High growth rate is possible with growth in manufacturing – Dr. Rakesh Mohan

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Pune, 13 August 2019: Increasing savings and ensuring growth of the manufacturing sector along with high exports is the key to achieving a growth rate of 8 percent per annum, said renowned economist and former Deputy Governor of Reserve Bank of India Dr. Rakesh Mohan.

Dr. Rakesh Mohan was in the city on Tuesday to deliver a lecture on ‘Moving India to a new growth trajectory.’ The event was organised by Pune International Centre. Also present on the occasion were Former non-executive director of Tata Sons Limited, Ishaat Hussain and PIC Honorary Director Prashant Girbane.

Sharing his views, Dr. Rakesh Mohan said, “There is a need to get the focus back on high growth. It must be understood that effective distribution is necessary but we can’t distribute unless we grow. In order to achieve this, it would be crucial to encourage domestic savings, step up tax collection and invest on building the necessary infrastructure.”

Highlighting the issue of stagnation in the manufacturing industry with zero growth seen in exports, Dr. Mohan said, “It can be observed that all countries that sustained high growth rates did so on the back of manufacturing. Hence measures must be taken to push the manufacturing sector with increased investment in research and development. If we are aiming to grow at 8 percent per year the manufacturing sector must grow at 10 percent and manufacturing exports at 12 percent annually.”

Dr. Mohan also emphasised on the government bring in labour reforms to encourage investment in the manufacturing sector.

He spoke of increasing the ratio of savings to Gross Domestic Product(GDP) as among the solutions to raise resources for investment in the infrastructure sector. He added that the government must invest in major areas of infrastructure development such as roads, bridges, ports and rail.

He further stressed on the need to boost the agriculture sector and the need for the government to invest more in areas of primary education and primary healthcare.

Stressing the need for a ‘second green revolution’ Dr. Mohan said that the country’s agriculture is skewed towards cereals but it must be reoriented to cover other areas such as dairy, meat and horticulture. Having efficient cold chain would do away with fluctuation in the prices of perishable goods and make them available round the year, he added.

Dr. Mohan further spoke of the need to restore confidence in the country’s banking and financial services and said that Niti Aayog should be redefined as a guiding light of economic policy and entrusted the responsibility of resource allocation.

Ishaat Hussain too agreed that the government should encourage manufacturing sector and at the same time bring efficiency in public services. He said there is a need to take a goal-driven, managerial approach in the delivery of public service.