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`Country may face crisis if inflation is not checked'

Special Correspondent

There is an imbalance in economic growth, says economist



C. T. Kurien

BANGALORE: Eminent economist C.T. Kurien on Saturday cautioned that a high growth rate on its own would not help alleviate poverty or ensure the development of all sections of society.

"A high growth rate without inclusive measures generates not only millionaires, but also beggars," he said while delivering a talk on "Inclusive Growth and Budget-2007" organised by the Bangalore Initiative for Religious Dialogue here.

"A high growth rate increases the levels of income of those at the top. But that is not inclusive development as that is not of any help to other sections of society," he observed.

Achieving inclusive growth was not all that easy as the generation of huge incomes at the top-level would always have a tendency towards exclusion of people at the lower level from the development process, he cautioned. Union Finance Minister P. Chidambaram had lost an opportunity in the budget to increase corporate taxes to raise resources for the development of other sections.

The present situation in which the country had registered a high growth rate was conducive for such a measure in his budget, Mr. Kurien said.

He cautioned that the country might face an economic crisis in the course of time if no steps were taken to check the high inflation, an offshoot of high growth rate.

At present, there was an imbalance in economic growth.

While 55 per cent of the growth was from the service sector, the agricultural sector which accounted for 55 per cent of the total workforce in the country, contributed only 20 per cent to the growth. The growth in the service sector was mainly due to the high salaries in the private sector. Hence, the important question was whether it `would be possible to sustain the high salaries on a long-term basis, he noted.

Expressing concern that a majority of the poor people in the rural areas were landless, he argued that the country should have taken steps to ensure the availability of land to them. China had taken such steps, he added.

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