The Hindu Business Line : 'Public policy framework vital for productive employment'

The RBI Governor, Dr Y.V. Reddy, releasing the souvenir at the 88th annual meeting of the Indian Economic Association, which began in Andhra University on Tuesday in Visakhapatnam. Also seen are Prof T.S. Papola (second from left), President of the IEA, and Dr K.C. Reddy (extreme right), Chairman of the AP State Council for Higher Education. — C.V. Subrahmanyam

Visakhapatnam , Dec. 27

INDIA is blessed with a young workforce, which can contribute to its economic growth in the next 50 years, but it may turn into a disadvantage without a proper public policy framework, according to Dr Y.V Reddy, Governor, Reserve Bank of India.

He made the observation at the inaugural session of the 88th annual conference of the Indian Economic Association, which began in the Andhra University here on Tuesday. The conference will continue on Wednesday and Thursday.

Dr Reddy said, "A large young workforce in India is often described as a demographic dividend but we must recognise that the so-called demographic dividend may turn into a demographic nightmare if we do not ensure adequate level of productive employment through an appropriate public policy framework.''

Stressing the need for improving productivity, he said information and communication technology could be used to achieve the end.

"Otherwise, we will have IT whizkids in Hyderabad and Bangalore working for the growth of banking sector in the West. Such tools have to be used purposefully,'' he said.

Referring to the banking sector, he said in the post-liberalisation phase the sector had functioned exceedingly well in India. "In fact, after reforms in many economies, banking is considered the soft underbelly of the economy, but it does not apply to India.''

Dr Reddy said Indian economy was both stable and efficient. "I do not subscribe to the view voiced by some economists that India sacrifices efficiency to stability. We are achieving 7 per cent growth at the investment rate of 22-24 per cent, whereas in China the investment rate is 40 per cent and the growth rate nine per cent. Indian economy is not contributing to global imbalances,'' he said.

On the role of the RBI, he said the central bank would play its role in keeping down inflation and ensuring stable, equitable development of the economy.

Prof T.S. Papola, Chairman of the Indian Economic Association and the Director of the Institute for Studies in Industrial Development, said there should not be excessive euphoria over the growth of the services sector in India.

"I do not want to belittle the services sector, but we should not delude ourselves into thinking that because of the remarkable growth of the sector we have already become a post-industrial economy. Even now, manufacturing matters. We should not neglect the industrial sector,'' he said.

Prof. L. Venugopala Reddy, Vice-Chancellor of the Andhra University, Prof. K.C. Reddy, Chairman of the AP State Council for Higher Education, and several others spoke at the conference.