Five Things On India's Chief Economist's Mind Ahead Of Budget 2025 — Profit Exclusive

Chief Economic Adviser V Anantha Nageswaran on Friday discussed the projected gross-domestic-product growth of 6.3–6.8% for the upcoming financial year, influenced by global risks and trade uncertainties.

Global factors, such as potential spillover from global financial markets and increased uncertainty in trade and investment flows, are significant considerations in the growth projection, the CEA said in a conversation with NDTV Profit.

The growth projections align with those of multilateral and private sector agencies. Here are the five highlights from the discussion.

Several states are already on the path of deregulation, and have seen positive impacts on industrial activity, Nageswaran said.

The business reform action plan has motivated states to implement reforms, leading to improved business conditions, he added, suggesting that states do not need to be nudged by the Union government as they are already taking proactive steps.

Asked about concerns about the urban slowdown in consumption and the impact on FMCG companies, the CEA acknowledged these concerns and said the government's recent notification of a credit guarantee scheme for small enterprises was expected to boost manufacturing and hiring.

He also mentioned that the urban consumption slowdown is partly due to the private sector's hiring and compensation practices.

Nageswaran clarified that the discussion on working overtime is not about the number of hours per week but about allowing flexibility for small entrepreneurs to adjust working hours based on seasonal demand.

The survey suggested that small enterprises should be allowed to meet stipulated working hours over a period of three to six months rather than weekly.

Nageswaran explained that the survey does not propose a specific fiscal intervention but highlights the health hazards of ultra-processed foods.

He mentioned that governments worldwide, including India, have used fiscal policies to discourage tobacco use, similar to the proposed approach for ultra-processed foods.

While artificial intelligence is evolving rapidly, it has not yet extensively displaced labour, the CEA said.

He acknowledged the need for technological innovation but emphasised the importance of preparing the youth to take advantage of these developments.

In conversation about import reliance in the EV sector and the need for domestic manufacturing boost, the CEA explained that the government has implemented PLI schemes for solar components and is incentivising domestic production of solar panels and modules.

The same approach is being applied to the EV value chain, with initial results showing positive outcomes, he added, emphasising the need for the private sector to invest more in research and development and find alternative supply sources, even if they are slightly more expensive.

The CEA noted that private investments are already happening in allied sectors of agriculture, such as cold-storage chains, distribution channels and land leasing, when questioned about the survey's emphasis on agriculture as a key growth driver and the need for private investment in small-scale farmers.

He highlighted that private investments in allied services are growing faster than traditional crops and grains.

The Economic Survey 2024-25, released on Friday, emphasised deregulation, with states already implementing business reforms. Urban consumption is improving, aided by the government's credit guarantee scheme for small enterprises, as per the survey.