MUMBAI, Aug 15: The role of the central bank will increase as the economy becomes increasingly complex and competitive, said the Reserve Bank of India Governor, C Rangarajan here on Friday.

"While the ratios of savings and investment in the economy have shown considerable increase, effective use of capital has remained a serious problem," he said.

Speaking at the Independence day celebrations at the RBI headquarters, Rangarajan said the incidence of poverty in the country is still very large and it is estimated that the proportion of people living below the poverty line in 1997-98 was above 35 per cent.

Rangarajan said the country had come a long way from the crisis years of 1990 and 1991. The foreign currency assets of the RBI today exceed $26 billion. The foreign currency assets including gold amount to $30 billion. "The savings rate has shown a rise and the external sector is very much under control," said Rangarajan.

He said during the period beginning 1950, the gross domestic product of the country grew at an average annual rate of 4.3 per cent. As the population grew more or less at the rate of 2.16 per cent per annum, the per capita GDP increased at an annual rate of 2.1 per cent which had the effect of more than doubling the per capita income over the period.

"We have moved from the status of a dependent country struck at periodical intervals by famine and shortages to that of an independent nation with a high degree of stability," said Rangarajan.

The food grain output which stood at 50 million tonnes in 1950-51 rose to 198 million tonnes in 1996-97 and the contribution of industry to national income has also increased perceptibly.

"The growth of the economy is also reflected in a fairly substantial expansion in educational and health facilities," he added. The literacy rate has gone up from 18.3 per cent in 1951 to 52 per cent as per the census of 1991. Since public health facilities have widened, the expectation of life at birth has increased from 32 to 61 years.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.