India to Maintain High Growth Trajectory Amid Global Challenges: CEA Nageswaran
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Synopsis
India is set to sustain its growth momentum despite global challenges, according to Chief Economic Adviser V. Anantha Nageswaran. Speaking at Columbia University, he emphasized the importance of policy measures and the need to strengthen manufacturing and the SME sector as part of the vision for a developed India by 2047.
Key Takeaways
- India can maintain its growth advantage with appropriate policies.
- The government aims for a developed India by 2047.
- Challenges in the global environment will persist.
- Investment rates need to be boosted to improve growth.
- External trade remains crucial for domestic innovation.
- Focus on quality, R&D, and logistics is essential.
- Manufacturing and SMEs are vital for economic growth.
- AI may affect entry-level job availability.
- Policy decisions are key in managing technological disruptions.
- Targeting a sustainable growth rate of 6.5% to 7% is crucial.
New York, April 21 (NationPress) India is poised to sustain its growth trajectory, despite facing new global challenges, through appropriate policy measures, according to the country’s Chief Economic Adviser (CEA), V. Anantha Nageswaran, during his speech at Columbia University here.
Nageswaran stated that the government aims for a developed India by 2047. However, he indicated that the major hurdle, aside from India's vastness, is that the global landscape may not be as favorable for the next 10-20 years as it was over the last 30 years, beginning around 1990. Given that the country cannot dictate its external environment indefinitely, challenges will arise, he elaborated.
“The journey ahead for India is significant amid a tough global environment, but I believe that our policy resolve and the prioritization we have established, particularly regarding deregulation, can help us retain our growth advantage even in these trying times,” Nageswaran remarked while addressing students and faculty at Columbia University over the weekend.
He further mentioned that India needs to enhance investment rates or derive more value from existing investments, as current geopolitical tensions are negatively impacting global capital flows.
Nageswaran also emphasized that India cannot depend on exports to drive growth as it did in the early 2000s.
Historically, exports accounted for 40 percent of GDP growth in the first decade, dropped to 20 percent in the second decade, and might decline further in the third decade, he noted.
However, he stressed that external trade remains important. It is essential for the nation to focus on it, as external competitiveness can also drive domestic innovation and growth.
Nageswaran underscored the need to enhance quality, invest in R&D, and improve logistics and last-mile connectivity to boost export competitiveness.
“This has to be our core focus. We must elevate our standards in quality, R&D, and logistics. From a policy perspective, we must recognize that extracting growth from exports will not be as straightforward as it once was,” he expressed.
As part of the ‘Viksit Bharat’ 2047 vision, Nageswaran highlighted the necessity to strengthen manufacturing and connect Indian businesses with global value chains while also fostering a robust small and medium enterprise (SME) sector.
“Nations that became manufacturing giants did not achieve this without a strong small and medium enterprise sector,” he pointed out.
He added that India must create at least eight million jobs annually for the next 10 to 12 years and increase the manufacturing share of GDP, similar to China.
Nageswaran remarked that given India’s large scale, navigating this complex challenge is formidable, and there are no simple solutions. As the country endeavors to generate more jobs, Artificial Intelligence may significantly impact entry-level jobs, or low IT-enabled services jobs may face threats, he noted.
Nageswaran indicated that policy choices would be crucial in managing this technological upheaval.
“Preparing the populace for an AI-dominated world is one thing, but achieving the right balance between labor-centric policies and technology is another. Ultimately, technology decisions are not solely for technologists but must involve public policymakers,” he observed.
“Clearly, maintaining an 8 percent growth rate in the current climate will be a challenging feat. However, if we can sustain growth rates of even 6.5 percent over the next decade or two, with an eye towards increasing it to over 7 percent through domestic deregulation, that will be the way forward,” Nageswaran concluded.
