Increase Investment and Wages, Suggests CEA, to Ensure Continued Industrial Growth in India
India Aims to Achieve Developed Nation Status by 2047: CEA Outlines Policy Directions
NEW DELHI - Ahead of the government's fourth quarter GDP data release, Chief Economic Advisor (CEA) V Anantha Nageswaran has proposed a series of measures to boost India's economic growth and transform the country into a developed nation by 2047.
Nageswaran called on India Inc to ramp up capital expenditure and raise workers' compensation in line with profitability growth to achieve sustained growth above 6.5%. He explained that increased investment would not only enhance capacity but would create more jobs with greater remuneration, ultimately leading to higher household savings.
Speaking at the Confederation of Indian Industry (CII) event, Nageswaran emphasized the need for a balanced deployment of capital and labor. He noted that India would require substantial investment in creating capacities, particularly in infrastructure, over the next 25 years. To generate employment and sustain growth, he highlighted the importance of fairer income distribution and improved workplace culture.
To address structural challenges, Nageswaran urged the private sector to focus on R&D to foster innovation and boost productivity. He also emphasized the importance of reducing the regulatory burden for better productivity of capital, but highlighted that developing trust between the government and private sector was essential to navigate the challenges of deregulation.
Looking ahead, Nageswaran remains optimistic about a stable, low-inflation growth path supported by resilient domestic demand. He expects the highest share of private consumption in GDP since FY04 to continue, potentially aided by lower interest rates. Despite the challenges of the energy transition, Nageswaran underscored the need for affordable power to maintain growth momentum.
Nageswaran also pointed to improvements in the labor market, with declining urban unemployment rates and labor market reforms, as positive signals for the economy. Maintaining this focus on labor market reforms is critical for continued economic growth.
As global trade patterns are set to change, Nageswaran expects the world to be divided into at least two blocs regarding trade and investments. To navigate these shifts, he advises maintaining a focus on long-term structural reforms while managing short-term uncertainties. The growth outlook for FY26 is retained between 6.3-6.8%, supported by robust domestic demand, steady investment, and a benign growth-inflation environment.
In summary, Nageswaran's recommendations aim to leverage India's strengths, address structural challenges, and develop a resilient, inclusive, and innovation-driven economy capable of achieving developed nation status by 2047.
Businesses must increase capital expenditure and improve workers' compensation in line with profitability to support India's goal of becoming a developed nation by 2047, as proposed by Chief Economic Advisor V Anantha Nageswaran. To achieve sustained growth, India will require substantial investment in infrastructure and implementing labor market reforms that aim for fairer income distribution and improved workplace culture.
