New Delhi: Reserve Bank Governor D Subbarao today said a growth rate of 5-6 percent is not sufficient for the economy, which has the potential to grow at double digit rate provided some issues are addressed.
"If we do the right things, we can get back on the track of the double digit growth," he said at the IIT Kanpur Alumni meet here. Pointing out some of the long-term challenges for the growth, Subbarao said there is a need for stable and predictable macroeconomic environment, removal of infrastructure deficit, skill improvement and job creation.
He said there is also need for raising agriculture productivity, and improvement of social sector outcome.
"We are quite happy that India is growing at 5-6 percent, but I must tell you that is not sufficient. That is much less than our potential ... unless we grow at 9-10 percent year on year for about 10 years we cannot pull 100s ofmillions of people out of poverty," he said.
"India consists of the largest number of poor people in the world. India has more poor people than the entire economy of South Africa," Subbarao, who is also an alumnus of IIT Kanpur, added.
Citing examples from the past, he said Indian economy grew by 9.5 per cent on an average three years before the global crisis of 2008.
"But today, the story has reversed, growth is moderating. This year we are going to grow at 5 percent (2012-13), which is the lowest in a decade. Inflation is still high and stubborn. Balance of payments is under stress.
Decline in investments is a worry. Investments not taking place today, that's a worry," he said. "So people worry whether we have got derailed from the high growth trajectory. My short answer to all those questions is that the India story is still intact and India's growth story is still credible," he said. The long-run drivers of India's growth story is still intact, he added.
However, growth slipped to a decade low of 4.5 percent in the third quarter of the current fiscal. As per the CSO estimates, the economy is expected to grow at 5 percent for the entire fiscal, against 6.2 percent in 2011-12 and 9.3 percent a year before that.
The latest Economic Survey released last week said Indian economy is likely grow at a rate of 6.1 to 6.7 percent in the next fiscal claiming that the downturn is more or less over and economy is looking up.