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Unproductive investments will hurt growth: Economist
NEW DELHI, JAN 9 (IANS):
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Published on 9 Jan. 2011 11:44 PM IST
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Increased unproductive investments in real estate and gold will hurt India’s economic growth in the long run as it blocks a large amount of capital, a senior economist said Sunday.
“Gold and real estate are two popular investments in India. A large amount of capital is blocked in gold. Generally it is kept in bank lockers and has no productive use,” Gautam Ahuja, chairperson of corporate strategy and international business group at the University of Michigan Business School, said here.
He said a large amount of investment in real estate is also locked in because people are scared of renting it out.
“Real estate is a productive investment. But we see many people just buy it and lock in. This is unfortunate for countries like India where millions of people don’t have shelter,” Ahuja pointed out.
Speaking at the C.K. Prahalad memorial lecture at the 9th Pravasi Bharatiya Divas here, the economist called for a broad-based and deep rooted rule of law to ensure that these locked in capital are put to productive use.
Ahuja said the much talked-about concept of “jugad” (quick-fix) will also hurt India in the long-run.
“Jugad is no friend to India. What is effective in the short-term may become a problem in the long-run,” he added.

 
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