CEA Flags India's Economic Growth Over 'Uneasy Equilibrium'

Chief Economic Adviser V Anantha Nageswaran has warned that India's economic growth is facing significant headwinds. This includes unsettled relations with the US, volatile energy prices, and the lack of an artificial intelligence presence in the country.

Speaking at the State Bank of India’s Banking and Economics Conclave in Mumbai on Thursday. Nageswaran described the India-US relationship as being in a state of uneasy equilibrium, with trade-related differences persisting between the two nations.

Nageswaran has stressed the need for India to strengthen its manufacturing capabilities. Attract foreign investment, and create employment opportunities that are suited to an AI-driven economy as it works towards becoming a developed nation by 2047.

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He noted that the country would need to undergo a significant transformation. Reimaging and reinventing many of its operational processes, whether in the private or public sectors.

Nageswaran has highlighted the need to strengthen domestic manufacturing and address the country's significant goods trade deficit. Which remains a challenge, accounting for 3.5-4 per cent of GDP, even after excluding oil and gold.

He also emphasized the importance of foreign investment. Identifying key areas such as tax certainty, simplicity, investor protection, and the availability of a skilled workforce as vital in attracting capital.

As a key industry player, Nageswaran has sounded the alarm on the potential employment implications of AI, urging policymakers to consider the broader consequences of their approach.

He advocates for a more holistic strategy that prioritizes the human workforce. Rather than solely focusing on cutting-edge AI research, and suggests creating both AI-enabled and AI-insulated jobs.

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India should work towards creating labour-intensive manufacturing jobs. As well as services such as hospitality, tourism, and elder care, which can provide employment opportunities.

Despite the headwinds, Nageswaran has noted that India'It's growth momentum remains resilient, with the economy growing at a rate of 7.8 per cent.

The government's reforms in digital public infrastructure. Inclusion, capital expenditure, and formalisation have contributed to sustained growth of 7 per cent or above.