Bengaluru: C. Rangarajan, former governor of the Reserve Bank of India (RBI), on Wednesday said that a slowing investment rate was the reason behind a dip in the country’s growth rate.
“In 2007-08, where the economy was growing at 8%, the investment rate was 38% of GDP but today it is 27%. It is the decline in investment rate that has led to the decline in growth rate," he said.
India’s GDP growth slumped to 5.7% in the June quarter, the slowest pace in three years. The slump underlined the uncertainty associated with the roll out of the goods and services tax (GST) and demonetisation among other factors.
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Rangarajan said that speedy implementation of stalled projects, smoothening credit flow and intimate discussions with people would help boost the growth rate.
He pointed out that the growth rate under the Manmohan Singh-led United Progressive Alliance government from 2004-14 was around 8%.
Ranagarajan and former prime minister Manmohan Singh were in Bengaluru to inaugurate the Dr B.R. Ambedkar School of Economics. Developed by the Karnataka government with an investment of Rs200 crore, the institute commenced its first academic year with 50 students.
Singh said the process of finding economic and social equity was still incomplete and fresh thinking was needed in these sectors.
“I hope the scholars coming out of this school will help in a new design for cohesive and inclusive growth," he said.
The educational institute is part of the Siddaramaiah government’s efforts to invoke Ambedkar in social schemes and appeal to the backward classes—his main support base.
“This premier institution will not only promote research and training in the field of theoretical and applied economics, along with other relevant subjects of social sciences, but also provide abundant opportunities for budding economists to take up research activities at a higher plateau," Siddaramaiah said.