India a 'bright spot' amid global uncertainty, says Chief Economic Advisor

Thiruvananthapuram: India remains a rare "bright spot" in a world facing growing uncertainty, said Chief Economic Advisor (CEA) V Anantha Nageswaran, pointing to the country's steady economic performance despite ongoing global challenges.

Talking to PTI, the CEA said that while conflicts and disruptions have been part of the global scene since 2022, they have become more intense and unpredictable, making the overall environment--whether political, economic or security-related--far more difficult for growth across the world.

"You could say that downside risks are higher than the potential for upside surprises," Nageswaran said, when asked for his views on the impact on the Indian economy due to rising global uncertainties caused by military conflicts in West Asia, between Ukraine and Russia, and also between India and Pakistan, as well as tariff wars.

He said this is not just a problem for India -- it's affecting many countries.

"To some extent, one can say that the global environment today--whether political, economic or related to security--has become considerably more complicated and more challenging for growth, not just for India but for several countries, almost for the entire world economy," the CEA said.

But under these circumstances, Nageswaran said he believes that India does indeed stand out as a relatively "bright spot."

Noting that India's economy has shown resilience since the COVID-19 pandemic, achieving strong growth while also improving its fiscal health, he said, "We have reduced the fiscal deficit and brought down government debt levels."

According to him, this has helped build confidence among investors, as reflected in the narrowing gap between Indian and US 10-year government bond yields-- "something we've never seen at this level before."

The CEA said India's current growth of around 6.5 per cent is a significant achievement under the circumstances.

Given how tough the global climate has become since the 2008 financial crisis, maintaining this rate is no small feat, he said.

While the government continues efforts to raise the growth rate to 7 per cent and beyond, Nageswaran cautioned that the world is no longer operating under the same favourable conditions it once did.

The CEA said that the government is doing the hard work to grow faster, but even maintaining a 6.5 per cent growth rate was a solid outcome in today's world.

Nageswaran said India's strategic edge in its ongoing tensions with Pakistan, along with its steady economic reforms, is reinforcing the country's image as a stable and secure investment destination.

India has not only asserted clear dominance in the recent standoff with Pakistan but also demonstrated maturity and confidence in global diplomatic forums. This has contributed to the perception of India as a reliable and strong economy, Nageswaran said in response to a query.

He added that India's status as a reliable investment destination is also supported by the fact that the country has recovered from the COVID-19 pandemic shock far better than many other nations -- in terms of growth rate, job creation, and fiscal management.

Asked whether India's superior strategic position in the conflict with Pakistan is influencing defence-related industrial growth, particularly under the ‘Make in India’ and Atma Nirbhar Bharat initiatives, he said that indigenous equipment has performed well and boosted morale.

He said this success has encouraged greater self-reliance.

According to him, in today's shifting geopolitical climate, India cannot afford to depend on unreliable supply chains. Nageswaran said the country must produce domestically to ensure strategic autonomy.

The CEA added that India's defence sector has made strong gains over the past decade under the leadership of Prime Minister Narendra Modi, with exports steadily rising.

"It is an ongoing exercise. We have gone from nowhere to becoming a major global defence exporter. This progress will only continue to strengthen. It is not a new development --as I mentioned earlier, it has been taking shape over the past 10 years," Nageswaran said.