- 22 minutes ago
Chief Economic Advisor to the Government of India, V. Anantha Nageswaran, discussed India's path toward Viksit Bharat by 2047, macroeconomic stability, and growth drivers. Highlighting the transformation over the past twelve years, he stated that Prime Minister Narendra Modi "is the architect of the economic policy" and credited structural reforms like the Goods and Services Tax, the Insolvency and Bankruptcy Code, and large-scale infrastructure expansion for repairing balance sheets and boosting potential growth. Addressing rural incomes and employment generation, Nageswaran emphasized that economic growth must directly impact citizens' lives, detailing fiscal initiatives, deregulation, free trade agreements, and credit expansion for micro, small, and medium enterprises. He also touched upon global headwinds, including geopolitical conflicts and manufacturing competition, noting that India's domestic capital formation and manufacturing share of gross value addition continue to rise steadily.
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00:00Joining me is V. Anant Nageswaran, Chief Economic Advisor to Government of India.
00:05Sir, welcome.
00:08You work closely with the Prime Minister.
00:11You're a part of this journey, Vikasit Bharat, by 2047.
00:16As India emerges as the fastest growing major economy,
00:19in your view, sir, how much of this is the reforms he initiated?
00:25What do you make of this journey so far?
00:28Thank you for having me on your show.
00:30And it's, I mean, to answer your question, I would say a very, very high proportion of the credit
00:36to India's journey towards becoming a Vikasit Bharat.
00:41And the fact that many Indians are even able to aspire for and dream of that possibility
00:48owes a lot to the kind of economic stewardship that the Honourable Prime Minister has provided
00:55in the last 12 years.
00:56He inherited an economy that was partly or largely broken because we had a high current
01:03account deficit.
01:04We had double-digit inflation rates.
01:08And we had a currency that had just cratered.
01:11And fiscal deficit was very high.
01:13And the banking system was in a crisis.
01:16And so were corporate balance sheets.
01:18We should not forget that these were the legacy that he inherited on the macroeconomic front.
01:26So given that, to have repaired the bank balance sheets, and today Indian banks not performing
01:32assets are at a historical low.
01:35And the insolvency and bankruptcy code also helped corporate balance sheets to become healthy.
01:41And then he unleashed financial inclusion to the PM Jandan Yojana and then handled COVID so well
01:52compared to many other nations that India was able to recover and bounce back with very high
01:58growth rates in 21-22 and 22-23 and sustain them in the following three years as well.
02:04And I'm leaving out an important landmark reform, single nation, single tax, the goods and services
02:11tax.
02:11Apart from the fact that from 2017-18, public investment in infrastructure and capital expenditure
02:19had gone up by three and a half to four times.
02:21And so much so that India's infrastructure when it comes to airports, road connectivity, energy
02:30generation, the number of cities that have metro rail, and the inland water transport for
02:37free, et cetera.
02:39If you really look at them, these have lifted India's potential growth rate.
02:44And it has also lifted India's aspirations.
02:46And all the while maintaining macroeconomic stability, having inherited a very high fiscal
02:53deficit.
02:53And with the COVID compounding it, he has fixed it.
02:57India earned its first credit rating upgrade in 2025.
03:01So we can go on.
03:02So clearly…
03:03It's interesting you point out, sir, that from Fragile 5, he was in 2013-14, he's been
03:10able to bring it to the fastest growing large economy right now.
03:14But the challenges, you know, that were en route, and we'll talk about those in a moment.
03:20But the challenges right now, there are many who say jobs, for example, or private investment,
03:25for example.
03:26That's yet to pick up at the full scale.
03:28In your view, sir, what's holding that back?
03:32What more needs to be done to unlock that animal instinct or that potential?
03:37Sure.
03:37No, you are right.
03:39The private corporate sector…
03:41But first of all, let me tell you that India's overall capital formation rate at 33-34% of
03:47GDP is a very high number.
03:49So there is capital formation happening.
03:51And you can say that it is because of public investment by government and the state governments
03:56as well, given the 50-year interest-free loans.
03:59And within the private sector, I think there are some research reports that show that listed
04:06companies have been doing better than non-listed companies or unlisted companies when it comes
04:11to capital formation.
04:13But the biggest reason that you are looking at a much higher number, but it is not there,
04:19are multiple.
04:19One is the global uncertainty, the kind of extraordinarily high degree of manufacturing competition coming
04:28from China, given their own deflation, given their own domestic economy travails.
04:32They rely extremely heavily on exports and their deflation is making them, you know, utilize
04:41the global markets, which naturally makes investors in other countries pull back and decide when
04:47to put their money to work, et cetera.
