Sounding optimistic about the economy bouncing back in the coming months, former RBI Governor C Rangarajan today said the economy needs to "pick up very fast" to be able to maintain a healthy annual growth.
The government needs to take quick measures to push the growth, he said.
"In some ways, one can say the economy has bottomed out.
Because, for two quarters it has remained at 5.7 per cent.
"Therefore, the glitches of GST may be over. Some of the effects of demonetisation would also be neutralised with the new currency coming in. Therefore, it could pick up. But, it needs to pick up very fast," Rangarajan told PTI here on the sidelines of an event.
The economy needs to grow at 7 per cent in three quarters even to have a growth rate of 6.5 per cent for the year as a whole, the eminent economist said.
"Because, the rate of growth of 5.6 per cent in the first quarter, even to get 6.5 per cent for the year as a whole, the economy needs to grow at seven per cent in the three quarters.
Therefore, the growth rate has to pick up much faster," he said.
The government needs to take quick action for the economy to pick up "really fast", Rangarajan said.
He suggested revival of "all viable stalled projects", recapitalisation of banks and removal of impediments in the way of higher corporate investment to give a push to the economy.
"One immediate thing that needs to be done is to recapitalise the banks as quickly as possible to enable them to lend more. For example, the disinvestment amount can be increased and the amount collected could be so to say reinvested in the banking system," Rangarajan said.
The government should meet industry bodies in small groups to find out the impediments that have come in the way of higher level of investment and try to remove them, he said.