Optimism should not cause premature triumphalism: CEA Nageswaran

Optimism should not become the cause for premature triumphalism and be grounded in reality as India is still an aspiring middle-income country with a long way to go, Chief Economic Advisor V Anantha Nageswaran said on Friday.

Speaking at the 96th Annual Convention of the Federation of Indian Chambers of Commerce & Industry (FICCI), the CEA said that our aspirations or announcements should not run ahead of our achievements.

Nageswaran stressed that there was a need to differentiate between tough optimism and euphoria while drawing lessons from the breakneck growth of the first decade and balance sheet repairs in the second decade.

India’s growth engine can become faster and accelerate if the much-awaited private sector capital formation kicks into a higher gear, he said.

Stressing the need to accept uncertainty as a given, Nageswaran said that the more the private sector begins to put capital to work, the lesser uncertainty there will be. “Investment activity that we will undertake will make a big contribution to dissipating uncertainty. There are enough resources with the private sector,” he added.

He said that structural changes that may come in the way of private investment are being addressed with a continued push to infrastructure, easing of compliance burden, and facilitating access to critical technology and raw materials.

“The track record of the last eight years tells us that these challenges will be addressed as the government has done in the last eight to nine years…Therefore, the choke point (for private sector investment), I would submit, is probably more psychological than real,” Nageswaran said.

On the part of the regulators, the CEA called for a better balance between compliance and facilitation of economic activity along with smartness and prudence.

Nageswaran also said that while India is the world’s growth engine, countries smaller than India have grown faster before and may still do so. “Compared to our peer group, or even advanced nations, we are relatively smaller in size in terms of nominal GDP…It is natural that our growth rate will have to be higher than other leading emerging economies like China,” Nageswaran said.

The Reserve Bank of India has raised its gross domestic product (GDP) growth projection for FY24 to 7 per cent from its earlier estimation of 6.5 per cent. India’s GDP grew at 7.6 per cent in the September quarter of FY24, outperforming expectations by a wide margin as manufacturing and construction activities expanded by double digits.