New Delhi India
Investments in human capital enhance productivity while improvement in productivity creates jobs, Chief Economic Advisor Krishnamurthy Subramanian said on Tuesday.
“We need to be working on enabling more cutting-edge research outlets,” he said while speaking at the FICCI ARISE Conference 2019 — Future Ready Learners and Schools. “The reforms that you see today are an articulation of a cogent vision that has private investments at its heart,” Subramanian added.
“In India, a lot of investments are funded by banks. However, investments by the private sector are key for sustained growth.”
But India’s investment rate has come down from a peak of 39 per cent of the GDP to about 28 per cent now, he said. On the other hand, China’s investment rate has been 48 per cent of the GDP to grow its economy.
“To achieve the vision of becoming a five trillion dollar economy in the next five years, India needs to grow at 5 per cent for at least two decades,” he said.
Subramanian said corporate tax rate cuts are not necessarily a sufficient condition for attracting investments as investors look for after-tax returns.