Poorer States are catching up with the richer ones. But the process of convergence of growth rates is yet to happen, a top policymaker has said.
For convergence to happen, all the States need to grow at a much higher pace, C. Rangarajan, Chairman of the Prime Minister’s Economic Advisory Council, said here on Monday.
Rangarajan stressed the need to push the reform agenda further to improve the investment rate in the economy. “For investments to come, sentiment should pick up”, he said at a satellite session of the Delhi Economic Summit 2012. The satellite session on the State of Tamil Nadu was organised by the Finance Ministry, the Southern India Chamber of Commerce and Industry (SICCI) and Madras School of Economics.
Rangarajan also stressed the need for implementing projects efficiently, stating that it was not enough to just improve the investment rate. He said the savings and investment rates in the economy had come down.
Earlier, Jawahar Vadivelu, President, SICCI, said India was losing its appeal as a low-cost production base.
“That by itself would not necessarily be bad, if it were accompanied by an increase in productivity, or if it had moved up the order for higher value-added production.
But the point is that costs have risen significantly, regardless of productivity gains, thus rendering business uncompetitive or vastly reducing margins,” he said.