Chief Economic Advisor (CEA) Anantha Nageswaran on December 12 voiced confidence that the Indian economy will grow in the range of 6.5 to 7 percent this fiscal, even though it had slowed down to 5.4 percent in the second quarter, prompting most experts to lower their estimates.
Nageswaran attributed the deceleration in GDP growth to factors that could either be temporary or indicative of deeper issues. “We are on track for robust growth, but enduring global uncertainties pose significant challenges that will shape the trend growth in the years ahead,” he said at the Global Economic Policy Forum 2024, organised by the Ministry of Finance and the Confederation of Indian Industry (CII).
Local Efforts to Fight Global Challenges
Nageswaran stressed on the need to double down on domestic efforts to tackle the global uncertainties. He highlighted the importance of innovation, wage growth, and quality consciousness in driving sustainable economic growth. “We must focus on making ‘Made in India’ synonymous with quality and R&D. Without growth, there are no resources to invest in climate change management,” he said.
Global disruptions, such as the renewable energy transition in Europe, were cited as cautionary tales. “The spike in energy costs has eroded European industrial competitiveness. We must manage our energy transition carefully to avoid sacrificing economic growth in the name of sustainability.”
Capital Formation and Private Capex
India’s capital formation as a share of the GDP is expected will rise from 30.8 percent to 35 percent over the next five years, with the private sector increasingly deploying funds, said the economic advisor.
"Private capital investment will be critical in sustaining our economic growth momentum," he said.
Job Creation and MSME Growth
Nageswaran said India needs to generate eight million jobs annually for the next 10-12 years to meet the rising demand. He stressed the need for MSMEs to shed their fear of growth and transform across scales — from micro to small, from small to medium, and from medium to large enterprises. “Deregulation and threshold-based concessions should be linked to economic activity, not rigid metrics, to encourage growth,” he said.
He also critiqued historical policies for MSMEs, stating that they have often stifled growth by keeping enterprises small. “Our policies have robbed MSMEs of the mindset and incentives to grow. We must remove this fear of growth and enable them to thrive,” he asserted.
Agriculture, Climate, and Energy Security
Agriculture remains a key focus area, with Nageswaran advocating for a shift away from cereals to high-value crops to boost exports. “Policy emphasis must make agriculture productive and resilient while ensuring water security and tailoring incentives appropriately,” he noted.
Balancing economic aspirations with climate change management remains a significant overhang, pointed out the chief economic advisor. “The agenda of emission mitigation must align with our growth priorities. Without growth, we can’t secure resources for climate investments.”
A Vision for Viksit Bharat
Nageswaran painted an optimistic long-term vision for India, predicting a significant rise in per capita income from Rs 2 lakh in FY23 to Rs 14.9 lakh by FY47. With a consistent GDP growth of 6-6.5 percent over the next decade, coupled with robust exports, India is on course to achieve its economic aspirations, he said.
“Employment generation, MSME growth, innovation, and energy transition done wisely will be the drivers that will propel us towards Viksit Bharat.”
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