At a time when many forces that might affect the economy are at play, Reserve Bank Deputy Governor M. D. Patra has advocated for a multi-pronged policy response to rekindle and maintain productivity and growth.
In order to foster a competitive innovation ecosystem, the policy response must be driven by deepening technological capital, long-term investment in research and development, skill development through sustained educational attainments and training, and strengthening of the physical infrastructure, according to him.
In his opening remarks at the Sixth Asia KLEMS Conference on Sunday in Lonavala, he said that Emerging Markets and Developing Economies (EMDEs) must take use of the services sector’s potential to spur productivity development.
In order to work with the private sector on this quest, he suggested investing in ICT infrastructure, achieving a decrease in trade costs including those related to shipping, logistics, and regulation, as well as supporting business-enabling changes.
Additionally, he said, increasing the number of employees in the labour market, particularly women and older people, might increase productivity. However, doing so would need expenditures in workability, retraining, and the learning of new skills in step with evolving technology.
Citing the OECD, he said that digitalization will be a crucial driver of future productivity development because it would allow for the quick dissemination and replication of concepts, informational products, and business procedures at close to zero marginal cost.
According to him, increasing and easing access to financing for small and medium-sized businesses, particularly in EMDEs, might lead to productivity spikes.
Given their responsibilities for macroeconomic and financial stability, central banks are participants in this endeavour, he added.
