Challenging Global Environment Ahead, Cautions Chief Economic Advisor

The global environment will be very challenging in the coming years, Chief Economic Advisor Anantha Nageswaran said at the securities markets symposium Samvad, hosted by the SEBI in collaboration with the NSE.

One important issue we need to face is what the sustainable current account deficit is, Nageswaran said, adding that in the competition for investments with developing and developed countries, the Indian economy will have to focus on what levels of the current account deficit it should aim for.

While there is a need for investment rates to once again be brought to the mid-thirties as a share of GDP, the global conditions currently persistent are vastly different from the accommodative conditions that the Indian economy saw when investment rates were higher, he cautioned.

There will be a need to focus on investment efficiency, rather than only on investment rates in the economy, Nageswaran said, emphasising the need for a faster pace of investment output.

Given private sector profitability was robust until recent quarters, there is risk taking that needs to happen for capital formation and employment generation, he said, adding that the public sector has done its part in sustaining capital formation.

However, there is more that needs to be done in terms of public-private partnerships, Nageswaran said. There is a need to ensure trust between different players and to look at each other as partners, he said.