New Delhi: Chief economic advisor V. Anantha Nageswaran on Tuesday urged the private sector to keep investing, hire more, and compensate fairly, stressing that the next 20 years will be very different from the past 80 years and that public policy alone can’t carry the economy.
India needs to “raise its game” on multiple fronts, he said, calling on private companies to bolster their research and development spending.
“(Government) policy will play its part, but policy can’t be the only instrument that drives the economy forward,” Nageswaran said at a special session with Assocham, the industry body said in a statement.
At the same time, the government would “continue to remain growth supportive, maintain macroeconomic stability and pursue deregulation and ease of doing business both for small and large enterprises”, he said.
Continued private-sector investments remain the key to sustaining India’s elevated economic growth, as the external environment remains uncertain and public investments cannot be raised beyond a point given resource limitations.
Investments in the economy jumped 11.9% in the June quarter from a year before. The strong growth, experts said, indicates an improvement in private investment on top of strong public investment.
The government started boosting its capital spending in a big way in the immediate aftermath of the pandemic to partly make up for subdued private investment at the time and support economic growth.
Economy remains resilient
The Indian economy is more “likely to be resilient rather than becoming more vulnerable”, even though the West Asia flare-up and geopolitical uncertainties have pushed up global oil prices beyond $105 per barrel and pressured global bond yields over the past week, Nageswaran told industry leaders at Assocham’s managing committee meeting.
He cited robust bank credit growth, strong goods and services tax (GST) mop-up and healthy corporate and banking sector balance sheets to suggest the economy remains on a strong footing. The 10-year US Treasury yield recently breached the psychological 5% mark.
The latest escalation of hostilities and rising interest rates after the relative calm between March and July have stoked fresh volatility in the global economic landscape, he acknowledged, but added that India entered this phase of global uncertainty from a position of strength.
India’s latest credit rating upgrade to A- by a Japanese agency and big mobilization of $137 billion through foreign exchange deposit swaps and external commercial borrowings, on top of good performances by high-frequency indicators, such as vehicle sales, e-way bill generation and export growth, as evidence of sustained economic .
“This is a period of churn, and this is an inflexion point, and therefore what served us very well in the first 45 years since independence and then the next 30 years in the liberalization era, both of these things may not necessarily be adequate for the next 25 years,” Nageswaran said.
He also called on individuals and households to consider their mental, physical, and emotional well-being. As artificial intelligence reshapes employment patterns, the youth need to upskill themselves.
Indian model of AI
According to Nageswaran, India can’t just simply emulate the hyperscale, capital-intensive AI model pursued elsewhere. “We have to find ways in which we use AI to complement rather than displace labour, because we are a large country,” he said, according to the Assocham statement.
“For countries that are ageing, demographically, AI could be a blessing. But for India, it has to be made into a blessing; it won’t happen easily,” he said.
Against such a backdrop, the Indian corporate sector has to be “very imaginative and sensitive”, he said. India’s free trade agreements with the UK and the European Union offer opportunities for labour-intensive export sectors. The rupee depreciation against the dollar was already visible in strong export performance over the first four months of this fiscal year.
“(Government) Policy will play its part but policy can’t be the only instrument that drives the economy forward,” Nageswaran said at a special session with Assocham, the industry body said in a statement. At the same time, the government would “continue to remain growth supportive, maintain macroeconomic stability and pursue deregulation and ease of doing business both for small and large enterprises,” he said.
Continued private sector investments remain the key to sustaining India’s elevated economic growth, as the external environment remains uncertain and public investments can’t be raised beyond a point given the resource limitation.
Investments in the economy jumped 11.9% in the June quarter from a year before. The strong growth, experts said, indicates improvement in private investments on top of strong public investments.
The government started boosting its capital spending in a big way in the immediate aftermath of the pandemic to partly make up for subdued private investments then and support economic growth.
Economy remains resilient
The Indian economy is more “likely to be resilient rather than becoming more vulnerable”, even though the West Asia flare-up and geopolitical uncertainties have pushed up global oil prices beyond $105 per barrel and pressured global bond yields over the past week, Nageswaran told industry leaders at Assocham’s managing committee meeting.
He cited robust bank credit growth, strong goods and services tax mop-up and healthy corporate and banking sector balance sheets to suggest the economy remains on a strong footing. The 10-year US treasury yield recently breached the psychological 5% mark.
The latest escalation of hostilities and rising interest rates after relative calm between March and July have stoked fresh volatility in the global economic scenario, he acknowledged, but added India entered this phase of global uncertainty from a position of strength.
India’s latest credit rating upgrade to A- rating by a Japanese agency and big mobilisation of $137 billion through foreign exchange deposit swaps and external commercial borrowings, on top of good performances by high-frequency indicators, such as vehicle sales, e-way bill generation and export growth, as evidence of sustained economic .
“This is a period of churn and this is an inflection point, and therefore what served us very well in the first 45 years since independence and then the next 30 years in the liberalisation era, both of these things may not necessarily be adequate for the next 25 years,” Nageswaran said.
He also called on individuals and households to think about their mental, physical and emotional wellbeing. As artificial intelligence reshapes employment patterns, the youth should need to upskill themselves.
Indian model of AI
According to Nageswaran, India can’t just simply emulate the hyperscale, capital-intensive AI model pursued elsewhere. “We have to find ways in which we use AI to complement rather than displace labour, because we are a large country,” he said, as per the Assocham statement.
“For countries that are ageing, demographically AI could be a blessing. But for India, it has to be made into a blessing it won’t happen easily,” he said.
Against such a backdrop, the Indian corporate sector has to be “very imaginative and sensitive”, he said. India’s free trade agreements with the UK and the EU offer opportunities for labour-intensive export sectors. The rupee depreciation against the dollar was already visible in strong export performance over the first four months of this fiscal year.