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Manufacturing growth not consistent with India’s overall GDP growth figures: Mohan

26 Jun 2019 Evaluate

Former RBI deputy governor Rakesh Mohan has said that manufacturing growth is not consistent with India’s overall Gross Domestic Product (GDP) growth figures. He noted that the country cannot grow at 8 percent without manufacturing sector posting 10 percent growth. He also pointed out that import of capital goods as well as growth in production of capital goods is zero.

Mohan has observed that in early 1950, the focus was on manufacturing growth, which seems to have been lost now. He said no country has grown fast, without high growth in manufacturing. His statement assumes importance in the wake controversy generated by former Chief Economic Advisor Arvind Subramania after he wrote in a research paper that the country’s economic growth rate has been overestimated by around 2.5 percentage points between 2011-12 and 2016-17 due to a change in methodology for calculating GDP.

Noting that India's tax-GDP ratio is low as against to other emerging market economies, Former RBI deputy governor said that tax cut is the worst idea. He also said that countries like China, Taiwan and South Korea had focused on promoting large industries. He felt that concentrating on MSME was India's biggest mistake.

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