India's Robust Growth Narrative Remains Strong; Employment and Wage Increases to Fuel Consumption: CEA Nageswaran
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New Delhi, Dec 5 (NationPress) The robust growth narrative of India is unwavering, and the policy reforms enacted over the past decade are beginning to show positive outcomes, asserted Chief Economic Adviser Dr V. Anantha Nageswaran on Thursday.
Emphasizing that employment and wage increases will be the key drivers of consumption, Nageswaran noted that, in contrast to previous growth cycles, India has managed to maintain its economic momentum due to supply-side enhancements that have kept pace with demand growth.
While addressing the ‘Bharat@100 Summit’ organized by Assocham in the national capital, the CEA outlined strategies for progression that advocate collaboration between the public and private sectors along with academia.
He reiterated that “India’s robust growth narrative is unwavering.”
“This is crucial as the nation aims to become a developed country during a time when global economic and political uncertainties present challenges,” remarked the CEA.
Nageswaran highlighted that as India increasingly relies on domestic growth over the next decade or two, all parties involved – public sector, private sector, and academia – must work together to transform the vision of Viksit Bharat into reality.
Providing an overview of India’s progress, Nageswaran discussed significant advancements in the logistics sector, India’s substantial rise in the global innovation index, rapid financial inclusion under the PMJDY (Pradhan Mantri Jan Dhan Yojana), and improved educational outcomes.
He underscored the vital role that the private sector and corporations can play in boosting consumption.
“For consumption to drive economic growth, we must examine post-Covid hiring trends, which show a shift towards contractual labor. While these contracts are formalized – providing workers with benefits such as provident funds and health insurance – wage growth for contract workers has not kept pace with inflation,” the CEA pointed out.
Highlighting that corporate profitability reached a 15-year high in FY24, Nageswaran indicated that a significant portion of this income is being allocated by companies to reduce debt.
“While it is beneficial to strengthen balance sheets, there needs to be a balance between corporate profitability and wage growth for workers,” he advised, adding that, “without this balance, there will not be sufficient demand in the economy for corporate products.”
When questioned about India's potential to become a manufacturing hub independent of China, Nageswaran suggested that the more pertinent question is how to integrate China into our supply chains rather than how to incorporate India into global supply chains.
He also emphasized the significant contribution that MSMEs (micro, small and medium enterprises) must make towards increasing India's manufacturing share in the GDP to 25 percent or higher.
