India’s medium-term growth trajectory can be lifted further through a new wave of structural reforms, Chief Economic Adviser V Anantha Nageswaran said, highlighting land, education, energy taxation and farm-sector changes as critical areas for pushing the economy towards a higher growth path.
Speaking too ET Now following the release of the Economic Survey, Nageswaran said reforms implemented over recent years have already helped raise India’s medium-term growth potential.
“First of all, it is indeed the reform that we have been able to accomplish in the last several years is the reason why we have upgraded it from 6.5 to 7. Now what would take us from 7 to 7.5 or 8 depends on addressing pending issues related to land reforms, conversion of land from agri to non-agri use, reducing cross subsidisation so that the input cost to industry becomes cheaper and also at some point bringing in fuels into GST, etc, and education sector where we are able to move from enrolment to education quality outcomes. These are all the various reform areas that would help us take it even further,” he said.
The Economic Survey has projected medium-term average growth of around 6.5%, with FY27 growth estimated in the range of 6.8% to 7.2%.
Rupee movement not disruptive yet
On the rupee, which has depreciated by nearly 6.5% as april,Nageswaran said the currency’s recent movement has not yet been disruptive,even as global trade tensions and tariff-related uncertainties persist.
“Look,I cannot give you a forecast and that is not my job either. All I can say is that yes, at this point it is not exactly disruptive, but whether it becomes disruptive or not, at what stage it is to be precise here.And we have also written about what it takes for a country to achieve a strong and stable currency over time. So, I am not in a position to add anything more than that,” he said.
Capex trajectory to be seen in Budget
On public capital expenditure, a key driver of recent growth, the CEA refrained from commenting on whether the pace would be sustained or accelerated, pointing to the upcoming Union Budget.
“Look again, it is a matter of a few days before you see the budget. We can all wait to see what kind of numbers we get,” he said.
DBT and fertiliser reform
Highlighting state-level innovations and the use of technology in subsidy delivery, Nageswaran said fertiliser reforms and better targeting of support to farmers could improve soil health and productivity.
“We have written about it in a box item, it is important to look at the way we compensate farmers for fertiliser prices, whether how to do it in a manner that
Key Takeaways from the Chief Economic Advisor (CEA) Nageswaran’s Statements:
Here’s a breakdown of the key points from the provided text, categorized for clarity:
1. Banking Sector & Government Control:
* The Economic Survey suggests monetizing public sector banks and lowering government shareholding while retaining control.
* Though, the feasibility and timing of these measures are up to policymakers, not a foregone Also to be considered:. The CEA’s role is to highlight possibilities.
2.Fiscal Policy & Debt-to-GDP Metric:
* Shifting the focus to debt-to-GDP as a fiscal metric (rather of fiscal deficit) is being considered, especially given high state debt.
* The CEA is not ready to speculate on this shift, awaiting the recommendations of the Finance Commission.
3. Capital Outflows (FPIs):
* $22 billion in foreign portfolio outflows have occurred in the last 12-15 months.
* The CEA views these flows as cyclical and largely influenced by global factors beyond India’s control.
* India is focusing on domestic policy levers like tax certainty and reasonable tax rates to attract investment. Geopolitical events also play a role.
4. Exports & Trade Agreements:
* Labor-intensive export sectors have successfully found choice markets despite US tariffs.
* The India-EU trade agreement is expected to significantly boost labour-intensive manufacturing exports (footwear, gems, textiles, etc.).
5. Agriculture:
* There’s scope for further agricultural reforms to improve productivity, including:
* Crop diversification
* Fertilizer reforms
* providing price certainty for farmers in export markets.
6.Consumption & Economic Growth:
* Private final consumption expenditure is projected to grow by 7%.
* this is supported by:
* Tax cuts (direct & indirect)
* Low inflation
* Rising prices of gold and silver (creating a wealth effect, offsetting stock market stagnation).
Overall Tone:
the CEA presents a cautiously optimistic outlook. He acknowledges challenges (like capital outflows and the need for agricultural reforms) but emphasizes India’s focus on domestic strengths and the potential for positive developments (like the EU trade agreement and consumption recovery). He also stresses that many decisions ultimately rest with policymakers.
