Prime Minister’s Economic Advisory Council Chairman C. Rangarajan, on Monday, called up States to work in the direction of increasing the saving and investment rate to enable them to catch up in growth terms with their peers.
Addressing the Delhi Economics conclave satellite session on the topic ‘Accelerating growth,’ with special emphasis on Tamil Nadu, Dr. Rangarajan said States, which were in the lower rung in growth parameters, had caught up with the fast-growing ones. “But the process of convergence, which is equalling growth of the States in the bottom level to that of the ones which experienced higher level of growth, has not taken place. The stress should be to push the laggard States to achieve convergence in growth at a faster pace,” he said. The satellite session was organised by the Ministry of Finance, Southern India Chamber of Commerce and Industry (SICCI) and Madras School of Economics.
Specifically, referring to the growth imperatives of Tamil Nadu, Dr. Rangarajan opined that steady supply of electricity and availability of water was critical for the further growth of the State. He suggested quick actions to make available these critical inputs.
Speaking at the meeting Raghuram G. Rajan, Chief Economic Advisor to the Finance Ministry, echoed the views of Dr. Rangarajan and said that the disparities arose mainly on account of the sectoral imbalances. While the services sector in India witnessed runaway growth, manufacturing growth flattened and agricultural growth declined. Even then, there was less migration of people from rural areas to urban centres.
He stressed the need for increasing the tempo of manufacturing growth to absorb the backlog of unemployed and to meet the employment requirements of those who would join the workforce in future. Dr. Rajan also underscored the need for skill development, enhancing the level of education and strengthening the scope and range of partnership between the government and industry to take the growth parameters into the next level.
Stressing on the need for timely finance in the right quantum to small enterprises, he wanted the concept of local area banks to be revisited. Also, the number of steps that were required for clearing a project could be reduced. Jawahar Vadivelu, President, SICCI, said that India was loosing its appeal as a low-cost production base. “That by itself would not be necessarily 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 significantly risen regardless of productivity gains, thus rendering business uncompetitive or vastly reducing their margins,” he added.
K.R. Shaunmugham, Director, Madras School of Economics, flag-marked some of the economic impediments being faced by Tamil Nadu and suggested ameliorative measures for overcoming them in the spirit of partnership between the public and private sector.