He reiterated that real economic growth this fiscal year will remain in the 6.5-7% range, as projected in the Economic Survey, despite the deceleration in the September quarter to 5.4%. The CEA was speaking at CII’s Global Economic Policy Forum.
Nageswaran said while the increase in the capital formation ratio since the pandemic is largely driven by the public sector, the private sector, too, has started to invest – something that will be more discernible in the coming years.
He underscored the need for doubling down efforts to pull all the domestic growth levers. India, he said, has to navigate a much tougher external environment to sustain high growth rates unlike during 2003-08 when the economy, even with much greater imperfections, expanded at 8-9% annually, riding the global boom. “(Moreover) the agenda of emission mitigation is also a huge overhang on developing countries in terms of balancing their economic aspirations and climate change management,” he said.
Review of support to MSMEs
Nageswaran called for a review of the incentive structure for micro, small and medium enterprises (MSMEs). The support needs to be tied to economic activity as a percentage of GDP rather than to any absolute number like turnover of entities, etc set in the distant past. This could encourage smaller units to grow bigger instead of limiting themselves to a certain size threshold set in a different era to keep getting official incentives. “So, the threshold should not become tyrannical in terms of holding back (their) growth, and that is what I think governments across the country – both union and state – have to focus on,” he said.Harnessing digital dataNageswaran said thanks to the robust digital public infrastructure, India is generating a lot of data, which–if harnessed properly–could add at least 0.5 percentage point to its potential GDP growth. He highlighted the need for greater focus on agriculture not just for food security but for exports and strategic advantage, given that a robust expansion of manufacturing and services would be challenging in a tougher global environment. The country needs to move away from excessive focus on water-guzzling cereals and ensure water security.