Growth estimates around 7% isn’t tariff-dependent, but a US agreement would further strengthen growth prospects, chief economic adviser V. Anantha Nageswaran said in a media interaction after tabling of the Economic Survey for 2025-26. An edited excerpt.
Will 7% projected growth be enough for Viksit Bharat by 2047, when earlier 8% was considered necessary?
Yes, the difference is largely about how growth is measured. The 8% figure is typically in dollar terms, while the 7% projection refers to real GDP growth in rupee terms. When adjusting for inflation differentials between India and the United States, 7% real growth in India can translate into 8% or more in dollar GDP growth.
Over the past four decades, India’s GDP growth in dollar terms has averaged about 8.7%. Sustained 7% real growth, therefore, is broadly consistent with the pace required to achieve long-term development goals like Viksit Bharat.
The Survey stresses Centre–state coordination. How will states find resources when large sums are committed to cash transfers?
So far, strong nominal growth has given states enough fiscal space to sustain these transfers. That is why the combined fiscal deficit remains around 2.8%, with no major slippage so far. However, some of this spending has come at the cost of capital expenditure by states.
This trade-off has been flagged as a concern because infrastructure investment is vital for sustaining long-term growth momentum.
How would a potential trade deal with the US affect growth?
Growth projections have been made keeping evolving trade dynamics in mind. India has signed multiple FTAs in recent years, including with the European Union.
The 7% growth estimate does not depend heavily on tariff outcomes, especially since timelines for any US deal remain uncertain. However, if such an agreement materialises, it would strengthen growth prospects further.
The Survey mentions more Quality Control Orders (QCOs), but also withdrawals. Why?
Several QCOs have been revoked or suspended after implementation experience showed that compliance costs exceeded benefits. This reflects a pragmatic approach: regulation must be grounded in economic realities. When evidence suggests that design or implementation imposes excessive burdens, the policy stance is revisited.
How do you view the recent depreciation of the rupee?
The depreciation reflects global factors, including geopolitical risks, that are beyond India’s control. The long-term solution lies in stronger manufacturing competitiveness and export performance. The rupee’s movement is broadly in line with other emerging market currencies.
Importantly, macroeconomic fundamentals remain stable. Sustained growth, structural reforms, and resilient exports should improve investor sentiment over time and support the currency.
What about the suggestion to reduce government stake in PSUs to 26% without losing their government character?
The idea is to explore stake monetisation without full privatisation. Currently, the government must hold 51% for a company to be classified as a government company.
However, in listed firms, a 26% stake provides special resolution rights. Since government ownership in many listed PSUs is around 60%, there is room for calibrated dilution. This would require amending the Companies Act to redefine the threshold for listed entities.
How is private capital expenditure performing?
Private investment is showing improvement. Data beyond official sources indicate rising momentum. CMIE reports investment announcements of ₹14 lakh crore in the first half of the current financial year, compared with ₹7 lakh crore a year earlier. Fixed assets of listed companies have also increased, pointing to a revival in private capex.