India must focus energies on deregulating the economy to the extent that millions of small and medium enterprises are able to dedicate their inherently limited management bandwidth to growing their businesses rather than devoting that to compliance purposes, Anantha Nageswaran, Chief Economic Advisor, said on Monday. 

Of all the things, this is the single most important requirement from the point of elevating the country’s potential growth, Nageswaran said at the GreenReturns 2024 Summit, organised by the Indian Venture and Alternate Capital Association (IVCA) in the capital.

CEA’s remarks on need to prioritise economic growth is significant as it came close on the heels of India clocking a seven quarter low growth of 5.4 per cent for July-September 2024.

“As things stand today, India’s potential GDP growth is 6.5-7 per cent and this could be achieved on the back of things done in the last ten years or so—Whether it be in terms of augmenting physical infrastructure or achieving financial inclusion and productivity enhancing investments in digital public infrastructure”, Nageswaran said. 

“However, given that our size is huge, if we have to achieve growth higher than 6.5 per cent in the face of energy transition that is required to be done, then India needs to double the efforts, not only in public and private sector investments, we have to deregulate the economy…”, Nageswaran said.

The CEA also said that aspirational countries like India must prioritise economic growth over energy transition, noting that there cannot be energy transition without economic growth.

“Focus on climate change and energy transition is no longer a choice, but a necessity. If energy transition is a necessity, then economic growth is also a necessity and not an option to us”, he said.

Nageswaran urged public authorities to take steps to bring down the cost of capital for India Inc.

“Economic growth gives us the confidence, gives us the base of incomes and wealth that we can draw upon to continue on the journey of energy transition. Whether we like it or not, economic growth requires both affordable and reliable sources of energy”, he addd.

Nageswaran also underscored the need for private capital to take up responsibilities and do some heavy lifting on the financing of energy transition efforts.

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