Good governance is essential for ensuring that we get full benefits of the various policy interventions, C. Rangarajan, Chairman, Economic Advisory Council to the Prime Minister, said on Saturday.
It is the quality of governance that separates success and failure in economic development, Dr. Rangarajan said while delivering the Rajaji Memorial Endowment Lecture on ‘Challenges before the Indian economy,' at National College here.
Good governance needs at all levels administrative systems that are efficient, effective and accountable, he observed. Research has showed that per capita incomes and the quality of governance were strongly correlated, indicating a virtuous circle, in which good governance results in economic development.
Vast differences had been noticed across states in development outcomes from out of the same mix of development policies. These differences arose because of differences in governance even as they adopt similar policy packages, Dr. Rangarajan observed.
“We need ideas and capacity to turn those ideas into policies and programmes. We need boldness and a sense of purpose to implement policies and programmes. Ideas, policies and execution form the triad of good governance.”
Stating that the new economic policy had not necessarily diminished the role of State, he said it had only redefined it, expanding it in some areas and reducing it in some others.
There was nothing in the new economic policy that took away the role of the State or the public sector in the system.
Economic growth in the five year period from 2005-06 to 2009-10, despite the crisis-affected year of 2008-09, was at an average of 8.51 per cent.
This clearly represented acceleration in the pace of growth and marked a distinct break from any previous five year period.
By any standards, the Indian economy was able to protect itself reasonably well in the turbulent conditions of the financial crisis, Dr. Rangarajan pointed out.
Revitalise agriculture
Calling for steps to revitalise traditional crop agriculture, he said this was vital for food security and farm income. Since 60 per cent of the population depended on agriculture, maintaining an annual growth rate of four per cent in agriculture and allied activities had become imperative.
Encouraging more private investment in power generation; devising an active as opposed to an indicative plan for creating power capacity and developing more natural gas and nuclear energy based power plants are some of the important steps which could be implemented to address shortage of electric power, he said.
