'Creating more job opportunities in services can spur growth to 8%'

Business

The finance ministry's chief economic adviser Raghuram Rajan on Friday called greater employment opportunities in the services sector as one of the steps to regain 8 per cent economic growth.

In contrast to commerce and industry minister Anand Sharma's call for boosting manufacturing sector to create more jobs, Rajan said, "We create too few jobs in services and instead focus on manufacturing sector jobs and that too largely low skill jobs."

Stressing that the government is 'well aware' that it needs to take further measures to prop up growth, Rajan termed the CSO estimate of 5 per cent growth rate for this fiscal 'below potential' and also questioned the data.

"There has been a lot of debate on the GDP data. One of the problem with the CSO estimate is that it is based on past data, and at turning points in GDP growth. Looking at past data underestimates change," he said at a symposium organised by Citi-MIT Sloan.

As part of his policy prescription to revive growth, Rajan said the government must work at fiscal consolidation as well. "We need to fix the fiscal deficit. We can't keep running large fiscal deficit and borrowing to finance it," he said.

Finance minister P Chidambaram has said the government will stick to the fiscal deficit target of 5.3 per cent of the GDP in 2012-13 and has also undertaken a number of expenditure control measures.

With fiscal consolidation, government expenditure declines and savings increase that helps reduce the need to borrow from overseas, Rajan said.

'Opportunities for corruption have increased due to better growth'

Raghuram Rajan, chief economic adviser to the finance ministry, on Friday refuted concerns over rising corruption and said that a higher growth trajectory has opened up more opportunities for corruption.

"I don't think we have become more corrupt. It is just that the opportunities for corruption have increased due to better growth," said, Rajan.

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