India’s external sector has become significantly more resilient and the country’s macroeconomic fundamentals are now better placed to withstand global shocks, according to Chief Economic Advisor (CEA) V. Anantha Nageswaran.
Speaking at NDTV Ignite Summit, Nageswaran said the risks facing the external sector have eased considerably, adding that the Reserve Bank of India (RBI) is unlikely to face pressure to draw down its foreign exchange reserves to manage the rupee.
On the external front, he said that the worst is behind us, attributed the improved outlook to prudent macroeconomic management and timely policy interventions during recent global disruptions.
Backing the RBI’s FY27 GDP growth projection of 6.6 per cent, Nageswaran said India’s macroeconomic situation is now much more under control despite uncertainties in the global environment.
Looking ahead, Nageswaran said India would need to sustain growth of around 8 per cent over the long term to achieve the goal of becoming a developed nation under the Viksit Bharat vision.
However, he stated that prolonged geopolitical tensions in West Asia or a sustained rise in crude oil prices above USD100 per barrel could weigh on growth and potentially lower the expansion rate to around 6 per cent.
On employment and technology, the CEA stressed the need to create new opportunities around the rapidly expanding artificial intelligence ecosystem. Workers would need to focus on skills that complement AI and remain less susceptible to automation-driven disruptions, according to him.
Pointing to improving corporate sentiment, the CEA said listed companies have stepped up investments, indicating signs of a revival in the private capital expenditure cycle.
Moreover, the rural economy is expected to remain supportive of growth, with Nageswaran expressing optimism about the upcoming kharif season.
Higher reservoir levels and improved sowing conditions are likely to support agricultural output despite concerns over a possible El Nino impact, he said.
Meanwhile, echoing the need for AI preparedness, former NITI Aayog CEO Amitabh Kant said AI would eventually become commoditised and India must build a strong talent base, robust data pools, progressive policy frameworks and scaled-up digital public infrastructure to emerge as a global leader in the field.
Kant described AI as a transformative force that could trigger productivity gains on a scale greater than those witnessed during the advent of electricity or computers.
“This will be the biggest of all revolutions,” he said, adding that while the world is grappling with geopolitical conflicts and supply-chain disruptions, it is simultaneously entering an era of unprecedented productivity growth driven by AI.
