Say experts at ‘Connexions’, IIM-Ahmedabad’s PGPX programme.
At a time when the Indian economy struggles to control increasing food inflation - last reported at 12.21% -- experts gathered at Indian Institute of Management, Ahmedabad (IIM-A) felt that tolerating the high level of inflation for long could hinder India’s growth engine.
Professionals at IIM-A’s Post Graduate Programme for Executives (PGPX)’s Connexions-2011, felt that at this point, sustaining India’s high growth at least for three decades is the key to making a difference in people’s lives in India.
And sustaining India’s growth is the only means to increasing income levels and pulling millions out of poverty in the country, they stated, on the second day of Connexions-2011 on Saturday.
Talking about the ‘Sustaining India’s Growth Momentum’, economist with JP Morgan Sajid Chinoy said that for sustainable growth what is required is more investment driven than consumption driven growth.
In an interesting observation, he also pointed out that India’s growth till 2007-08 was investment driven which was sustainable, but it became consumption driven later. One of the reasons for the consumption driven growth is also the National Rural Employment Guarantee Act (NREGA) which has boosted people’s income in rural areas where they now have meal two times a day, unlike in the past. Because of this, consumption has gone up but productivity has not increased, he said while emphasising that NREGA is a very good scheme and has done a lot of good to people in India.
“There is a need to jump start investment to boost the economy, reduce output gaps and control inflation,” he said. Talking about some of the challenges facing India, P Mukherjee, president, Axis Bank, said that persistent fiscal deficit, impending infrastructure deficit and skill shortage were major bottlenecks to sustained growth. However, he said that urbanisation will not only be growth driven but also deepen connections like remittances and food supply chain. “Share of urban town in GDP in 1990 was around 46% and 54% from rural. By 2030 it is expected to reach 69% from urban areas,” he said.
“Yet balanced consumption and savings is likely to make India’s growth more stable, shielded from global stocks. Scale of funds required for sustainable growth is enormous. The financial sector will have to grow to supply the funds,” he stated.
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