India Growth: Structural Reforms for 7%+ Expansion – CEA Nageswaran

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 conclusion.​ 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.