Economist C Rangarajan bats for resurgent investment climate

BENGALURU: Renowned economist and former governor of RBI C Rangarajan on Wednesday said there is serious concern of private investments going down, pulling the economy growth rate with it. With the news of the growth rate at 5.7 per cent, and much concern about it with even prime minister Narendra Modi trying to defend the drop, Rangarajan said there is a need for conducive investment climate in India.
“It is often said that investments is an act of faith in the future. For the resurgence of investments, we need to create a conducive climate which is also the result of not only economic factors but also non-economic factors,” he said.
In the city to deliver the keynote address on the inauguration of the academic season of Dr B R Ambedkar school of economics, Rangarajan said: “What has really happened is that the level of investment rate has dropped. Just look at it, when the economy growth rate was at 9.4 per cent in 2007-08, the investment rate of the economy was at 38 per cent of the GDP. Today, as per the latest estimates, it is at 27.4 per cent of the GDP. It is this drop in the ivestment rate that is the cause of much of the problem in the decline of the growth rate and also increased the unefficient use of capital investments,” he said.
Rangarajan said the union government however needs to augment the private investments by taking several concrete measures. “While the public investment is doing alright, the private investment is coming down. The focus should be on how to augment the private investment,” he said.
Rangarajan said the government needs to make efforts towards completing all stalled or started projects are completed in quick time. He said the government also needs to have an “intimate” discussion with the industrialists to understand the impediments for investments.
Rangarajan said the government must also ensure that banks are quickly recapitalised to ensure that the financial institutions start to lend money by providing more than what has been allocated in the budget.
Former economic advisor to the prime minister Manmohan Singh and former RBI governor, C Rangarajan on Wednesday said that the NDA regime’s goods and service tax (GST) was an important step forward in trying to reform the economy. He even dismissed the much publicised glitches in the implementation of the GST as part of the process, which will eventually stabalise.
“I think GST is an important step forward in the reform side of things for the economy. The glitches which is being spoken about is always going to be there as it is a massive measure of reform which is being introduced. But once these glitches and other things are over, the economy will start to grow,” he said.
Former prime minister and noted economist Dr Manmohan Singh on Wednesday steered clear of commenting on the dropping economic growth rate, but mentioned that the economic liberalisation process which began during his tenure in 1991-96 and then between 2004-2014.
Speaking at the inaugural academic session for the Dr B R Ambedkar school of economics (BASE), Singh said: “The economic liberalisation I was associated with was, above all, a process of opening up new opportunities for people far long without social and economic privilege. I must confess, the process is still incomplete. There needs a lot of fresh thinking in reforming the social and economic policies to direct at a growth in the economy and contain the economic inequality and work in tacitly to reduce it.”