Dr Manmohan Singh

Our Bureau

New Delhi, Dec. 15 The Prime Minister, Dr Manmohan Singh, on Saturday expressed concern over the rural-urban and inter-regional divide in the country’s growth process and stressed on the need for economic policies that would bridge the imbalances.

Inaugurating the golden jubilee celebrations of the Institute of Economic Growth, Dr Singh said that there was a historical continuity in the pattern of imbalance in regional development.

“We have to move from a situation where people are migrating to where jobs exist to (a situation) where jobs migrate to where people live,” he said.

“Inter regional imbalances in developments have both economic and political causes and consequences,” he said.

Dr Singh said that historically parts of north western, western and southern India have developed faster compared with central, eastern and north eastern India and stressed on the necessity for policy initiatives that would enable the less developed areas to catch up.

Stating that the Central Government has initiated several steps to bridge the regional imbalances, the Prime Minister stressed on the need for the State Governments to play an active role in bridging the regional divide.

“Can the Central Government alone reduce that imbalance if concerned States will not do their bit,” he asked.

On the issue of Government subsidies, the Prime Minister said that there is a need to have a re-look at subsidies that have failed to achieve the objective of reducing inequities.

“We spend far too much money funding subsidies in the name of equity, with neither equity objective nor efficiency objective being met,” he said.

Stressing on the necessity of investments in social and economic infrastructure, Dr Singh said that, “We need policies that will make public investment more productive and encourage private investment. We need rapid expansion of labour-intensive manufacturing industries.”

Dr Singh said that, “The investments we are making in rural infrastructure, rural education and healthcare and in promoting non-farm employment in rural areas should help (but) there is much that the State Governments will have to do in this regard.”

Calling for a “new wave of creative thinking” on developmental issues, Dr Singh said that “moving from one straight jacket into another, from the ideology of State to that of market may also not help.”

Pointing out that the Indian model of “mixed economy” often became a “mixed up economy,” the Prime Minister said that “experiences of that past should not discourage us from once again looking for a new middle path to development that combines the efficiency considerations of market with the equity considerations of a liberal policy.”

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