'Global factors on India’s watch, domestic indicators promise steady growth'

While the Indian economy is on a growth trajectory, external factors – slowdown in global economy and trade, geopolitical uncertainties and stiffer financial situations – that could pose a risk to the country are being constantly watched, V Anantha Nageswaran, chief economic advisor, ministry of finance, said on Saturday.

Nageswaran – sharing data on economy’s growth, sectoral and fiscal performance, status of financial and corporate sectors, and gains to economy due to digital integration – talked about economic outlook in the near future, at a session, “The decade of India’s growth and prosperity… the beginning”, organised by Bharat Chamber of Commerce in Kolkata.

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Investment and consumer spending, the private sector’s expected growth – with strengthening corporates, banks, and the government’s capital spending, the expanding digital platforms, public initiatives – like PM GatiShakti, national logistics policy, production-linked incentives schemes, Nagewaran pitched as factors that will facilitate growth.

He, however, cautioned that external factors – a global slowdown affecting international trade impacting Indian export growth of goods (while services sector exports are resilient), and prolonged geopolitical uncertainty and stiffer financial situations – throw up risks.

“We are constantly watching the space, globally and nationally, as to what can go wrong and how to prepare ourselves,” Nageswaran said, adding how concerns like food stock, water reservoirs – for instance – in the agricultural sector are monitored. “We know that there are challenges – energy security is important for us, and the global climate debate will have consequences for our energy security. We know that the pandemic cost years of learning losses for our children… Our youth population can become a demographic dividend rather than demographic debt-weight, provided they are adequately skilled,” he stated.

Besides, Nageswaran said that electricity generation and distribution companies, at the state-level, need to turn economically viable, and governments (at different levels) have to whittle down licensing-inspection-complaints regimes.

Artificial Intelligence (AI) and India’s services sector

“The advent of AI gives us both opportunities and threats. To manage, to maintain service sector exports, we need to be vigilant. But, the service sector is not just about software. It is also about various value added services, such as risk management compliance… all of accounting, all of them being driven out of India through global capability centres – GCC. So India’s service sector growth is not just the story of IT and ITES,” Nageswaran said. “It is an issue that the industry will have to plan for,” he told DH on the sidelines of the session.

Status of states’ debts

Nageswaran said that the state governments are on the job of meeting their fiscal numbers. “Their fiscal numbers, in recent years, have been lower than what was budgeted, and what was the additional spending allowance given to them. So, the overall general government debt is something the Union, and the state governments are tackling… India’s general government debt, which includes Union, and state governments, was 81% of GDP in 2005. Now it is 84 per cent. So it has not worsened compared to several other countries, where it has gone up by more than 20 percentage points, or even 80 percentage points,” he said.