Reserve Bank of India Governor, Bimal Jalan said on Thursday that inefficiencies in the Indian system, low return on resource and its wastage were the main deterrent to a greater than 6 per cent growth, contrary to popular belief that government policies were the culprit.
Jalan also said public sector reforms was possible without hurting the interest of the employees and the government needs to take a firm view on the issue.
"The critical issue was the choice of reforms with social justice," Jalan stated in a formal speech at the Indian Chamber of Commerce.
The Governor hinted on the possibility of a better fiscal management by the government and speeding up the process of procedural reforms.
The real deterrent was general societal acceptance of wastage and low productivity in the economy. Jalan however also said that there were a number of policies that supported inefficiencies in the system.
"This will require us to change our acceptance of low productivity in the name of public services, for a policy doing good to a section of people almost necessarily harms another larger group of people," he added.
Focusing on the positive points Jalan said, Indian economy has emerged more resistant to external and internal shocks despite inefficiencies.
With years, sources of comparative advantage has also changed and potential of growth has also increased.
To achieve the potential, corporate and individuals need to take a stake in India's growth, and a greater effort in improving efficiency, said the Governor.
Jalan also reiterated the point that increased infrastructure investment both from the government as well as the corporate sector was required and it was high time they took a decision in this regard.
"We need to get into the act of bringing down costs, decreasing delays to make ourselves world competitive and stop tolerating inefficiencies," Jalan said.
On the issue of greater autonomy and deregulation Jalan said, corporate governance policies of corporate leaves a lot to be desired and accountability was also an issue. "We cannot have deregulation without responsibility," he added.
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