India's economy was growing below its potential as a large number of poor people were not participating in the growth process, Finance Minister P Chidambaram said on Sunday.
"I am proud that we have achieved an average growth rate of 8.6 per cent during the past three years. At the same time, I am acutely aware that our economy is growing at a rate below its true potential," Chidambaram said at the convocation ceremony of the Indian Institute of Management.
"There are many reasons, but the most important appears to be that nearly one-half of the people of the country do not fully participate in the growth process due to lack of education, skills, jobs, capital or opportunity," he said.
"They are poor, not only in terms of income poverty but also in terms of many human development indicators." Chidambaram noted that India could emulate some smaller and poorer countries in its neighbourhood that have surged forward.
"Some of them have wiped out abject poverty, for instance Malaysia and Thailand," he said.
Some have become middle-income countries like South Korea while others like Sri Lanka have achieved remarkable progress in literacy, life expectancy and other human development indicators, he said.
Chidambaram said India, after independence, failed to encourage the creation of wealth. "Wealth creation, especially through private enterprise, was viewed with suspicion and sometimes even contempt," he remarked.