CEA V Anantha Nageswaran discusses the focus on deregulation in India’s Economic Survey 2024-25, forecasting a 6.5-7% growth for FY25 and emphasizing workforce reforms to boost consumption and savings.
Deregulation: A Key Theme for India’s Economic Future
India’s Economic Survey 2024-25 is set to focus heavily on deregulation, Chief Economic Advisor V Anantha Nageswaran announced, signaling a shift towards simplifying regulatory frameworks to enhance business and economic activity. Nageswaran highlighted that the 6.5-7% growth forecast for FY25 remains achievable, provided the country addresses key challenges in its workforce and wage structures.
The CEA outlined that strategic reforms in these areas are essential to fuel sustainable economic growth, boost consumption, and increase savings rates across sectors.
The Informalization of the Workforce: A Growing Concern
The pandemic has led to significant changes in the structure of employment across India, with a rise in contractual and temporary workers. This trend, referred to by Nageswaran as “creeping informalization,” has impacted wage growth, as these workers are not receiving adequate pay raises in line with inflation. The CEA pointed out that this wage stagnation is putting downward pressure on consumer spending, a critical factor for maintaining economic momentum.
To address this, Nageswaran suggested that companies must reconsider their hiring practices and provide fair compensation to employees to stimulate consumer demand.
Wage Growth: A Crucial Factor for Economic Stability
Nageswaran emphasized the importance of aligning wage growth with inflation rates to support economic stability. Higher wages would increase the disposable income of employees, boosting consumer spending and encouraging increased savings. These factors are pivotal for driving the next phase of economic growth in India.
The CEA argued that improving corporate wage structures would directly contribute to a healthier economic environment, providing a boost to both domestic consumption and overall economic activity.
Deregulation: Unlocking India’s Growth Potential
The CEA’s focus on deregulation aims to:
Enhance the ease of doing business by removing unnecessary regulations.
Attract investments by simplifying compliance requirements.
Boost entrepreneurial activities, allowing businesses to grow without excessive bureaucratic hurdles.
These steps are expected to strengthen India’s position as a competitive global economy and create new opportunities for business expansion across various sectors.
India’s Growth Outlook for FY25
India’s growth forecast for FY25 remains strong at 6.5-7%, despite challenges in the global economy. The CEA believes this target is achievable, but it requires addressing the pressing issues of informalization and wage stagnation. By focusing on workforce reforms and deregulation, India can continue on its growth trajectory and maintain stability in the coming fiscal year.
CEA’s Recommendations for Growth
Focus on deregulation to boost business efficiency and attract investment.
Adjust wage structures to encourage higher consumption and savings.
Tackle the growing trend of workforce informalization to ensure fair wages for all employees.
Manage inflation effectively to maintain a stable economic environment.
