New Delhi: India’s rapid economic growth has opened the way for the government to invest resources in improving the lives of the disadvantaged, speakers at a panel discussion in the World Economic Forum’s India Economic Summit said on Tuesday.
The implication is that inclusive growth that helps the poor reap a fair share of the growth dividend is a corollary to overall economic expansion.
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The government was urged to do even more by way of economic reform to accelerate growth and create resources that will benefit the poor and rural sections.
Lack of sufficient progress in land, labour and infrastructure reforms “is actually holding back growth”, Pawan Munjal, managing director and chief executive of motorcycle maker Hero Honda Motors Ltd, said at the session.
“If you don’t have enough GDP (gross domestic product) and if you don’t have enough revenues, where do you get the financial resources to be able to look at inclusive growth,” Munjal said.
The United Progressive Alliance government has put inclusive growth that benefits the poor and rural India at the top of its governance agenda and invested heavily in pursuing that goal. India’s economy, which expanded 7.4% in the last fiscal, is forecast to log growth of 8.5% this year.
Investment in social sectors produces a payback in terms of consumption, the session heard. Hari S. Bhartia, managing director of Jubilant Bhartia Group, noted that while urban areas were reeling in the last economic slowdown, consumption in the villages was unaffected.
Other panellists called for public-private partnerships to achieve the objective of inclusive growth.
“It’s not just government’s responsibility, the private sector should also play a role,” said Chanda Kochhar, chief executive of ICICI Bank Ltd.
“I don’t think any one organization, whether it’s private or government, can tackle this issue. It calls for a new model of cooperation between public sector and private sector,” said Dennis Nally, chairman of PricewaterhouseCoopers International Ltd.
Nally said India needs to pay a lot of attention to its infrastructure to achieve inclusive growth, citing a recent survey in which most Indian CEOs said the government should accord top priority to infrastructure development, followed by poverty reduction.
Ajit Gulabchand, chairman of Hindustan Construction Co. Ltd, said the government should address a rapid increase in the migration of rural residents to the cities as well as a “looming water crisis”.
Ellen Kullman, chief executive of DuPont, noted that Indian agriculture was growing by just 2.5%, far slower than the overall economy, warning that it would affect food availability, accelerate migration from rural to urban areas and create additional stresses.
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