Measures to encourage corporate investments are key to restoring non-inflationary economic growth, according to Arvind Virmani, former Chief Economic Advisor.

Increasingly, the Indian economy has been driven by modern sectors which have contributed to the high growth rate.

So corporate investment is important, he said at a panel discussion on the state of the Indian economy at an event “New Ideas for a New India” on the theme ‘economists on the economaze’ organised by the Sastra University and The Hindu .

A range of reforms, including institutional, electoral, judicial and democratic, are needed. Infrastructural policies need to be streamlined to improve efficiencies.

Coal sector should be professionalised and private competition encouraged, productivity of railways and ports have to be improved.

N Ravi, Editor-in-Chief, The Hindu , moderating the panel discussion, said economic growth has dropped from a high rate of over 8 per cent to about 5 per cent. The challenge will be to restore the growth rate.

Ajit Ranade, President and Chief Economist, Aditya Birla Group, said addressing inflation and the underlying corruption will be the biggest challenge for the Government.

While there are concerns about the stagnation in manufacturing sector and industrial growth in the last couple of years, tackling corruption should be the priority of the new Government, he felt.

Industrial clusters S Gurumurthy, corporate advisor and political commentator, said the economic policies need to be tailored to Indian conditions rather than emulate the West.

But the wave of globalisation since 1991 and economic policies have not supported the domestic small and medium industries and local entrepreneurs.

It is the local industrial clusters and entrepreneurs – over 43 million non-farm enterprises, 75 per cent of them unregistered – that have contributed to over a 100 million jobs.

India-centric But policies are geared to the stock exchange-listed companies that contribute a minor fraction of the GDP. “India centric thinking for economic development” is needed to support growth, he said.

Rathin Roy, Director, National Institute of Public Finance and Policy, said State Governments have largely consolidated their finances.

The Central Government faces the challenge of cutting down on expenditure to bring down the fiscal deficit.

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