Call for labour-intensive production

CHENNAI JULY 26. Increase in the tax:GDP ratio through better compliance and use of techniques like tax deduction at source (TDS) and enforcement of user charges for non-public goods, especially in urban areas, are vital to raise the growth rate of the economy to more than 8 per cent and find resources for human development, according to Rakesh Mohan, Vice-Chairman of the Infrastructure Development Finance Co (IDFC) and former Adviser to the Union Finance Ministry.

Delivering the 28th Frank Moraes Memorial Lecture under the auspices of the United Writers Association (UWA) and the Frank Moraes Foundation, Dr. Rakesh Mohan also called for restructuring of industry, labour law reform and social security and retraining for workers to encourage labour-intensive production.

Citing the example of Southeast Asian countries, he said large volumes and quality production in labour-intensive and relatively low-technology sectors would impart global competitiveness but this would also require removal of product reservation for small-scale industry, combined with technological and financial support to SSIs.

Expressing concern over the decline in the rate of growth of the economy, including the industry sector, and the rate of public investment and savings since the mid-1990s, Dr. Rakesh Mohan said another priority area of attention should be further liberalisation of agriculture by unshackling the farmer. He called for tailoring of plans and institutional support to suit the changing pattern of food consumption in favour of non-cereals such as vegetables, meat, fruits, eggs and processed foods resulting from rising incomes of families and changing life styles.

This would warrant a review of the pattern of high levels of price support to paddy and wheat whose production far exceeded effective demand because of high prices.

In the area of urban infrastructure, Dr. Rakesh Mohan called for empowerment and professionalisation of local bodies and levy of user charges for services like water and transport consumed by people with higher incomes.

"The new challenge facing the Indian economy is to generate higher economic growth that is much more labour-using in both agriculture and industry than has been the case in the past,'' and greater decentralisation and knowledge-intensity in policy-making, Dr. Rakesh Mohan said. He wanted the resistance to FDI in retailing to be overcome in the interests of farmers and consumers and to generate employment.

The UWA Best Editor Award (2001-02) was presented on the occasion to R. Kalidasan, Editor, Industrial Herald, Chennai, and the UWA Best Banker of the Decade (1990-2000) Award to Ashim Baran De of the Central Bank of India, Kolkata.

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