Raise savings and investment rates for growth, says former RBI chief

Former RBI Governor C Rangarajan today suggested that India must improve savings and investment rates for sustained growth.

"India is currently going through a phase of slow growth......a speedy completion of projects will result in the pick-up in the growth even in the short run. However for sustained high growth we must raise the savings and investment rates," Rangarajan said at the convocation ceremony of the Indian Statistical Institute (ISI) here.

The former chairman of the Prime Minister's Economic Advisory Council warned that the country needs to overcome the low growth phase as quickly as possible because growth is the answer to many of our social and economical problems.

In many ways, he said, the current decade or the coming decade will be crucial for India.

"If India grows at 8-9% per annum, it is estimated that the per capita GDP will increase from the current level of $1,600 to $8000-$10,000 by 2025 then only India will translate from being a low-income country to a middle income country," Rangarajan said.

On various government schemes aimed at expanding the base of growth and provide social safety nets like employment guarantee scheme, universalisation of education, extension of rural health and providing food security, he said all these programmes have made a substantial demand on public expenditure.

"It has been possible to fund these programmes only because of the strong growth we have seen in the recent years.

Growth has facilitated more resources for the government," he said.