Addressing the 96th Annual Convention and Annual General Meeting of FICCI, Dr. V Anantha Nageswaran, Chief Economic Advisor to the Government of India, stated that “India’s growth engine can become faster and accelerate if the much-awaited private capital formation kicks into higher gear.”
Underscoring the significance of robust private investment in driving economic growth amidst global uncertainty and geopolitical shifts, Dr. Nageswaran urged the private sector to embrace uncertainty and proactively invest, stating, “The more the private sector begins to put capital to work, the lesser will be the uncertainty.”
He noted the need for the corporate sector to transition from a phase of balance sheet repair, seen in the aftermath of the global financial crisis, to proactive investment. This shift is crucial for generating employment, driving income growth, and ultimately spurring sustained consumption, which he identified as a consequence, not a cause, of economic growth. The Chief Economic Advisor underscored the government’s role in creating conducive conditions for private investment, citing initiatives such as infrastructure development, ease of doing business improvements, bank recapitalization, and liberalization of foreign direct investment sectors, among others. Reflecting on India’s economic journey, the Chief Economic Advisor spoke about the lessons learned from the financial upheavals of the past two decades. He stressed the importance of distinguishing between euphoria and what he termed “tough optimism.” This approach, according to Dr Nageswaran, involves maintaining a realistic outlook while nurturing positive economic expectations. He highlighted the Reserve Bank of India’s recent measures, such as increasing the risk weights on unsecured personal loans, as an example of prudent financial management aimed at sustaining long-term economic stability. “Optimism should not become the cause for premature triumphalism,” he said.
Addressing a remark by Mr Uday Shankar, Past President of FICCI regarding structural choke points impeding private investments, Dr. Nageshwaran averred, “The choke points should not be seen as structural choke points, but rather as structural challenges or issues. These are being actively addressed and will continue to be a focus area.” He emphasised the ongoing need for infrastructure investment and the refinement of compliance regulations. Dr. Nageshwaran acknowledged progress in simplifying procedures but highlighted the enduring need for further improvements. He stressed the importance of gaining access to critical technologies and raw materials, particularly from the developed world, to facilitate energy transition and reinforce energy security in India.