08 Oct 2020 20:03 IST

Fiscal deficit could rise up to 14 per cent: Former RBI Governor

Banks have turned risk-averse and this has impacted demand and consumption, said C Rangarajan at ICFAI

Former RBI Governor C Rangarajan, said, “The banking system, which has turned risk averse, needs to start giving credit. The government has to invest more in healthcare, relief activities, and education. The combined fiscal deficit of states and the centre could rise up to 14 per cent, and steps towards pushing demand and expanding production are extremely necessary at this stage,” speaking at the annual doctoral thesis conference organised by the ICFAI Business school.

In his inaugural address at the programme, he told the research scholars that deep understanding of economic theory is important for research studies. Scholars should be clear of what they want to do and the questions they wish to have answered through their research, he added.

The two-day thirteenth Annual Doctoral Thesis Conference organised by the ICFAI Business School, Hyderabad, was around the the topic ‘Economy, Finance, Well Being, and some issues in Methodology.’ The conference, in collaboration with the Indira Gandhi Institute of Development Research (IGIDR), Mumbai, was held virtually because of Covid-19.

Need to create jobs

The inaugural session of the conference had a special address by Prof S Mahendra Dev, Director and Vice Chancellor, Indira Gandhi Institute of Development Research and President of Indian Economic Association. Addressing the researchers and other participants, Prof Dev touched upon the prevailing crisis situation and the crucial role that the financial sector needs to play to tide over the crisis. But, banks facing their own crisis have become risk averse, he emphasised.

Citing the statistics of over a decade, he said that, although poverty has reduced considerably and the participation of women in the workforce has increased, it still calls for eight million jobs annually to completely do away with unemployment. This need could be sufficed through innovative, out-of-the box solutions provided by the private sector and scaling up MSMEs. There are several opportunities coming our way due to development of digital infrastructure and from global value chains that China is set to vacate, he added. As a piece of advice, he asked researchers to focus on addressing the issues of research methodology, and to check if the theories that fit developed countries are applicable in India or not.

Social dialogue

The conference has attracted papers from several leading institutes in the country including IIMs, IITs, NITs, JNU, Delhi School of Economics, IGIDR, and IFMR among others. Of the 145 research papers received from research scholars, working in various fields related to management studies and economics, 105 papers were accepted for presentation after review by an expert committee.

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