'Raise domsavings to 34 pc for 9 pc growth rate'

New Delhi, Oct 13: India needs to raise its rate of domestic savings to 34 per cent, from the present 30 per cent, to achieve a 9 per cent GDP growth rate, Deputy Chairman of the Planning Commission Montek Singh Ahluwalia said here today.

India also needs a first class financial sector that is decentralised and multi-layered, said Dr Ahluwalia at The Leadership Summit organised by industry body Confederation of Indian Industry (CII).

He said the government can support GDP growth by bridging the massive infrastructure deficit. ''This needs to be done innovatively and will require a massive effort.'' Given the magnitude of the effort required to build infrastructure to reach the 9 per cent GDP growth target, the government has to reinvent itself by building leadership at all levels, he said.

Currently, China saves 40 per cent of the GDP Dr Ahluwalia said adding that this shows we are more efficient than China in the use of capital.

''In the government, people tend to follow what their leaders say rather than displaying individual leadership.'' Individual leadership matters because it energises the entire team. The absence of leadership at the top cannot be substituted by energy from below because then the team loses direction. Business has proved to be flexible and innovative and can do things differently but this has yet to percolate into the government, he said.

Profit, he said, is the trade off between risk and reward.

''Profit is the reward for taking risks and handling uncertainty.'' Leaders are more capable to handling uncertainities and willing to take risks, he said. ''If you want a higher mean outcome, you have to take higher risks.'' Leaders also need to be aware of vested interests and make policies that do not cater to them, he said. Policy formulation has to be done on the assumption that it will create the greatest good for the greatest number, the Deputy Chairman said.

Boston Consulting Group Chairman Arun Maira said the Indian economy and companies are on a good growth trajectory. The competitive advantage of many Indian companies in international business is their access to good value manpower resources in India.

Fortunately, there are many good examples of companies who have made the development of Indian youth in cities and rural areas a core part of their business strategy.

With such strategies they are ensuring that their growth will be sustainable. Many excellent examples of strategies for winning through inclusion were presented at the summit, Mr Maira said.

UNI