8% growth needed for a $5-trillion economy: Ex-RBI governor

: To become a USD five- trillion economy in the next five years, the country should grow at eight per cent per annum and it requires a clear roadmap, former RBI governor C Rangarajan said here Friday.

Speaking at the ninth convocation of Icfai Foundation for Higher Education, he said though investments are the key drivers of economic growth, policymakers must try hard to create the right climate for investments.

The major task of the country is to move as fast as it can to achieve a higher standard of living. The goal is to make the economy a USD 5-trillion one in the next few years," he said.

This requires a growth of 8 per cent per annum and a clear roadmap, he said.

Prime Minister Narendra Modi recently said the union budget for 2019-20 lays down a roadmap for nearly doubling the size of the Indian economy to USD 5 trillion in five years by raising per capita income, boosting consumption and increasing productivity.

"Investment is the key driver of economic growth. There are limits to which public investment can grow as the demand for welfare expenditure keeps increasing," Rangarajan said.

Private investment by companies both small and large have a bigger burden to bear. Policymakers must try hard to create the right climate for investments to come, he said.

On the draft new education policy 2019 released recently, he said it recognises the need for improving quality of higher education though the question is whether this improvement could be achieved by the various changes proposed by the new draft.

According to him, though the "multidisciplinary liberal education approach" is well taken, it should not be pushed too far and it "it is going too far to abolish all specialised institutions such as IITs and IIMs.

The state universities and colleges suffer from lack of funds and recruitment procedures for faculty in general were far from satisfactory, the former RBI governor said.

"To seek faculty autonomy is good. But we need to get faculty of requisite quality. The only way we can alter the quality of higher education is by changing the examination system," he said.

The new education policy calls for the need to wean students away from learning by rote, which can be achieved only if the assessment system changes and questions the test analytical abilities more than memory, he added.