Need for better development indices: FM

Insisting that the construction of the Human Development Index...

Insisting that the construction of the Human Development Index (HDI) has broadened the notion of progress from being growth-centric to become development-centric, minister of finance P Chidambaram has said that the search for even better indices for development should continue.

“There is no trade-off between economic growth and social goods. It has been validated by the new growth theory models which now model technical change as an endogenous variable,” he said at Partnership Summit 2008.

He said growth is an imperative, because with growth there is a chance for equity, however without growth there is no such chance.

Story continues below this ad

“High growth has helped the government bring down the fiscal deficit to 3.3 per cent of GDP, but it is still a bit above the standardised 3 per cent figure — a figure the Maastricht Treaty obliges every EU member to have. Also, we’ll wipe out revenue deficit by 2008-09, but deficit as such can’t be eliminated as it has adverse growth implications,” Chidambaram said.

Stating that the leading drivers of growth are consumption and investment, he averred that India has all the ingredients of keeping itself on a high growth path given the savings rate of 33 per cent of GDP and the investment rate of greater than 35 per cent of GDP.

Chidambaram said the US sub-prime crisis will not affect India’s growth prospects significantly, as India’s export basket is not over-concentrated in favour of the US.

“If the US economy goes into recession, India will also have to share the effects,” he argued. With respect to the SEZ policy, he declined to answer any question.