CHENNAI: Former governor of RBI Dr C. Rangarajan on Friday called for the Centre considerably stepping up capital expenditure to counter the falling investments in the Indian economy and also ensured credit actually flowed from the banking system to industry in a bid to reverse the economic slowdown.
"If you want the economy to grow faster, you need to act on savings and investment rates. Only then you will be able to get a sustained higher rate of growth of the economy," he said inaugurating a two-day international conference on 'Contemporary Practices of Technology and Management for Economic Growth', organised by the VIT Business School at VIT, Chennai.
Agreeing with the view that government needs to increase expenditure, Dr Rangarajan, now chairman of Madras School of Economics, said it has to be a nuanced approach, with the increased expenditure being put into investments.
For the economy to grow really fast, Dr Rangarajan urged government had to act on savings and investment rates. The savings rate had now come down to 30.50 per cent against 34.60 per cent in 2011-12, while the investment rate has shrunk from 34.30 per cent in 2011-12 to 28.60 per cent in 2017-18, he pointed out.
Turning to sector-wise issues, he said the credit system, comprising both banks and NBFCs', should be put on a better footing. "Otherwise, unless the credit flows from the banking system, you will not be able to push up the economy," he said.
On "lot of talk" these days of India becoming a US dollar five trillion economy by 2025, Dr Rangarajan said even if achieved India would still remain a 'Low Middle Income' country as our population would have touched 1.40 billion by 2025. To actually become a 'high income country', a sustained nine per cent annual growth rate would be required for the next 22 years, the eminent economist opined. He also lauded VIT for organising this important meet on a critical economic issue.
Mr. G. V. Selvam, vice-president VIT, in his address, explained the challenges faced by the agriculture sector. Over 120 papers are expected to be presented at the two-day seminar.
