'Private sector must invest, must hire and compensate fairly': CEA Nageswaran asks India Inc to step up

The private sector must step up investment, hiring, and research as India enters a period that will be very different from the past, Chief Economic Adviser V Anantha Nageswaran said on Tuesday.

"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," Nageswaran said at an ASSOCHAM Managing Committee Meeting and Special Session.

His remarks came as renewed geopolitical uncertainty pushed crude oil prices past $107-108 a barrel and hardened global bond yields over the past week.

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'Policy Cannot Drive The Economy Alone'

Nageswaran said India was entering the uncertain period from a position of strength. He pointed to strong bank credit growth, robust GST collections and healthy corporate and banking sector balance sheets.

He also cited India's recent sovereign rating upgrade to A- and the mobilisation of $137 billion through foreign exchange deposit swaps and external commercial borrowings.

High-frequency indicators such as vehicle sales, e-way bill generation, and export growth also pointed to sustained economic momentum, he said.

At the same time, he cautioned that the country would need to raise its game.

"This is a period of churn and this is an inflection point, and therefore what served us very well in the first 45 years since independence and then the next 30 years in the liberalisation era, both of these things may not necessarily be adequate for the next 25 years. We need to raise our game in multiple respects," he said.

The CEA said policy support would continue, but it could not be the sole driver of growth. "Policy will play its part, but policy cannot be the only instrument that drives the economy forward," he said.

The government would "continue to remain growth supportive, maintain macroeconomic stability and pursue deregulation and ease of doing business both for small and large enterprises," he added.

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AI Must Complement Labour

Nageswaran also said India would need a different approach to artificial intelligence from the hyperscale, capital-intensive model being pursued elsewhere. He pointed to edge AI, which can run on CPUs rather than GPUs while keeping data local, as an area with promise for India.

"We have to find ways in which we use AI to complement rather than displace labour, because we are a large country," he said. "For countries that are ageing, demographically AI could be a blessing. But for India, it has to be made into a blessing it won't happen easily."