Panaji, Jun 23 (UNI) India could sustain its rapid economic growth only if the authorities take the right proactive policy decisions, says Dr M Govinda Rao, member of Economic Advisory Council to the Prime Minister.
''We are passing through an explosive situation, following the oil crisis. Our rapid economic growth of 9 per cent could be sustained and the demographic dividends attained, if our government takes appropriate policy decisions to avoid deceleration of the economy,'' Dr Rao, who is also director of National Institute of Public Finance and Policy, New Delhi, said.
He was delivering a lecture on ''Emerging issues in the Indian Economy'', as part of the Goa Dialogues project, initiated by the International Centre Goa and the Asian Dialogue Society here.
The initiative was to promote and strengthen peace, stability, freedom, independence and sustainable development in Asia and the world through dialogue, interaction and mutual cooperation among civilisations.
The inflation in India now could have been higher than 11 per cent, while it was a little lesser in China as against 25 per cent in Vietnam, the economist said.
''Don't blame the commodities market, which sends signals about the demand of the commodities, but blame the speculators and initiate action against them through ''stable and not ad hoc policies,'' Dr Rao said.
The policy should be such that it should encourage private investment in education, health and infrastructure in a big way as India will have a majority of employable youth by the year 2035.
This ''potential youth force'' could turn into a real ''productive force'' if they were given proper education, skills and opportunities through advance planning and investment, besides bidding goodbye to the licence or permit raj, Dr Rao said.
Terming the growth as ''impressive'', he said the country's potential should be further exploited through proper policy decisions without resorting to adhocism under political pressure of the coalition partners.
Services sector alone accounted for 70 per cent of the growth factor as against 25 per cent by manufacturing sector and five per cent of agriculture sector.
But the growth had become ''lopsided'' with lower agriculture productivity, despite sharp decline in poverty and lesser volatility in the growth over the years, the expert said.
The private investment alone accounted for 36 per cent of the GDP even as India's share in the world trade had touched one per cent of exports and three per cent of imports now, as against 0.5 per cent before the liberalistion, he said.
The private sector, which is on an acquisition spree abroad, has indicated the high level of confidence in its abilities adding to the growth of Indian economy over the years.
A clear pro-active, not reactive, policy framework and encouragement to micro-economic management in the globalsed economy alone could sustain the sharp growth of the Indian economy, which has still not rid of Rs one lakh crore fertiliser subsidy and Rs 2.40 lakh crore oil susidy per annum, he said.
All this expenditure, including successive pay revisions and loan waiver programmes, besides electricity transmission and distribution losses, which comprised 6.5 per cent of the GDP, while the fiscal deficit also accounted for the same figure, leaving a heavy burden on economy, Dr Rao said.
''We could have avoided the pinch from the oil crisis had the government immediately increased the prices of petroleum products long ago with a bold face, while incentivising the cultivation of biofuel crops like Jatropa in a big way, besides sensitising the public on the use of the alternative fuels,'' the expert said.
Citing an example of China, he said it used ''economic diplomacy'' in Africa to buy oil fields in lieu of developing rail infrastructure at a time when even the United Nations, with members of the OPEC countries in its body, failed to do anything to contain the crude oil prices, he added.
The Goa legislative assembly Speaker and the International Centre, Goa president Pratapsinh Rane and the Centre's vice president Dr V A Pai Panandiker were in the chair.
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