Chief Economic Advisor V Anantha Nageswaran highlights deregulation as a pivotal theme for the upcoming Economic Survey 2024-25. Growth prospects of 6.5-7% for FY25 remain feasible, but workforce informalization and stagnant wages could impact consumption.
Deregulation to Be a Central Theme in Economic Survey 2024-25
The upcoming Economic Survey 2024-25, to be presented alongside the FY26 Union Budget, will spotlight deregulation, Chief Economic Advisor (CEA) V Anantha Nageswaran revealed during an industry event hosted by Assocham. Deregulation aims to streamline processes and reduce bureaucratic hurdles to enhance economic efficiency.
The CEA also underscored that India’s growth projection of 6.5-7% for FY25 remains achievable but stressed the importance of addressing workforce challenges and wage dynamics to bolster consumption and savings.
Economic Growth Amid Workforce Challenges
Addressing the post-pandemic economic landscape, Nageswaran highlighted the phenomenon of “creeping informalization” in the corporate sector. This trend, characterized by an increased preference for contractual over regular employees, has resulted in stagnant wage growth that fails to keep pace with inflation.
Such hiring practices, while beneficial for individual companies, have a collective impact on consumption levels. “Post-COVID, workforce informalization has created downward pressure on consumption,” the CEA explained, emphasizing that companies must rethink hiring strategies to foster growth.
Focus on Wage Structure for Sustained Growth
Nageswaran pointed out that correcting the corporate wage structure is pivotal for accelerating domestic consumption and savings rates, both critical components of India’s economic growth engine.
“The current wage growth for contractual employees is inadequate to offset inflationary trends. For consumption to drive growth, there needs to be a structural correction,” he stated, urging corporates to align hiring practices with long-term economic goals.
Deregulation: A Growth Catalyst
The focus on deregulation in the Economic Survey aligns with India’s commitment to improving its business environment. By simplifying policies, the government aims to:
Enhance ease of doing business.
Attract foreign direct investment (FDI).
Encourage entrepreneurship and innovation.
This approach is expected to mitigate inefficiencies and stimulate sectors that have been constrained by over-regulation.
Growth Forecast for FY25: Optimism Amid Challenges
Despite global economic uncertainties, the Indian economy is on track to achieve a 6.5-7% growth rate in FY25. The CEA attributed this resilience to:
Strong fundamentals in the manufacturing and services sectors.
Sustained growth in exports and private investments.
Strategic fiscal and monetary policies.
However, challenges such as rising inflation, workforce informalization, and sluggish wage growth could temper the growth momentum if left unaddressed.
CEA’s Vision for India’s Economic Future
Looking ahead, Nageswaran called for a balanced approach to policymaking, blending market-driven reforms with targeted interventions to address structural weaknesses. The upcoming Economic Survey is expected to present actionable insights and reforms aimed at sustaining India’s growth trajectory.
Key Takeaways from the CEA’s Address
Deregulation will be a cornerstone of the Economic Survey 2024-25, promoting economic efficiency.
Workforce informalization and wage stagnation pose risks to consumption-driven growth.
Growth prospects for FY25 at 6.5-7% are realistic but contingent on addressing workforce challenges.
Corrective measures in corporate hiring and wage structures are critical for enhancing domestic demand.
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