Former RBI Governor C Rangarajan today said the government would have to step up public investment to boost growth to the desired level.
“Public investments by the government will have to pick up. Only this will stimulate private investments and generate demand in the economy,” Rangarajan told reporters on the sidelines of Indian Statistical Institute convocation here.
Rangarajan, who was the Chairman of Prime Minister’s Economic Council during the UPA regime, said that external demand is subdued due to various reasons.
“For this, there is a need to generate internal demand which will stimulate growth. Once government investments rise, private investments will automatically follow”, he said.
Rangarajan said for India to graduate from a low income country to a middle income country, the country’s GDP growth would have to rise.
“There is a need to overcome the phase of low growth. If India grows by nine per cent till 2025, this will be possible”, he said.
He however said that India’s present performance in the overall global situation was a matter of pride.