04:49But having said that, India's capital formation in the private sector is beginning to rise in
04:55the last few quarters and the bank credit growth to industry is running at 20%.
05:02And I think given the kind of steady growth rate that we have witnessed in the Indian economy,
05:08the private sector capital formation, and I hear I refer to the unlisted space,
05:12I think it will catch up with the households and with the public sector.
05:17In fact, making them step back a bit and private sector capital formation will probably take over the
05:23baton from these two segments of the economy.
05:27Back to you.
05:27Sir, you spoke of the global headwinds, you know, you spoke of COVID-19.
05:32So 2020, that was a huge challenge.
05:36Then 2022, the Russia-Ukraine war, both energy and fertilizers adversely impacted.
05:42Then again, 2025 and 2026, you've had Iran, US and Israel conflict, the impact again on energy
05:51and fertilizers.
05:52Because what's it like working with the prime minister when these challenges come and you sit
05:58in the prime minister's office and talk about how do you overcome these challenges?
06:02Of course, I mean, I don't sit in the prime minister's office.
06:05The chief economic advisor's office is part of the ministry of finance.
06:09But I do do regular periodic updates on the macro situation to the honorable prime minister.
06:15I think one of the things that you alluded to in your own initial intro remarks is his laser-like
06:22focus
06:23and his ability to remember details and to ensure follow-up and a steady hand.
06:30At the same time, not losing focus on the underlying inherent strengths of the economy for meeting
06:38short-term needs.
06:39He doesn't sacrifice the long-term macroeconomic stability or financial prudence, even if the
06:46short-term situation calls for remedies.
06:48He's able to keep an eye on the medium-term strengths that have been serving Indian economy
06:54very well over the last 12 years, even as he has to take short-term measures to make sure
06:59that the economy is able to handle the crisis.
07:01We saw that in the pandemic, we saw that during the 2022 Russia-Ukraine crisis, and even this
07:08year, in ensuring supply of cooking gas, natural gas, crude oil, diversifying the sources,
07:14using the crisis to make people move from cooking gas to pipe natural gas, etc.
07:19And then in the last two years, you have seen the liberalization of nuclear energy, the draft
07:24rules have been announced recently, and also launching the critical minerals and rare earth
07:31mission.
07:31So, it is the ability to manage the short-term crisis and the exigency, while keeping a very
07:37firm and clear-eyed focus on the medium- to long-term priorities, I would say, are his core strengths.
07:44Okay.
07:45And, you know, you've talked of GDP growth numbers, they remain strong, 7.8%, even though
07:51there was a storm in a teacup or more politically over certain numbers.
07:56But, if we were to come to rural income, for example, or wages, you know, which would give
08:03you that sense that as India grows, that journey towards Viksit Bharat, salaries are also going
08:09up.
08:10Now, that also remains under pressure.
08:12Now, what more needs to be done?
08:14And what is the Prime Minister and your entire team, you know, the Finance Minister, you, the
08:20entire team doing, to ensure that the growth should be felt across sectors?
08:25Yeah.
08:26Absolutely.
08:26Undoubtedly.
08:27I mean, economic growth, per se, would count for very little, unless it touches people's
08:32lives and makes a difference.
08:33There should be no doubt about that.
08:35And rural income and rural employment growth, if you look at the annual numbers, they have
08:40been steadily improving post-COVID.
08:42In fact, it is the recent monthly data that have been somewhat cyclically drifting lower,
08:50but annual numbers show a very robust growth in both the rural employment and incomes.
08:57Clearly, rural income growth is cyclical in nature, and this year's monsoon has introduced
09:02a certain sense of uncertainty with respect to agricultural output and rural demand down
09:09the road.
09:09So, government will be very much alive to the situation and responding to that, if necessary.
09:15But to your broader question about what we should be doing, and in fact, the government
09:19has been doing a lot.
09:20I think memories are a bit short these days because of the onslaught of information from
09:26social media.
09:27But July 2024, budget by the government was exclusively focused on employment, whether it
09:32is corporate internship, apprenticeship schemes, incentives for first-time jobs created by
09:39companies in manufacturing and in non-manufacturing sectors, contributing to some of the provident
09:46fund contributions by the employees, the government taking over the employers' contributions so
09:51that they don't feel disincentivized to hire because of pension contributions which the government
09:56took over.
09:57So, the entire July 2024 budget was about employment generation.
10:01Second, the labor-intensive free trade agreements that the government is now signing with the
10:08UK, it is now active.
10:09And with the European Union, it is going to become active by the end of the year.
10:14And these agreements open labor-intensive goods and services sectors for Indian producers and
10:20entrepreneurs.
10:21And the third thing that the government is doing, it is actively facilitating deregulation
10:27efforts in states.
