Nalco MD Ansuman Das (centre) greets C. Rangarajan (right) while governor SC Jamir looks on at the programme in Bhubaneswar on Monday. Picture by Sanjib Mukherjee

Bhubaneswar, Jan. 6: Chairman of the Economic Advisory Council to the Prime Minister, C. Rangarajan today advocated debate on whether to curtail the subsidies given on various products.

“Subsidies require a second look. If the process of fiscal consolidation is to move along a clear road map, subsidies as a proportion of GDP must be brought down. The subsidies should not be more than 1 per cent of the GDP. While subsidies should be given on food items, Parliament should take a decision on items on which subsidies should be given.”

Speaking on the need to check inflation, he said: “One fact that stands out prominently in the inflation experienced recently in the country is the persistence of food inflation. What we have seen in the last three years is that food inflation had remained high because of the spurt in the prices of one category of food articles or the other. Even in the current year, we are seeing the same phenomenon.”

Delivering the Nalco Foundation Day lecture on “Immediate challenges and medium term concerns” here today, the former governor of the Reserve Bank of India said: “We must provide retail business direct access to farmers. The mandi arrangements at the wholesale level need radical transformation.”

Stating that a number of initiates had been taken to boost the economic growth, Rangarajan said: “India’s trade account has shown improvement. Since August last, India’s exports of goods have shown a sharp rise. In the current fiscal 2013-14, growth may turn out to be modest. The growth rate can be around 5 per cent.”

Expressing concern over the slow growth of the Indian economy, Rangarajan said: “The performance of manufacturing sector was a great disappointment. Non-farm sector growth can however improve in the second half for four reasons.”

The economist said that the government’s effort to liberalise the FDI norms, resolution of some tax issues of concern to industry and fuel subsidy reform, a special emphasis on achieving the prediction and capacity creation targets in key infrastructures such as coal, power roads, railway, efforts to remove bottlenecks in the clearance and implementation of large projects, were likely to bring a positive intervention in the economy.

Urging people to bring a change in their mind-set, Rangarajan said people should not go on a gold-buying spree.

“The gold price in the international market has started sliding. We need to keep the financial assets attractive enough. In fact, keeping the rate of return on financial assets attractive is also necessary from the point of view of preventing gold becoming as an asset of investment,” he said.

Stating that a balance should be struck between developmental agenda and environment, Rangarajan said: “Growth and equity should not be posed as opposing considerations. They must be weaved together to produce a coherent pattern of development.”

Among others governor S.C. Jamir and chairman-cum-managing director of Nalco Ansuman Das also spoke on the occasion.