7 per cent GDP growth is doable for India despite global challenges: CEA Nageswaran

New Delhi : Achieving a 7 per cent GDP growth rate "is doable" for India despite the global environment has become more challenging since the beginning of the year, Chief Economic Adviser V. Anantha Nageswaran said on Monday after the Economic Survey was released.

"We were more confident of a 7 per cent GDP growth when we wrote the interim economic survey in January. Since then, the global environment has become even more polarised. Given that, we feel 7 per cent is doable, but yet we want to be not necessarily cautious but prudent," he said on the 6.5 to 7 per cent growth rate that has been projected for India’s GDP growth in the Economic Survey.

"We are not pessimistic, we are optimistic about growth. But we are mindful of challenges -- about the way the monsoon has progressed," he added.

He said that the agriculture sector still carries a huge potential to drive growth, allied sectors need to be encouraged and land consolidation is needed.

"We are facing a very challenging global environment, along with climate change, so we need to make sure we pursue all possible approaches without any ideological orientation," he said.

The Chief Economic Adviser (CEA) anticipates improved performance in the farm sector for the financial year 2024-25.

Furthermore, a widespread acceleration in industrial growth is also expected. He noted that the Production-Linked Incentive (PLI) schemes are achieving significant results as of May 2024. These schemes are gaining traction and demonstrating considerable progress in critical sectors like electronics and pharmaceuticals, with reported investments surpassing Rs 1.28 lakh crore. However, the idle capacity in China and low-skill manufactured goods can pose risks to India's capital formation.

There is a need to balance between the import of goods and FDI, he remarked. He was of the view that choosing the FDI strategy "appears more advantageous than relying on trade" as it can arrest the growing trade deficit India has with China.

Nageswaran further stated that India's corporate sector needs to ensure that the deployment of technology does not hurt the labour and capital share of income. It is necessary for India's IT and non-IT sectors to find the right balance between the deployment of technology and labour, he added. He highlighted the need to create 8 million jobs per annum and formalising the workforce in the Indian economy.

He pointed out the fact that the number of patents filed per year has gone up 17 times from 2015, reflecting the surge in innovations that were taking place in the country.

Nageswaran also mentioned the country’s lopsided distribution of enterprises with too many micro industries, some large, but with a huge gap in the middle which needs to be plugged to raise the share of manufacturing in GDP. "The clue to sustaining growth lies in the nuts and bolts of deregulation in the manufacturing sector," he added.

He also said that it is no longer about big-ticket reforms, "but the groundwork, the nuts and bolts of governance that we need to get right in order to drive growth forward".