Last year’s consumption slowdown from tight credit led government to announce major middle-class tax cuts
Mumbai
India’s economic momentum remains strong, supported by positive high-frequency indicators, Chief Economic Advisor (CEA) V. Anantha Nageswaran said on Wednesday. Speaking at an event here, he noted that while trade-related issues matter, they should not overshadow other key challenges.
He said last year’s consumption slowdown was driven by tight credit and liquidity, prompting the government to announce major middle-class tax cuts in the Union Budget. The Reserve Bank of India has also cut policy rates by 100 basis points and ensured surplus liquidity to aid growth. On US tariffs, he said it was too early to gauge their effect on India’s GDP.
Nageswaran stressed that India must boost efforts in artificial intelligence (AI) and semiconductor manufacturing to compete with the US and China. He identified energy transition, energy security, AI’s economic impact, and broad public-private collaboration as critical challenges.
Highlighting global competition, he pointed to US dominance in AI and chip design and China’s rapid chipmaking expansion. India has launched initiatives like Semicon India to strengthen domestic manufacturing. On Tuesday, the Cabinet Committee on Economic Affairs approved ₹4,600 crore for four semiconductor projects in Odisha, Punjab, and Andhra Pradesh.
Nageswaran also flagged shifting consumption trends, noting that online gaming spending hit ₹10,000 crore in July — an annualised ₹1.2 lakh crore — alongside rising speculation in options trading. He observed that much urban consumption is shifting from listed to unlisted firms, with services’ consumption underreported.
He urged private companies to focus on long-term national goals over short-term results, pooling resources with the government to meet strategic objectives.
