6% growth not enough given India's poverty level: Subbarao

RBI to announce growth estimates for FY14 on May 3

The Reserve Bank of India (RBI) will announce its economic growth estimates for the current financial year (2013-14) on May 3, when it announces its annual monetary policy, RBI governor D Subbarao said here today.

"Various investment banks and think tanks have projected the growth numbers for this year at slightly higher than last year's growth rate of five per cent. Many international governors have told me that India's growth rate would be about six per cent this year. We have not yet made our projections. We will announce them on May 3," he said.

He was speaking on "India's Macroeconomic Challenges - Some RBI Perspectives", organised by the Federation of Karnataka Chambers of Commerce and Industry (FKCCI).

He added even six per cent growth was not sufficient and the country should aspire for higher numbers at eight -nine per cent or even a double-digit growth, "though it was not possible to achieve it next year".

"For a country, which by whatever estimates, has at least 300 million people below poverty line, a six per cent growth is just not enough."

We need to grow at eight per cent or nine per cent and indeed a double-digit growth year on year for the next 10 years in order to bring those hundreds of millions of people above the poverty line," he said.

He further added it would not be possible to achieve 10 per cent growth immediately in the next year. "I am not suggesting that we are going to grow at 10 per cent next year. It is not possible. But we must aspire for that," he said.

"For a long time, we have seen our East Asian tigers such as Hong Kong, Singapore, Korea and Taiwan growing at eight - nine per cent and 10 per cent. We were quite dismissive saying they were small economies and India is a large economy and it cannot grow at that high rate. But China has demonstrated it emphatically, consistently for the last 15 years that a large economy can grow year-on-year at above 10 per cent and that is both a challenge and an opportunity for India. We need to grow at a faster pace in the next 10 years," Subbarao said.

India's long-term growth drivers are intact like demographic dividend, young population, the capacity levels and the rising productivity levels that can lead it on a high growth rate, he said.

"India growth story is intact. But India growth story is not inevitable. If we don't do right things in the right time, we will squander an opportunity. It is very important we think through all the short term and medium term challenges so that we exploit the potential of this country," Subbarao added.