Buoyed by the improved second quarter GDP numbers, Niti Aayog Vice Chairman Arvind Panagariya today said the economy will grow over 8 per cent this fiscal.
In the first half of the current fiscal, the GDP growth stood at around 7.2 per cent and is expected to cross the 8 per cent-mark in 2015-16, Panagariya said.
Helped by a pick up in manufacturing, the country’s GDP witnessed a growth of 7.4 per cent in July-September, to become the fastest growing major economy.
The Indian economy grew at an average 8.3 per cent rate during the 2003-14 period, and in 2014-15, the growth was 7.3 per cent, he said while addressing the students at Malviya National Institute of Technology (MNIT) here.
The Niti Aayog Vice Chairman further said that only four countries Singapore, South Korea, Taiwan and China have a growth rate in the range of 8 to 10 per cent.
Panagariya also stressed on the need to have an improved growth rate in sectors such as agriculture and services.
On overall economic growth in the country, he cited the role of five critical factors such as growth of merchandise exports, improved manufacturing and services sectors, shifting of workers from agriculture to industries and services, better wages for eliminating abject poverty and rapid urbanisation.
Terming the Niti Aayog’s role as a facilitator, Panagariya said the dissolution of the Planning Commission and the formation of Niti Aayog yielded good results, and its policies are in the right direction.
On the agriculture sector, he said, “According to the 2011-12 data, the share of agriculture in employment is 49 per cent while that in the GDP is 15 per cent.”
“The best agriculture has done over a ten-year period is 4.7 per cent during 1980s, and both industries and services have been growing faster (8 to 10 per cent) in the last decade,” he said.
“Therefore, the share of agriculture will only decline in the future, and no fast growing economy has ever been able to reverse the trend,” Panagariya added.
India needs to create a large number of jobs in industry and services to absorb agriculture workers who wish to migrate to other sectors, he added.
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Panagariya further said the country cannot fight against the poverty without progress, and for that a rapid economic is required.
On whether the 7th Pay Commission report would benefit the poor, he said the recommendations will “definitely benefit government employees but for poor there are a number of central schemes” like MGNREGA, Public Distribution System and social programmes.
A hike in pay scale was necessary otherwise talent would be leaving the government sector, he added.
On a query regarding the progress in rural versus urban areas, he said the villages have made progress and one should compare the status of today with 25 years ago. “We are making progress every where,” Panagariya added.
He further said that Prime Minister Narendra Modi has given highest priority to the agriculture sector by launching schemes like “PM Krishi Unnat Yojna”.
But the state governments have got a vital role to play for the success of such programmes to yield better agricultural produce, he added.
The Niti Aayog Vice-Chairman emphasized on evolving the National Agriculture Marketing and implementing required upgradation and modernisation tools for the benefit of farmers, besides developing better storage facilities.
He hailed the Modi government for launching various public welfare schemes and using Aadhar card in eliminating ghost accounts, thus saving a huge amount of money of the exchequer.
On the performance of large corporates in the country, Panagariya said, India’s experience corroborates the importance of large firms. In the auto sector, large firms emerged after liberalisation and the segment has done well.
This is also broadly true for engineering goods, pharmaceutical, telecom and software sectors; but large firms have not emerged in sufficient numbers in the leather sector and electronics, he added.
In apparel sector, large firms are missing in India but they abound in China. However, in the auto space, the Indian industry more closely resembles with China in firm size, he said.
“The single most important key to the success of the Chinese marketing is an echo growth of large firms and large scale manufacturing”, he said.
Advocating for research in universities than in private research councils, Panagariya said teaching and research should go together. He said, “We were sceptical of private universities, but in the last ten years there is mushrooming of private universities in India.”
“India has fallen behind China in the list of 100 top institutes, but in 200 top institutions, IIT Bombay and Indian Institute of Science have figured recently,” he said.