Motivation for growth must be part of development: Rangarajan

Says distribution by itself is no solution at very low levels of per capita income

Chairman of the Prime Minister's Economic Advisory Council C Rangarajan today said motivation for growth must be a part of the development process because distribution by itself is no solution at very low levels of per capita income.

“At our present stage of development, we cannot afford to sacrifice growth. It is key to improving  the living standards of our people," he said while stressing the need to weave equity and growth together to produce a coherent pattern of development.

Delivering the second foundation day lecture on the topic, 'Economic Growth and Social Development-Synergic or Contradictory?' at the Center for Economic and Social Studies (CESS) here , Rangarajan said growth and social development are the two legs on which the country must walk.
 

Citing the impact of higher growth rate on poverty reduction during the period 2004-05 to 2011-12, Rangarajan said had the country initiated reforms in the late 1970s as China did and not in the 1990s, we could have had the benefit of higher growth for an additional decade and a half helping us to overcome the poverty and other related problems.



According to Rangarajan, if India grows at 9 per cent per annum its per capita GDP will increase from the current level of $1,600 to $8,000-$10,000 by 2025. Then the country will become part of the middle income group of countries.

"Without a strong growth, we will not be able to provide employment to the growing number of young people who will join the labour force. Continued strong growth will help to accelerate the declining trend in poverty ratio,” he said. With the population growth rate coming down, a strong growth will mean a substantial growth in the per capita income, according to him.

Responding to a question on when the current low growth period is expected to end, he said the economy had bottomed out in the first half of the current year touching at 4.9 per cent while the second half is expected to see a growth of 5.2 per cent suggesting a much higher growth in coming quarters.