Indian economy needs to grow fast to enhance the per capita income of the country, said the Reserve Bank of India’s former governor C Rangarajan on Saturday. Addressing the 13th convocation of the ICFAI Foundation for Higher Education, Rangarajan lauded India for becoming the fifth largest economy in the world but said this is not enough and work needs to be done to increase the per capita income of the country. 


The former governor noted in his address that after the Covid-19 pandemic and the Russia-Ukraine war, India’s future development requires laying down a clear roadmap, and increasing the growth rate has to be given priority. 


Commenting on India’s per capita income, he said, “In 2020, India’s rank with respect to per capita income was 142 out of 197 countries. This only shows the distance we have to travel…   All the same, we have no choice but to grow fast, given the present level of per capita income.”


Rangarajan noted that if India manages to achieve a growth rate of seven per cent over the next two decades, it would almost reach the status of a developed country and make a significant change to the levels of the economy. 


“India needs to absorb the new technologies that have emerged and that will emerge and skilled manpower which is consistent with this development though the new technologies may lower the employment elasticity with respect to output. Employment must come out of increased growth. Employment enhancement without growth is not sustainable. That is why we must aim at least at a sustained growth of 7 per cent,” the former chairman of the Prime Minister’s Economic Advisory Council said. 


Rangarajan also pointed out that the development strategy needs to be multidimensional and the country requires strong export and manufacturing sectors. He called growth without equity ‘not sustainable’. 


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