Chief Economic Advisor V Anantha Nageswaran on Monday said the private sector needs to invest more in technology and research and development, and pay the MSME suppliers on time to help the economy.
Stating that Indian economy cannot remain “exempt” from the global challenges but it remains resilient and is poised for a rebound as the banking system is better, inflationary issues are peaking out and ongoing recovery is healthy, the CEA said.
“It is to our credit so far that we have managed to keep the impact at more manageable levels so far. But it should require continuous vigilance, continuous action and discipline for policymakers,” he said while speaking at a virtual meeting with the Calcutta Chamber of Commerce.
Citing examples of several economies facing very high inflation, Nageswaran said India is in a relatively better position and the majority of its sectors are doing quite well despite market volatility and inflation.
Nageswaran emphasised the need to focus on R&D and innovation for long-term benefit.
“We need to embrace technology. On a global index, we are very low in R&D spend. Government spending is 52 per cent,” Nageswaran said, urging the private sector to invest more.
Nageswaran also said the private sector should make payments to MSME as that will also help the economy revive better.
He said the rebound in capital goods companies' order books is an indication that the investment cycle will pick up.
Praising the government's efforts on several structural reforms, the economist said, “The real fruits of these reforms will be reaped from 2024 onward when the ongoing shocks will phase away.”
Lauding the role of the Reserve Bank of India in managing inflation by increasing interest rates, Nageswaran said he expects that the central bank will be able to bring inflation to 6.5 per cent.