Improving efficiency of capital is the key to growth

Our Bureau Chennai | Updated on February 19, 2014 Published on February 19, 2014

C. Rangarajan, Chairman, Economic Advisory Council to the Prime Minister with R. Vaidyanathan (right), Professor of Finance, IIM Bangalore and author of the book ` India Uninc', at the book release event organised by MMA, in Chennai on Wednesday. - Bijoy Ghosh

Whether FDI in retail or balancing needs of small scale and large-scale in manufacturing, the focus should be on improving efficiencies for economic growth, said C Rangarajan, Chairman, Economic Advisory Council to the Prime Minister.

Addressing a function to mark the release of “India Uninc” a book by R Vaidyanathan, Professor of Finance, IIM-Bangalore, which focussed on the contribution of the informal sector to the economy, Rangarajan said productivity and efficiency of capital has to improve for economic growth.

In 2007-08 when the economy grew at 9.5 per cent the investment rate was 38 per cent. But now while the investment rate is at 34 per cent growth is low. This is because efficiency of investment has been hit due to delays and inadequate critical inputs like power and coal, he said addressing the event organised by the Madras Management Association.

Allowing FDI in retail is about bringing in efficiencies in the supply chain and improving market access to the farmers. The wholesale trade needs to be revamped by allowing large-scale retail direct access to farmers to improve farmers’ income and increase efficiency of retail, he said.

Arun Duggal, Chairman, Shriram Capital, said more institutions are needed to focus on credit delivery to the unorganised and small scale businesses. S. Gurumurthy, corporate advisor and columnist, said the small scale and unorganised sector contribute to the major portion of the economy and jobs. But formal financial support is less than five per cent.

Published on February 19, 2014
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