NEW DELHI: India’s economic energy hasn’t lost its spark this year—just take a peek at all those fast-moving economic indicators lighting up dashboards across the nation. Trade concerns might grab the headlines, but they aren’t the only things shaping our outlook.
At a recent gathering, the government’s Chief Economic Advisor, V. Anantha Nageswaran, reminded everyone that other structural challenges must not slip out of focus.
Tackling consumption and liquidity hurdles
Remember the much-discussed slowdown in private consumption last year? According to Nageswaran, it wasn’t mysterious at all—it reflected a squeeze in credit and liquidity. That’s why the government rolled out generous tax cuts for the middle class in the Union Budget, aiming for a demand boost.
Meanwhile, the Reserve Bank of India joined the party with a 100-basis-point policy rate cut and ample liquidity infusions, helping to prop up broader growth.
Nageswaran also urged patience in evaluating the real effects of US tariffs on India’s growth story. It’s still too soon, he said, to quantify the drag (if any) that these measures might create for India’s GDP trajectory.
AI, chips, and India’s next leap
Here’s where things get interesting—if we want to keep pace with global heavyweights like the US and China, India needs to up its game in artificial intelligence (AI) and semiconductor manufacturing.
While the US holds sway in AI breakthroughs and chip innovation (think Nvidia, Intel, AMD), and China surges ahead with aggressive state-led chipmaking, India is just getting started. The government’s moves—such as the Semicon India initiative—signal we mean business.
On top of that, the recent Cabinet decision to invest Rs4,600 crore in four semiconductor projects across Odisha, Punjab, and Andhra Pradesh sends a strong message. It’s a vital step for domestic capacity and strategic autonomy in tech.
Nageswaran didn’t mince words about what’s holding India back: energy transition, securing reliable supplies, harnessing AI’s economic punch, and—crucially—ensuring everyone works together. That last element is key: strong coordination between government and private sector, pooling resources, and looking past quarterly profits to build for the future.
Switching gears, the CEA pointed to emerging consumer behaviours that could change how we read the economy. A big chunk of spending is now flowing toward online gaming and speculative markets. Just in July, he observed, online gaming alone racked up roughly Rs10,000 crore—a gigantic annual run rate of Rs1.2 trillion!
There’s a parallel with options and derivatives speculation on the markets. In both worlds, it’s often “the house that builds,” not the ones making wild bets. At the same time, urban consumption patterns are shifting under the radar, with more spending moving from listed to unlisted companies—making it tricky to measure what’s really happening in the booming services economy.
