New Delhi: Indian companies must instead hold cash, that their profits have improved and have healthy balance sheets, the chairman of the Council for Economic Advisory to the Prime Minister (EAC-PM) S. Mahendra in an interview with Mint.
Certainly, private investments show early signs of growth and are likely to speed up as soon as global uncertainty retreats, he said, before he admitted that government capital expenditures remain central to the short -term economic stimulus. He stressed that the growth of investments is the most effective strategy for India and hoped that the pace of rural and urban demand gathering would sit increased private investments.
US President Donald Trump released a disturbing tariff war against the world, causing a great deal of uncertainty of trade and promoting companies to detain new investments.
NEV stressed that the Indian economy has the ability to grow on a sustainable basis for rates needed to become developed by 11% to 12% and 7% to 8% for inflation over the next 25 years. However, states must make more effort to attract investments, domestic and foreign, said Dev.
The Indian economy has expanded by 6.5%in FY25, while the country’s central bank projected the same growth rate in FY26.
Above the normal monsoon, it is well auguled for higher farm growth in FY26, Dev said in an e-mail interview. While central programs improve agricultural productivity and cash transfers help to increase loan and investment, states should continue reform in this industry for faster growth and improving farmers’ income, he said.
The use of artificial intelligence offers both challenges and opportunities, but will probably have a general positive impact on jobs in India, said Dev, quoting a study on this topic.
Investment and consumption
Dev stressed that the growth of private investments must obtain dynamics as there is no lack of availability of capital.
“There are some green shoots on private Capex. Many state governments also attract domestic and foreign private investments. The corporate sector and banks now have more profits and their balance sheets are in good shape. So it is in some countries in some countries.”
“Increasing rural and urban demand will facilitate more private investments. Many companies have changed without debt and doubled their money on books. India Inc must instead maintain cash,” said Dev.
In order to achieve this objective, greater progress in the field of “easy business” at state level is needed, added Dev and quoted the case for deregulation carried out in an economic survey of 2024-25.
“Hopefully, private CAPEX will be more as soon as domestic demand will increase and global uncertainty will decrease. Once tariff concerns have been terminated, there will be more opportunities for investing for the Indian industry.
He also called on to maintain a move on government capital expenditure. “Generally, India’s growth strategy should be driven by consumption support. The study C. Rangarajna and DK Srivastava suggests that the growth strategy is the best choice and that government expenditures still hold the key to stabilizing or short -term stimulation.
On the other hand, private expenditures for final consumption or household expenditure, the largest part of the national income in India has expanded to 7.2% faster compared to 5.6% FY24 growth, said Dev.
“Consumption has played an important role in this growth. The Indian meteorological department (IMD) expects a normal monsoon this year and goes well for higher agricultural growth, rural consumption and lower inflation.
Although there is a volatility of agriculture growth, the resistance of agriculture to monsoon has increased over time as a result of increasing irrigation and other measures. The production of agriculture has increased over the last eight years to an average annual extent of 4.6%-2017-18 to 2024-25, said Dev and added that FY25 also recorded a rate of growth of 4.6%, which significantly contributed to gross growth (GVA) by 6.4%of the last fiscal.
Growth potential
The Indian economy is resistant and continues to be the fastest growing country among large economies, said Dev, adding that some estimates assumed the requirement of nominal GDP growth by 11-12% and real growth rate of 7-8% to achieve the objective of the developed countries by 2047.
“India has the potential to achieve these growth levels. The country is on the way to become the fourth largest economy in the world at the end of FY26. It also shows considerable progress towards almost eliminating extreme poverty and reducing the inequality of consumption,” added Dev.
Some increase in investment, including domestic and foreign private investments, efficiency of capital use and strengthening the overall productivity of factors, will increase India’s growth, he said.
“Increasing saving in the economy is important for higher investments. Structural transformation of the economy into production and employment from agriculture for production and services is also important for higher growth. India is doing well in service exports.
The youth population with a middle age around 28 years compared to the aging population of developed countries is another key driving force for India. Increasing urbanization will need more urban infrastructure and improve growth. Reduction of global uncertainties in the future will increase to higher growth. Increasing the strengthening of the position of women will increase Indian GDP. Goals 2047 also include inclusive growth and sustainability objectives, ”added Dev.
“In terms of growth in India, states play an important role. It is a healthy sign that states compete by announcing HDP and GDP goals per capita. Many studies have shown that the improvement of” state capacity “and administration is important in increasing people’s income and providing public services such as education and health.
(Tagstotranslate) growth in private investment
