New Delhi [India], May 29 : Chief Economic Advisor V Anantha Nageswaran on Thursday expressed confidence that India is on track to become a USD 5 trillion economy by 2027-28, even as the country navigates complex geopolitical challenges and positions itself to benefit from shifting global trade dynamics.
Speaking on India's economic trajectory, the CEA acknowledged that while the nation faces geopolitical headwinds, some sectors are expected to benefit from US tariffs, creating new opportunities for Indian businesses.
The CEA outlined five critical handicaps that India must overcome in its journey toward becoming a developed country by 2047.
The global model of capital-intensive growth sits oddly with India's abundant labour endowment, creating structural challenges for employment generation.
Anantha Nageswaran said that the energy transition mantra presents a double whammy for capital-led growth. He added that cheap power remains essential for growth while accounting for backup costs in the energy transition.
CEA emphasised that meeting India's capital needs requires steady growth of household savings and income, highlighting the importance of domestic resource mobilisation.
Emphasising the importance of private sector participation, the CEA stated that India cannot achieve its desired growth without strong private-public alliances. He called for fairer distribution of incomes, balanced deployment of capital and labour, improved workplace culture and mental health initiatives, and increased investment in R&D from the private sector.
"We're seeing a small gap in the private sector's rate of growth in profitability and rate of growth in capital formation," the CEA observed, highlighting an area requiring attention.
Talking about AI, CEA said that AI and robotics pose significant threats since they target service jobs first, potentially undermining India's competitive advantage in the services sector.
The CEA also highlighted India's strategic vulnerability in critical minerals, noting the country's dependence on other nations for these essential resources.
On artificial intelligence, he stressed that building super-intelligent AI systems is a business choice, and striking a balance between AI deployment and labour protection is a deliberate decision, not an inevitable outcome.
The CEA warned that the combination of ultra-processed foods and increased screen time poses a huge risk to India's demographic dividend, potentially undermining one of the country's key economic advantages.
He also addressed India's trust deficit, noting that the society is characterised by low trust levels overall. "Feudal, community-based societies are high on trust inside and low outside," he explained, adding that a significant share of regulatory overreach stems from non-reciprocity of trust between the government and private sector.
Despite the challenges, the CEA highlighted several positive factors supporting India's growth prospects.
The CEA also cautioned the private sector against expecting the rupee to weaken as dramatically as it did over the past 30 years, suggesting a more stable currency outlook.
Looking ahead, the CEA predicted significant changes in global trade patterns. "In the next 10-15 years, ensuring supply chain security rather than efficiency will be important," he said, forecasting that the world will be divided into at least two blocs regarding trade and investments.
The CEA concluded with a measured perspective on short-term uncertainties: "From a short-term cyclical perspective, we shouldn't be subsumed by uncertainties," emphasising the need to maintain focus on long-term structural reforms while navigating immediate challenges.
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