By Team Mangalorean Udupi

Manipal November 3, 2009: The Deputy Chairman of Planning Commission Montek Singh Ahluwalia said it was now time for India to get on the fast track as global economic slowdown was easing.

Mr Ahluwalia was speaking after inaugurating T A Pai Management Institute (TAPMI) Knowledge Centre near here. He said the country had witnessed nine per cent growth in the economy before the slowdown, testifying to the success of the economic reforms. ''In the first year of the crisis, our growth slowed down to 6.7 per cent in 2008-09.'' ''In the current year 2009-10, we are battling the combined effect of the continuing global slowdown and a truly unusual drought. We expect the growth in the current year will be around 6.5 per cent,'' he added.

Mr Ahluwalia said while this growth is distinctly lower than in the pre-crisis years, it is actually better than what we experienced in the ten years from 1992 to 2002. ''In fact, we have performed much better than most other countries. Indeed, India is the second fastest growing country in the world today after China.'' He stressed there were new challenges to achieve the growth rate.

In this direction, financial sector has to support multi-dimensional economic transformation, hopefully, for next 20 years. This challenge essentially required huge investment by the financial sector in the development of infrastructure like roads, power, telecommunication water and urban infrastructure.

He noted that only 30 per cent of the Indian population lived in urban area which is slow growth. In the coming years, this is going to increase, posing big challenge of making huge investments in urban infrastructure. For this challenge of providing infrastructure to urban and rural municipalities, both the Centre and the State Governments should borrow from financial institutions, he said adding that the country also needs to use the right technology in agriculture so that there is more production with lesser people employed in the sector. People should be pulled out from the agricultural sector and effectively employed in other areas of production, so that country will have more development as agriculture contributes less than 20% to the GDP, he said.

''We hope to do much better in 2010-11 when the world will be on a path to recovery and we will have the beneficial impact of a normal monsoon.'' ''Our growth rate should be back somewhere between seven and eight per cent in 2010-11,'' he said.

He said that country should give priority to infrastructure development and invite investment in various sectors including power, roads and urban infrastructure. Provision of urban infrastructure posed a challenge and the State governments and the urban local bodies had to raise funds for urban infrastructure, he said.

Later speaking at the national seminar on “Next stage of India’s economic growth – redefining role of banking and financial institutions”, organised by TAPMI, the chairperson of Indian Council for Research on International Economic Relations, Dr Isher Judge Ahluwalia opined that country needed to strike a balance between financial openness that supports innovation and growth, while implementing regulations and effective supervision that limit the potential risk of financial excesses.

The past two decades have seen a great deal of financial innovations world over. New financial products, complex derivatives, securitization etc were the ways in which the banks attempted to spread their risks on loans that originated in their balance sheets. Asset price mismatches and irresponsible ratings provided by the credit rating agencies meant that risk rather than being distributed was actually accelerated, she said.

Stating that the recommendations set forth by the Narasimhan Committee in 1991 paved way for economic reforms in the country, she said the Commission's thrust was on capital adequacy and prudential norms for banks in lending.

Those who were present on this occasion included Manipal University Chancellor Dr Ramdass Pai, Pro Chancellor Dr H S Ballal, TAPMI Director Dr Saji Gopinath and others.

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Manipal: India poised to achieve steady growth - Montek Singh Ahluwalia