By- Gaurav Noronha
In order to achieve an annual GDP growth rate of 8%-9%, India must ensure an annual growth rate of above 4% in agriculture, 8% in manufacturing and 9% in servicesNSE -0.29 %, according to economist and former deputy governor of RBI, Rakesh Mohan.
The government must focus on a strong growth policy during this period of deceleration in order to avoid the ‘middle income trap’, he said while presenting his paper titled, ‘Moving India to a New Growth Trajectory’, at a seminar at Brookings India.
Mohan has envisaged a ‘reasonable though ambitious’ path for the Indian government, however, even if such an ambitious growth rate is achieved on a sustained basis, India’s GDP would be $10 trillion by 2035, whereas China’s GDP reached $12.2 trillion in 2017.
One of the major issues identified in the paper is the declining household savings rate. “There has been a dramatic fall in net household financial savings from 11% to 12% of GDP in 2007-08 to around 7% in recent years and I cannot understand it,” he said.
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