10:29And that is an effort underway both in the union government, of course, that is separate,
10:33but in the states as well, where there is a touchpoint of the local governments with
10:39the businesses, small businesses.
10:40And this deregulation will lower the cost of doing business for small and medium businesses
10:46in states and therefore contributing to their hiring much more.
10:51So, I would say fiscal initiatives, free trade agreements, deregulation initiatives, and the
10:59various incentives given for capital formation by the states, 50-year interest-free loans, and
11:07ensuring that credit availability to MSMEs, look at the MSME credit code from the banking
11:13sector, it is running at nearly 23%.
11:15So, all these things, and then the various initiatives given for startups and new businesses,
11:21et cetera, all of these things, given the uncertainties, despite the global uncertainties, all of these
11:27things are contributing to keeping up job creation and will continue to facilitate job creation in
11:34the Indian economy in the coming years.
11:36And manufacturing, that's been one of the key focus areas and key result areas for the
11:42Prime Minister.
11:43We've heard him talk about Atmanir Bharat, increased manufacturing on ground.
11:50I mean, considering China manufactures so much that it's exporting finished products on ground,
11:56how much of our manufacturing is actually taking off?
11:59What more needs to be done to ensure that our manufacturing is world-class, competitive, and
12:06export-oriented too?
12:09Sure.
12:09I mean, the entire PLI initiative is all about bringing manufacturing to a greater share of
12:16gross value addition, GVA, in the economy.
12:19And in fact, in constant prices, India's manufacturing share of GVA has been rising from 14% something
12:27to 16.1% in the last three years in constant price terms.
12:32And I think apart from the PLI initiatives, ensuring energy availability, ensuring skilling,
12:39creating these free trade agreements so that manufacturing can export goods with lower or no duties,
12:46etc. And also creating this, reducing the customs duties on intermediate goods and inputs,
12:55which were the major planks of the budget announced in February 2026.
13:01And then creating demand visibility for manufactured goods in the country through reduction in direct
13:07taxes and indirect taxes in the course of 2025.
13:10All these are all measures to ensure that Indian businesses continue to grow their manufacturing
13:19share because free trade agreements bring in an element of competition as well.
13:24And then also induce businesses to invest in R&D.
13:27So multiple measures are underway and the manufacturing share of GVA rising
13:32is showing that these efforts are bearing fruit.
13:35And how would you describe, you know, Prime Minister Narendra Modi's personal role in shaping
13:41the economic policies in the past 12 years and of course the road ahead?
13:46Because $4 trillion to reach that $30 trillion mark by 2047, this will have to grow
13:52a multifold and manifold now, sir.
13:55How to describe his personal role is to simply say that he is the architect of the economic policy.
14:00He is the architect of the manufacturing vision and of the world-class infrastructure that
14:07India has been creating over the last 12 years.
14:10And also he is the one who anticipated the supply chain disruptions and weaponization that could
14:18happen and which is why he called for Atmanidbartha and indigenization since the Russia-Ukraine war
14:25broke out.
14:25And I think his emphasis on indigenization is turning out to be prescient, even that more
14:31and more supply chain choke points and weaponization is emerging increasingly so in the world.
14:37And then when you look at the fiscal prudence and fiscal stability, which has brought down
14:42the overall interest rates in the Indian economy, even though it has gone up in the last few
14:47weeks or so, the 10-year bond yield at 7% from India is at historical lows, which is what
14:54brought
14:54us the credit rating upgrade as well, even as it improved the quality of fiscal expenditure
15:00by increasing the capital expenditure share and lowering the revenue expenditure share.
15:05All of these things are, he is the architect of all these policies, whether it is financial
15:11inclusion, Jandan Yojana and the mobile phone and the jam trinity, digital public infrastructure.
15:18We all know that he is a big believer in the role of technology in improving lives and improving
15:25efficiency in the economy.
15:27So I would say his imprint is very evident in almost every major policy initiative and
15:34the macroeconomic stability that have underpinned India's rise amidst massively rising global
15:41uncertainties.
15:42So that is why we are confident that while there are challenges, because we are a lower middle
15:47income economy right now, there are challenges about in geopolitics, in climate change, in supply
15:53chain, etc.
15:54We are confident that we can meet these challenges because he has focus, he has determination and
16:01he has vision and the passion to deliver on India's Vikasit Bharat aspirations.
16:07Sir, for joining me here on this India First special broadcast, because that vision and that dream
16:13of a Vikasit Bharat by 2047, you know, that's actually a nation's dream to be a developed country
16:21and that inclusive development.
16:23Many thanks for joining me and hope to have you on India First more often.
16:26Many thanks, sir.
16:28Welcome.
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