The Hindu : Tamil Nadu / Chennai News : RBI Deputy Governor lists areas for reforms

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Friday, Jun 24, 2011
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Tamil Nadu

Tamil Nadu - Chennai

RBI Deputy Governor lists areas for reforms

Special Correspondent

Subir Gokarn

CHENNAI: Reserve Bank of India Deputy Governor Subir Gokarn on Thursday outlined food, human capital, infrastructure and financial sector development as critical area for reforms to achieve sustainable growth.

Addressing the 175th Annual General Meeting of the Madras Chamber of Commerce and Industry (MCCI), he said, “This is not intended to be an exhaustive list…I have chosen my list based on my understanding and knowledge of them and not because I believe they are decisively more important than others that have been excluded. Nor am I claiming to offer panaceas by way of reform ideas.”

Dr. Gokarn said that the policies and strategies for sustainable growth have to be welfare-oriented; they must give due consideration to risks and have pragmatic ‘whatever works' approach.

On food inflation, he said “The enduring solution to the persistent demand-supply imbalances in food is to increase supply rapidly. Production of relevant items has to be increased, mostly by increasing productivity. Cultivation risk has to be mitigated for farmers to find these products more attractive. Transportation, storage and distribution efficiency has to be increased to keep losses and distribution margins down.”

Noting that the Centre had taken the first step by setting up the National Mission on Protein Supplements, he said that the need of the hour was to come out quickly with a concrete action plan.

According to him, infrastructure problem has two dimensions – sectoral and geographic. Significant progress had been made in the areas of sectoral imbalances. Over a period of time, policy clarity has been achieved and appropriate regulatory structures have been or are being put into place, he said.

Mentioning that between 2020 and 2030, India would take over the mantle of ‘factory of world' from China, he said that basic concern was the quality of workforce and called for providing vocational and job-oriented training to equip workers to function effectively.

Talking about the financial sector, he said penetration of insurance, pension and other long-term savings instruments were extremely low as households kept the money at homes or in bank accounts. Last-mile delivery mechanism has to be developed to take these products to a vast pool of new customers.

Monsoon

Later talking to reporters, he said that the forecast of below normal monsoon rains would not pose too much threat to food inflation so long as the central part of the country received close to normal rains.

“The central part is where there is lot of concentration of pulses and cereals. If rainfall in that part of the country remains close to normal, I do not think there will be any pressure. RBI is keeping a close watch on cereals, oilseeds and pulses. However, it is too early to speculate on the impact of the monsoon on food inflation,” he said.

MCCI president T. T. Srinivasaraghavan said that they are setting up Rs.6.50 crore skill development centre in Thiruvallur district.

Soft launch would take place by August-end and in the first two years, it would train about 3,500 workers.

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