KOCHI: While there is heightened global uncertainty due to the ongoing conflict in West Asia, India’s economic fundamentals remain strong enough to withstand the shock, chief economic advisor Dr V Anantha Nageswaran said on Tuesday.
He was delivering the post-Budget lecture organised by the Cochin Chamber of Commerce and Industry. Anantha said that the bigger concern is not how long the conflict lasts, but whether global supply routes stabilise anytime soon.
India, he said, is closing the current fiscal year with a growth of around 7.6 per cent, alongside moderating inflation and a significantly improved fiscal position. “The reduction in fiscal deficit over the past few years has helped keep borrowing costs in check and enabled the private sector to raise capital more freely,” he said.
At the same time, he cautioned that the West Asia situation could disrupt energy supplies, push up logistics costs and affect both imports and exports. “Freight rates have already risen sharply and any slowdown in Gulf economies could have a bearing on remittance flows to India.”
The issue is not just the conflict, “but whether supply chains return to normal,” he said, adding that volatility in oil prices and trade costs could linger even after the hostilities subside. Anantha argued for “intelligent import substitution”, where domestic industries are encouraged to scale up with clear performance expectations, rather than through open-ended protection.
He also flagged broader structural challenges, including urban planning, skilling and energy strategy. On energy, he said “affordability and reliability must remain a priority even as India expands its capacity.” Despite the risks, he said that India is better placed than in previous crises, and can turn the current disruptions into an opportunity if it continues to focus on long-term capacity building and policy discipline.