IGI Logo

Chief Economic Advisor (CEA) V Anantha Nageswaran expressed optimism over India’s economic growth and said that the country’s economy is likely to grow at the rate of 6.5 per cent in the coming decade on the back of the turnaround in financial and investment cycle. He further said going forward, global exports growth volumes may be somewhat tepid in terms of their growth rates due to the kind of uncertainties the world is facing. He said ‘So, I think the restoration of the financial, credit and the investment cycle in the commercial sector and the real estate sector will probably see us growing on an average of six and a half per cent in the coming decade’.

Nageswaran attributed the slowdown in India’s economic growth just before COVID-19 pandemic to the classic financial cycle distress that India went through. He opined ‘If you look at data from 2012 onwards, so basically pre-pandemic period itself, we went through a period of classic financial cycle repair, credit cycle repair, which is what brought down a slowdown in the construction sector, and real estate sector’. According to him, in the second decade of the century, by the time India could start thinking of enjoying the repaired balance sheets, came the pandemic for two years. He said ‘And then came the commodity price shock and later came the interest rate shock in the second half of the 2022’, and added that so naturally, some of these things do induce uncertainty in the minds of private investors and they may be a little bit more cautious than they might have been.

Noting that developing countries including India, definitely need economic growth to finance their energy transition requirements, Nageswaran said without domestic savings, there is no question of adequacy of resources for financing energy transition. On production-linked incentive (PLI) scheme, the CEA said the exit clause is very important for any scheme. The government has announced PLI schemes for 14 sectors, including white goods, textiles and auto components. The objective of the PLI scheme is to make domestic manufacturing globally competitive, create global champions in manufacturing, boost exports and create jobs.