India On Track To Grow 6.5% For Rest Of The Decade, Says CEA Anantha Nageswaran

India's Chief Economic Advisor, V. Anantha Nageswaran, is confident that India's growth trajectory will average 6–6.5% for the rest of the decade, given the robust macroeconomic fundamentals and underlying momentum.

India can do even better, provided it rises to its immediate challenges of skilling its youth and meeting global net-zero targets and emission requirements, he said during an industry gathering by the Associated Chambers of Commerce and Industry of India in Kochi.

Nageswaran said he is optimistic about India's medium-term performance and expects India's final figure for economic growth in fiscal 2023 to be higher than 7.2%, given the underlying momentum.

According to him, fiscal prudence during the pandemic has benefited India. He highlighted an uptick in economic activity, a decline in inflation, stronger corporate balance sheets, and a rebound in the lending capabilities of banks as signs of economic momentum.

In terms of risks and challenges in the near term, India should be prepared for an uphill struggle when it comes to goods exports, given global demand conditions, he said. However, India's service exports remain on the safer side, Nageswaran said.

"Services exports are doing well, as many countries don’t rely on India for IT-enabled services alone. They rely on us for accounting, risk management, compliance, back office operations... Services export growth, which did well in FY23, will continue to be a bright spot," Nageswaran said.

Monsoon showers would also be a keenly watched parameter in India's growth story as the country prepares for kharif sowing.

The Indian monsoon still has a huge effect on sentiment rather than actual output, as the economy has become less dependent on the monsoon and more reliant on irrigation potential, he said.

Third-party advance estimates already place total food grain production in the country for FY23 at 3,305.3 lakh metric tonne, which is higher by 149.2 lakh metric tonnes as compared with FY22.

Water reservoir levels, seed availability for the kharif crop, food procurement in fiscal 2023, domestic tractor sales, and fertiliser stock give the government confidence in the farm sector's prospects, Nageswaran said.

In the near term, the risks are more balanced, and growth will toe the RBI and Finance Ministry estimates of 6.5%, he said.

If India can sustain 6.5–6.8% economic growth for the rest of the decade in the face of current global conditions, it will be a creditable achievement, Nageswaran said.

The government should look towards easing its licencing, inspection, and compliance procedures so that businesses can make legitimate decisions in an environment where the rules are principle-based and not prescriptive.