To have an inclusive growth government should address three major issues -- inflation, fiscal consolidation and current account deficit, says C Rangarajan, chairman of the Prime Minister's Economic Advisory Council.
Speaking at the 14th PoleStar Awards organised by Polaris on Wednesday at Chennai, he said that issues related to agriculture and infrastructure sectors also need to be addressed.
"We must make sure that the agriculture sector grows by atleast 4% every year and we must ensure basket of goods produced by the sector change according to demand," said Rangarajan.
Indian economy currently going through tough phase. Growth is slow, inflation and deficits are high.
Rangarajan said deficit must reduce to 3% of GDP over the next five years and we must aim at current account deficit of 2.5% of GDP. We must also attempt to get subsidies down to 2% from 2.5% of GDP, he added.
"Government has shown seriousness in ensuring fiscal consolidation," he said.
From 2005-06, India's GDP has grown at 8% and one must not overlook the adverse impact of the global economy. The 1991 crisis was used as an opportunity to bring changes in the financial policy, he said.
"Government is evolving mechanism for speedier decision on investments," said Rangarajan.
One of the main sectors that needs to be focussed on is the power sector, Rangarajan added.
What China adds in one year, we are adding in five years and the concerns related to the sector including coal linkages, environment concerns, land issues need to be addressed, he said.
To bring back India's GDP to around 8-9% level, these issues need to be addressed and this inturn will increase the per capita income to $8,000-9,000 by 2025 from the current $1,600. This will enable India to become a middle income country from low income one, he said.
While stating the slowdown in investments and savings has led to the slowdown in overall GDP growth, he said it is important for the government to boost investor sentiment to put India back on the growth journey.
To a question on the recent FDI in retail issue, Rangarajan said the government has had wide ranging consultations and has taken care to see FDI doesn't affect small retailers.
