There is a need to raise Gross Fixed Capital Formation (GFCF)from current level of 29 percent to 32 percent of Gross Domestic Product (GDP) achieve higher growth, according to C Rangarajan, Chancellor, ICFAI Foundation for Higher Education (IFHE).

In his adress at the 13th Convocation of IFHE here on Saturday, the former chairman of Economic Advisory Council to the Prime Minister said the ‘first and foremost task’ was to raise growth rate.

“Our calculations show that if we achieve a seven per cent rate of growth continuously over the next two decades or more, India may almost touch the status of a developed economy,” Rangarajan said.

This would require GFCF to be raised from current 29 percent of GDP to 32 to percent, he added. 

“If at the same time, we maintain the ICOR between four and five which is a reflection of efficiency with which we use capital, we can comfortably achieve a seven percent growth,” the economist said.

Stating that India should absorb new technologies, Rangarajan said adding that increased growth rate should result in more employment generation.

“Employment enhancement without growth is not sustainable. That is why we must aim at atleast at a sustained growth of seven percent,” he added.

Describing India being the fifth largest economy in the world as ‘impressive’, Rangarajan, however, noted that it was a ‘different’ story in relation to per capita income and there was still “distance to travel’ .