India Needs Investment Push To Sustain 8% GDP Growth: Former RBI Deputy Governor Michael Patra

India has the potential to have an average growth rate of 8% in the gross domestic product, only if it hinges critically on boosting investments, particularly from corporates, according to former Reserve Bank of India Deputy Governor Michael Patra.

"The most important factor that is missing is investments from corporate India," Patra said at the Elara India Dialogue 2025 in Mumbai on Monday, adding that to sustain an 8% growth, the country needed to get its investments back, especially led by infrastructure.

India’s growth story has been underpinned by cyclical recovery. But without stronger private sector participation, particularly in capital expenditure, growth can lose steam, he said.

He also flagged the challenge of aligning investments with climate change imperatives, suggesting that green infrastructure will be critical in the years ahead.

This has come as India’s GDP growth came in at 7.8% in the April-June period, according to the latest estimates released by the government's statistical office. This is the sharpest GDP growth in the last five quarters and significantly higher than estimates.

The former central banker underscored India’s structural weaknesses in the labour market, noting that 80% of the workforce remained in the informal sector and women’s participation is still low.

"The exclusion of women from the labour force has been a major impediment. While labour force participation has risen, much of it is unpaid family work, which does not add real value,” he observed.

On education and skills, Patra said that neglect of primary and secondary schooling has undermined India’s demographic dividend, leaving the labour force underprepared for modern economic demands.

He also pointed to gaps in digital adoption, stressing that while financial inclusion has expanded access, "usage" remains limited due to low digital literacy, leading to vulnerabilities like frauds.

Speaking about the banking sector, he cautioned that while gross non-performing assets have stabilised, provisioning has lagged, leaving risks around net NPAs. He said that disintermediation is rising as more business shifts outside banks and as deposits move to mutual funds.

His comments come as India aims for high-growth trajectories amid rising global economic uncertainty.

Policymakers, including the finance ministry and NITI Aayog, have repeatedly underlined the need for private investments to complement government-led capital expenditure.

On the recent imposition of 50% tariffs on India by the US Donald Trump administration, Patra doesn’t expect much impact on the same on India, adding that it is a “one-time show". But said that he is worried it is an attempt to depreciate the Indian rupee.