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The Prime Minister's economic advisory panel today said the country's GDP would grow over 9 per cent if there is a ratio of 4:1 of the incremental capital to output. "If we attain an incremental capital to output ratio of 4:1, India's GDP will easily grow over 9 per cent," Prime Minister's Economic Advisory Council chairman C Rangarajan said at an event organised by the Skoch Foundation here.Rangarajan also said GDP will grow by around 8.5 per cent in the current fiscal. "The economy can comfortably grow at 9 per cent, provided the savings rate is 36-37 per cent and the capital-output ratio sustains around 4 per cent," Rangarajan said. According to Rangarajan, India is facing two challenges in attaining its rate of growth. The first challenge could be agriculture where it needs to grow at four per cent for regional development, better food security and reduction in poverty. Second, infrastructure is one of the major challenges too — especially the power sector. "We have underachieved our targets in capacity addition in the first three years of the 11th Plan. Another 50,000 MW addition in the next two years is a steep target but there is no reason why we should not do it," he said.Rangarajan said poverty can be addressed better only if we clock a higher GDP growth rate. Incremental growth is the key to uplift the poor, especially those who are below the poverty line, he said.
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