News: Challenges in achieving India's 8% GDP growth

(BL 01/10/2006) Chennai - Raising agricultural growth and building-up infrastructure are among the main challenges facing the country in achieving eight per cent GDP growth, according to Dr C. Rangarajan, Chairman, Economic Advisory Council to the Prime Minister.

Speaking at the Chamber Day function of the Madras Chamber of Commerce and Industry, Dr Rangarajan said the first challenge was stepping up agricultural growth. The critical problem, he said was low yields and inability by farmers to reap the advantages of markets.

Poor infrastructure

The lack of infrastructure particularly in the power sector is the second challenge. He said that in order to mobilise the necessary resources to build quality infrastructure, there is a need to put in place appropriate legal, regulatory and administrate frameworks.

Dr Rangajrajan said the fiscal consolidation was a pre-requisite for sustained growth. He said in an economy with capital controls where investable savings are limited, fiscal deficits crowd out private investments.

The other challenges are building social infrastructure, managing globalisation and good governance, he said.

R. Raghuttama Rao, Managing Director, ImaCS said one of the key points was to focus on sectoral growth rates, getting a consensus on labour reform and overcoming the human resources crunch.

He said more than 700 million persons would enter the job market in the next 10 years. But a large percentage of the educated youngsters coming into the job market every year, are "unemployable".

Rao said intervention was required at different parts of the human pyramid for creating the required human resources.

The Ambassador of Finland in India, Asko Numminen, who was the chief guest at the Chamber Day function, said bilateral trade between India and Finland was growing. Finnair, the national airline of Finland would start operating a service between New Delhi and Helsinki in October.

He said a number of Finnish companies were upping their investments in India this year.