India to perform better than many nations amid West Asia crisis: CEA

The Iran crisis could have implications for India’s growth, inflation, current account if the conflict or its effects last for a longer duration however, given its macroeconomic stability India is expected to perform better than many other nations, Chief Economic Advisor (CEA) V Anantha Nageswaran said in an interview to CareEdge Ratings.

 

In the interview posted on Thursday, the CEA said, “Even if we are going to go through a period of uncertainty and with some adverse impact on inflation and growth, depending on how long this conflict lasts, I think relatively speaking, we will still be better off than many nations, thanks to the hard work we have done both pre and post Covid.” 

 

He said that how the crisis ends is an equally important question to know whether both sides voluntarily end the conflict, or one side withdraws due to fatigue or exhaustion. In the latter case, he said the other side will feel dominant and therefore, continue to dictate terms. 

In the Economic Survey 2025-26, Nageswaran had warned that the global environment is being reshaped by geopolitical realignments that will influence investment, supply chains and growth prospects for years to come.

 

Stressing that India was rightly signing more free-trade agreements (FTAs), Nageswaran said, “The rising tide of global export global growth is not going to lift all boats, which was the case in the first decade when India had a very good export growth every year.”

 

He said that India needs to extract growth from all possible sources, and therefore also be an exporting nation. “This situation is very tailor-made to pull oneself back into a shell in the name of resilience. But that is something that we are not doing, and I’m very happy about it,” he added.

 

The CEA said the government is opening doors through FTAs and exposing domestic sectors to competition. “We have spent a lot of time, giving them time to grow. Now, it is time for them to face competition.”

 

On the question of artificial intelligence, the CEA said that India needs to create homegrown AI models, because everything can and will be weaponised in the world, from money to resources to food items to data. He said that the biggest area of action is education and pedagogical reform. 

 

“To be able to succeed and use AI successfully you need to become cognitively more agile, and that means your education system has to undergo a root and branch reform,” he said.