EAC-PM member highlights need of more efforts to increase India's economic growthDevdiscourse News Desk | New Delhi | Updated: 17-05-2019 18:23 IST | Created: 17-05-2019 18:06 IST
India needs to make all efforts to reach 'double-digit' growth and should not treat 7 per cent expansion as the 'new normal', Economic Advisory Council to the Prime Minister (EAC-PM) member Shamika Ravi said Friday. Ravi also refuted the contention of her EAC-PM colleague Rathin Roy that India could fall into the middle-income trap -- a term used by the World Bank to refer to nations that get stuck at a middle level of economic development as they attempt to grow rich.
"But emphasis now needs to be on how do we get back with the vision to that double-digit growth. "The new normal of 7 per cent or perhaps weakening further because of the global trends cannot be the new normal for a country with per capita income that we do have," Ravi said at an event organised by Brookings India.
The Central Statistics Office (CSO) had in February revised downwards the growth estimate for 2018-19 fiscal from 7.2 per cent to 7 per cent -- the lowest in five years. Ravi also asserted that there needs to be the reinforcement of mechanisms through which India can continue to aspire for double-digit growth.
She maintained that India is unlikely to fall into the middle-income trap. "I don't think India can afford that (middle-income trap). I don't think India is going to fall into the middle-income trap like Brazil or South Africa," the EAC-PM member opined.
Recently, EAC-PM member Rathin Roy had said the Indian economy is heading for a structural slowdown. "The economy since 1991 has been growing not on the basis of exports... but on the basis of what the top 100 million of the Indian population wants to consume. Those 100 million or 10 crore Indian consumers who were powering India's growth story have started to plateau out.
"It means, in short, we will not be South Korea. We will not be China. We will be Brazil. We will be South Africa. We will be a middle-income country with large numbers of people in poverty seeing rising crimes," Roy had said. The concept of the middle-income trap was first put forward by the World Bank in a 2006 report on the development of East Asian economies.
The theory states that in many middle-income economies, growth slows and nations are unable to generate further economic momentum and grow rich. Ravi also noted that India should not lose fiscal discipline which it maintained during the last five years of the Narendra Modi government.
The eminent economist also pointed out that states which are ranked high in ease of doing business have a low unemployment rate compared to the all-India average. "It's important to realise that the recipe for job creation will also eventually come through entrepreneurship. The government cannot be the final provider of jobs," she said.
Ravi also stressed on the need to improve the fundamental quality of India's data systems.