Economy may grow by over 7% for 4th year running in FY25: CEA Nageswaran

“Economy is a system of mutual dependencies that is why when an economy grows into a funk, you need exogenous shocks to lift it out of the funk, which normally comes from fiscal stimulus.

“The fiscal authorities, given their ability to tax, or the monetary authorities, given their ability to print money or external demand are the factors that do not necessarily fall within this closed-loop system. These are considered exogenous factors that can once in a while be applied to lift economies out of downturns,” he said.

“Otherwise, capital formation and economic growth are naturally co-dependent. In this regard, we are all very happy to note that our economy is poised to grow at more than 7 per cent for three consecutive years, and with some very good luck and reasonable assumptions, we might do so in FY25 as well,” he added.

Meanwhile, he also said that terms such as 'sustainable,' 'green,' 'climate,' and 'environment' have lost their significance, having been overused to the point of becoming mere rhetoric. He said that these words have become convenient veneers for various stakeholders to justify their actions without genuine commitment to their ideals.

“Some of these words like sustainable, green, climate, environmental have all been overused to the extent that many of them have lost their meaning. They have become nice scaffolding or convenient packaging for industries, policymakers, regulators, financiers and everybody to clothe whatever else they do," he said.

But, at the same time, the CEA said that sustaining a certain activity or performance over long periods has been rare in the country.

ALSO READ: Moody's sees faster CY24 GDP growth; CMIE predicts low FY25 inflation

“In general, sustaining performance over long periods has been elusive. We have had short bursts of economic growth for 8-9 per cent over 3 years or 4 years and soon thereafter we run into the brick wall of imbalances, overheating and naturally in its wake follows high trade deficits, higher inflation, overvalued exchange rate, non-performing assets in the banking system, etc.

“And the cycle and the clock is set back to zero again. So in other words, we have always had this problem of running out of breath and running out of steam after a few years,” he said.

Highlighting India’s recent infrastructure advancements and digital transformation as positive indicators, he underscored the importance of addressing supply-side constraints and expanding market access for sustained capital formation.

Additionally, he commended the improved financial health of the Indian corporate sector and institutions, enabling greater risk-taking and lending capacity.

The CEA warned against complacency, urging stakeholders to challenge conventional wisdom, prioritise long-term strategies, and cultivate a mindset that balances present actions with future consequences.

He noted the irony of a nation rich in spiritual heritage succumbing to short-term desires, emphasising that true mindfulness entails fulfilling present duties while being mindful of long-term goals and consequences.

“The underlying focus that the regulators have, which is to ensure that we stay stronger for longer, rather than get caught up in the immediate euphoria of our growth rates and market valuations, and also try to make instant profits. And that is what the rising exposure of even small investors in the F&O segment signaled to me. And that is a worry,” he said.