India’s economic growth can become faster if the much-awaited private capital formation kicks into higher gear, Chief Economic Advisor V Anantha Nageswaran said on Friday.Nageswaran said that post-COVID financial balance sheets of corporates have been positive.”For economic growth we need to have investment spending … India economic growth can become faster and accelerate if the much awaited private capital formation kicks into higher gear,” he said while addressing an event organised by industry body FICCI.
The CEA pointed out that in terms of instilling confidence in the private corporate sector, the government in 2019 reduced the corporate tax rate.Underscoring the significance of robust private investment in driving economic growth amidst global uncertainty and geopolitical shifts, Nageswaran urged the private sector to embrace uncertainty and proactively invest, saying, ‘the more the private sector begins to put capital to work, the lesser will be the uncertainty.” The Reserve Bank of India on Friday raised the GDP growth projection for the current fiscal to 7 per cent from 6.5 per cent earlier on buoyant domestic demand and higher capacity utilisation in the manufacturing sector.
India’s economy grew 7.6 per cent in the September quarter of this fiscal and remained the fastest-growing large economy, mainly due to better performance by manufacturing, mining and services sectors.The IMF, World Bank, ADB, and Fitch expect India’s GDP to expand by 6.3 per cent in the current fiscal. S&P Global Ratings expects India to record a 6.4 per cent growth this fiscal.The CEA underscored the government’s role in creating conducive conditions for private investment, citing initiatives such as infrastructure development, ease of doing business improvements, bank recapitalization, and liberalization of foreign direct investment sectors, among others.
Reflecting on India’s economic journey, he spoke about the lessons learned from the financial upheavals of the past two decades.He stressed the importance of distinguishing between euphoria and what he termed “tough optimism.” “Optimism should not become the cause for premature triumphalism,” he said.Nageswaran said the country’s optimism should be grounded in the reality. “We still are aspiring middle-income country and we have a long way to go before we get there,” he said.While noting that there are structural challenges that are being addressed, he said India needs to ensure that the country gets access to critical technologies and raw materials and resources. He noted that India’s tax to GDP ratio is not low, but it can be better.
With inputs from PTI