New Delhi : Policies in South Asian countries need to create congenial climate for attracting new private investment, with public sector taking the lead in areas that can create large positive externalities, such as infrastructure, education, and health, Reserve Bank of India Governor Shaktikanta Das said.
Speaking on raising productivity during a conference held by the International Monetary Fund, Reserve Bank of India Governor Shaktikanta Das on Friday said while sustained and broad-based economic recovery remains the current policy focus, it is necessary to undertake deep structural reforms to raise the potential growth trajectories of the economies in the South Asian region.
In this context, the Governor highlighted some specific areas of policy on priority. "First, undertaking desirable structural change would require an improvement in resource allocation - moving production from low productive sectors to high productive sectors and promotion of innovation," he said.
Second, the Governor mentioned skill mismatches - a major constraint to resource reallocation - which would warrant policy focus on education and skill upgradation. He said this was particularly important to the South Asian region, as the favourable demography of the region would require that production processes must be labour-intensive while being globally competitive.
"Third, while free trade and foreign direct investment (FDI) have been conventionally congenial for diffusion of technology and augmentation of productivity," the region's investment on research and development must also increase from the current low levels, and the policy environment for scientific research and startups must be made more rewarding.
Fourth, he added that investment in physical infrastructure -- energy, transportation, and telecommunication -- which are prime drivers of productivity growth would have to be enhanced.
The Governor also highlighted that infrastructure in the contemporary world of digital revolution would also include digital infrastructure -- data centres, cellular towers and fibre connectivity, with an emphasis on scalability and resilience. He said fintech, e-commerce, edtech, healthtech and foodtech were the new age growth propellers and these needed quality internet connectivity and reliable digital payments.