Economic Resilience Amid Global Uncertainty
Chief Economic Adviser (CEA) V Anantha Nageswaran has asserted that the Indian economy is better positioned to withstand renewed geopolitical tensions, elevated crude oil prices, and hardening global bond yields than to become vulnerable. Speaking at an event organised by Assocham on Tuesday, Nageswaran highlighted several structural strengths that underpin this resilience.
Key indicators cited include robust bank credit growth, strong Goods and Services Tax (GST) collections, and healthy balance sheets within the corporate and banking sectors. Nageswaran noted that India successfully navigated the geopolitical tensions observed between February and July, achieving a GDP growth rate of 7.8 per cent in the April-June quarter. High-frequency data, including vehicle sales, e-way bill generation, and export growth, further corroborates sustained economic momentum.
Fiscal Prudence and Deficit Projections
The CEA emphasised that the government has maintained a path of fiscal prudence. While earlier concerns suggested the fiscal deficit could slip to 5 per cent in 2026-27, recent improvements in government revenues and a decline in oil and fertiliser prices have provided confidence. Consequently, the Centre now projects the fiscal deficit for FY27 to be closer to 4.3 per cent.
India’s entry into this phase of global uncertainty is from a position of strength, Nageswaran stated. This is evidenced by the recent sovereign rating upgrade to A- and the mobilisation of $137 billion through foreign exchange deposit swaps and external commercial borrowings.
Strategic Shifts in Policy and Industry
Nageswaran described the current period as an "inflection point," suggesting that strategies effective in the previous 75 years of independence and liberalisation may not suffice for the next 25 years. He urged the private sector to increase investments in hiring, employee compensation, and research and development (R&D), noting that the post-World War II economic landscape will differ significantly in the coming two decades.
Regarding artificial intelligence, the CEA advised against replicating the hyperscale, capital-intensive models pursued by some other nations. Instead, he advocated for technologies such as edge AI and CPU-based computing that allow data to be retained locally. "We have to find ways in which we use AI to complement rather than displace labour, because we are a large country," Nageswaran said.
He also highlighted the need for individuals to focus on mental, physical, and emotional wellbeing, while encouraging young people to acquire trade skills alongside conventional education as AI reshapes employment patterns. The government reaffirmed its commitment to remaining growth-supportive, maintaining macroeconomic stability, and pursuing deregulation to ease the business environment for enterprises of all sizes.