“A major concern confronting the Indian economy relates to the slowdown in growth witnessed in the last five years,” according to C. Rangarajan, former Chairman, Economic Advisory Council to the Prime Minister.

It is true that India’s growth even after slowdown has been one of the highest in the world. Nevertheless, concerns persist because the slowdown in growth has had an even greater impact on employment, he said, while delivering the foundation day lecture of the School of Management Studies, University of Hyderabad, on Thursday.

The former Governor of the RBI and current Chancellor of the University, Rangarajan said job creation happens only when a high growth momentum is maintained. “We have shown that India has the potential to grow at 8 to 9 per cent in a sustained way,” he added.

In his lecture titled ‘On Stepping up India’s Economic Growth’, Rangarajan spoke on the ways to get back to the high growth rate, which, according to him, is based on a new approach that incorporates trends in growth; determinants of growth; increasing incremental capital–output ratio (ICOR); and declining investment rate.

Rangarajan felt, in many ways, the coming decade would be crucial for India. If the growth rate is at 8 to 9 per cent per annum, it is estimated that per capita GDP will increase from the current level of $1,600 to $8,000 by 2030. Then, India will transit from being a low-income to a truly middle-income country.

“We need to overcome the low-growth phase as quickly as possible, as growth is the answer to many of our socio-economic problems. In the recent period, we have launched a number of schemes aimed at broadening the base of growth. These include the employment guarantee scheme, universalisation of education, expansion of rural health, and providing food security”.

However, all these programmes have made a substantial demand on public expenditure. It has been possible to fund them only because of the strong growth that the country has witnessed in recent years. Growth has facilitated raising more resources by the Government.

Development has many dimensions. It has to be inclusive, poverty reducing and environment-friendly. All these elements need to be incorporated in the growth process. Strong and balanced growth will enable the economy to achieve multiple goals, including reducing poverty. India has to follow a two-fold path of accelerating growth and addressing directly, through various schemes, the vulnerable and poor groups.

Investment, as they say, is an act of faith in the future. If there has to be investment resurgence, it is necessary to create the climate that promotes this faith. “We have already outlined the actions that can be taken in the purely economic arena. But ‘animal spirits’ are also influenced by what happens in the polity and society. Avoidance of divisive issues is paramount in this context. Undiluted attention to development is the need of the hour,” the former RBI chief felt.

Appa Rao Podile, Vice-Chancellor, UoH, presided over the function and B. Raja Shekar, Dean, School of Management Studies, gave the welcome address and briefed the guests and audience about the activities of the School.

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