Amid renewed geopolitical tensions, elevated crude oil prices and hardening global bond yields, Chief Economic Adviser (CEA) V Anantha Nageswaran has said that the Indian economy is more likely to remain resilient than become vulnerable. He said strong bank credit growth, robust GST collections and healthy corporate and banking sector balance sheets are providing resilience to the Indian economy. He noted that India had successfully sailed through the geopolitical tensions between February and July and clocked GDP growth of 7.8 per cent in April-June. At the same time, he said the government had stayed on its path of fiscal prudence and stability.
He said that while there were concerns that India's fiscal deficit could rise to as much as 5 per cent in 2026-27, the fall in oil and fertiliser prices, along with a sharp improvement in government revenues, gave the Centre confidence that the fiscal deficit could be closer to 4.3 per cent in FY27. Highlighting the country's recent sovereign rating upgrade to A- and the mobilisation of $137 billion through foreign exchange deposit swaps and external commercial borrowings, he said India has entered the current phase of uncertainty from a position of strength. He also cited high-frequency indicators such as vehicle sales, e-way bill generation and export growth as evidence of sustained economic momentum.
On the role of the private sector, Nageswaran said companies would have to step up investments, hiring, employee compensation and research and development. He said 'The private sector must invest, must hire and must compensate fairly and also invest in R&D because the next 20 years is going to be very different from the last 80 years post World War II.' However, he said policy support alone would not be sufficient to drive economic growth. He reaffirmed that the government would remain growth-supportive, maintain macroeconomic stability, and pursue deregulation and ease of doing business for both small and large enterprises.
