressed regret that while India built sound democratic institutions after 1947, the political parties failed to discuss creation of wealth. "I am surprised that few people in authority saw the connection between wealth and well-being or between wealth and welfare." India remained complacent with a moderate 3.5 per cent growth rate for three decades.

Mr Chidambaram asked the new managers to beware of the challenges ahead when the current establishment would become the old establishment. India's true potential can be realised only by ensuring the active participation of nearly half the population, of those who are poor in terms of many human development indicators, in the country's economic growth.

Giving statistics of increased allocations in different programmes of social sector, he said the benefits did not match the funds due to design and governance failures, which now needed to be addressed.

With regard to Sarva Shiksha Abhiyan, the Minister said while relatively backward States such as Orissa and Rajasthan marched ahead successfully, West Bengal, Karnataka and Tamil Nadu lagged behind in reducing the number of drop-outs.

"If Mumbai and Delhi airports can be modernised and upgraded through public-private partnership model, why is there reluctance to adopt the same model for Kolkata and Chennai airports?" he asked.

Compliments China

He lauded China for its "splendid record of implementation, especially in the infrastructure sector", and pursuing the "One Country, Two Systems" policy, as well as a third system for Macao. China's goal is clear: creation of wealth.

"I suspect that in India we have `One country, one system and as many interpretations as there are political parties. The Indian brand of deliberative democracy with innumerable checks and balances has often paralysed decision-making, led us to accept sub-optimal solutions, and ultimately exacted an enormous cost in terms of time and money while implementing a project or programme."

Call to corporates

Emphasising that the disconnect between the citizen and the development programme and the policy failures and governance failures needed to be addressed urgently, he urged the corporate managers to willingly participate as catalysing agents in the process of change, to work as monitors and evaluators at the block and district levels for governmental programmes. "That is the battleground where the war on poverty, ignorance and disease will be won or lost, and we need more selfless foot soldiers on that ground." He also lauded the role played by the late Dr Vikram Sarabhai in establishing the IIM-A.

Dr Vijaypat Singhania, Chairman of the IIM-A's Board of Governors, spoke about the Institute acquiring a brand-equity image globally. He cautioned the students about their responsibilities, too and warned them against getting politicised. "With $140 billion of foreign investment sitting in the Gujarat kitty, talk of Godhra signifies confused thinking, that can easily erode a hard-earned reputation." He also asked the students to draw a "Lakshman Rekha" for themselves that they would never cross.

In his address, the IIM-A Director, Dr Bakul Dholakia, said the Institute has emerged as the first choice of both domestic and foreign recruiters. One of the faculty, Dr Ravindra Dholakia, was recently appointed as an Expert Member on the Sixth Central Pay Commission, the first-ever from any IIM, he added.