Mumbai, Aug 13 The overall momentum of the Indian economy has not slowed, as is evident from high-frequency indicators and although trade-related issues are important, they should not overshadow other critical challenges, the government's Chief Economic Advisor (CEA) V. Anantha Nageswaran said on Wednesday.
In his address at an event here, Nageswaran said the consumption slowdown last year was largely due to tight credit and liquidity conditions, prompting the government to announce substantial middle-class tax cuts in the Union Budget. The Reserve Bank of India has also cut policy rates by 100 basis points and ensured a liquidity surplus to support growth, he added.
Nageswaran said it was too early to assess what impact the US tariffs would have on India’s GDP growth.
He said that India must significantly step up efforts in artificial intelligence (AI) and semiconductor manufacturing to compete with the United States and China.
Nageswaran identified energy transition, energy security, AI’s economic impact, and sector-wide collaboration as the main challenges. He called for close coordination between public and private sectors, with resources pooled to meet national objectives. He urged the private sector to look beyond quarterly results and commit to long-term national priorities.
The US dominates AI research and chip design through companies like Nvidia, Intel, and AMD, while China has expanded chipmaking under state-backed initiatives. The government has launched programmes such as the Semicon India initiative for the first time to strengthen domestic manufacturing.
On Tuesday, the Cabinet Committee on Economic Affairs approved Rs 4,600 crore for four semiconductor projects under the India Semiconductor Mission across Odisha, Punjab, and Andhra Pradesh.
Nageswaran flagged a shift in India’s consumption trends, pointing to a growing diversion of consumer spending towards online gaming and options trading.
Shedding light on the data points related to consumer participation in online gaming, he mentioned that in July alone, monthly spending on online gaming stood at about Rs 10,000 crore — implying an annualised run rate of approximately Rs 1.2 lakh crore.
While drawing parallels with speculation in options and derivatives, Nageswaran mentioned that “in these situations, it is the house that builds and not speculates".
The CEA observed that much of urban consumption is increasingly moving from listed to unlisted companies, with inadequate data capture for services' consumption.
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