Speaking virtually at an event organised by the Bengal Chamber of Commerce and Industry (BCCI), Nageswaran said that while the economy will grow at 6.5 per cent in real terms, the nominal rate of growth will be 11 per cent, taking inflation into account.
“The Indian economy is poised to remain the fastest growing in the current financial year with a growth rate of 6.5-7 per cent on a steady state basis. This is a very good achievement in the current global context,” Nageswaran said.
He said that while the world is facing medium-term uncertainties with global trade slowing to a crawl, post-COVID recovery in India is now cemented due to calibrated fiscal and monetary policies pursued by the government.
“Post-COVID recovery in India is cemented due to prudent macro-economic management which laid the foundation of economic growth with stability,” he said.
Nageswaran said that there is no vulnerability in the current account balance of the country with domestic financial markets and the banking system in good health. “The macro indicators signal stability. There has been a massive shift in capital expenditure, declining external debt to GDP ratio and lower retail inflation,” Nageswaran said. He said all of these warrant a credit system upgrade of the country, adding that the supply side capability of the economy has been boosted which also helped in keeping inflation on the leash.
“All these will help maintain a steady growth rate over the next several years. And India needs to find domestic sources of growth,” the CEA said.
The country needs to generate productive employment, ensure food security, ease regulatory bottlenecks for the MSMEs and ensure efficient financial resource allocation, he said.
Nageswaran said the MSME sector is the key to non-farm job creation and small and medium firms need to graduate into large enterprises to absorb more labour.
He said there is also a need for greater participation of women in the workforce for which safety and security in workplaces have to be ensured.
Regarding artificial intelligence (AI), Nageswaran said that it might end up displacing labour.
“An appropriate balance has to be struck between technology and labour keeping the social responsibilities in mind,” he added.