At the end of a long day chief economic adviser V Anantha Nageswaran spoke to TOI on a range of issues highlighted in the Economic Survey for 2024-25. He talks about the need for the private sector to think strategically about supply chain resilience and explore alternative sourcing in the face of China’s dominance across sectors. Excerpts:
The focus on role of private sector on 2 aspects: capex and real wages… What is the thinking?
Post-Covid, there has been a shift in compensation and hiring practices. We just want them to re-examine it from the point of view of demand growth and from the point of view of visibility for their own investment. The discussion on employment and hiring and compensation practices is something that we did even in the last survey as well when we just reiterated it. We also gave the example of the compact that Japan did arrive at between workers, employers and govt after World War II which enabled them to become a developed country within a generation. Govt allowed businesses to become large, promising productivity, and employers promised lifetime jobs guarantee and real wage growth in line with productivity growth. So that is a kind of compact that is needed in the Indian private sector. Moreover, the ask of the private sector was not just confined only to this issue of hiring and compensation vis a vis profitability. We also looked at issues like workplace safety, sale of ultra processed foods, and investment in R&D. There were multiple asks of the private sector in the survey across different chapters.
You have sought checks on ultra-processed foods, including higher taxes…
If the market, which is a consumer, is going to soon turn unhealthy, then it raises question marks on the viability of the long-term investment prospects of this area of business.
The survey talks about China’s dominance across sectors. What is the message here to policymakers and the private sector?
Policymakers are faced with this issue and that is why many of the schemes such as PLI and also the emphasis on creating domestic indigenous capacity in solar power generation, silicon wafers, modules, cells or panels has been instituted. The same thing related to battery technologies and battery storage. Govt is aware of it and has been acting with the private sector. These efforts have to continue. It is also a call for them to think somewhat strategically about some of these issues instead of purely from an economic cost perspective alone. You have to look at the supply chain resilience and look at alternative sources of sourcing as well.
The survey talks about concentration of production in China. Is there a need for more steps from govt in terms of access to technology?
These things take time when countries have invested in them to be able to arrive at the position that they are in today. We have to start the process of building domestic capabilities. That doesn’t mean that it happens overnight.
Is there a case for reviewing the pace of transition say in the case of EVs?
We also need to look at the kind of investments we make in public transportation, we need to therefore not look only at e-mobility as an answer to our fossil fuel imports or considering the environmental pollution of burning fossil fuels and traffic congestion and the productivity impact it has. Given the investments we have made in public transportation, we need to actively look at and promote that as a very viable means of conveyance for people by integrating it between road, metro and commuter trains. That is the way to go about it. Of course, the pace of good mobility growth can also be looked at not just from a point of view of emissions, but also from strategic angles and domestic capability angles.
The survey focuses a lot on deregulation. How hopeful are you and how critical is it to accelerate the pace of reforms across sectors?
We have mentioned it because it is critical. It is not as if those reforms have not been happening before; ease of doing business has been the focus of this govt at the Union govt level since 2014. Many states have also been implementing business reform action plans. States that have done well in business reform action plans are the ones that have seen industrial activity grow as well. It (observation in the survey) is about the pace and it is about taking it to the next level.
