Keep `engine of agriculture' humming, says chief economic advisor

India's economy is too complex for a singular focus on sectors like manufacturing or services to achieve the developed-nation status, chief economic adviser V. Anantha Nageswaran said, highlighting the need to pursue multiple avenues simultaneously.

Speaking at the Mint India @2047 summit, Mr Nageswaran called attention to the latest Economic Survey, which noted increasing industrial competition worldwide, with even developed countries trying to reclaim their manufacturing share through active policies.

With the services sector prospects impacted by technological developments like artificial intelligence, India has no choice but to keep the engine of agriculture humming as an important lever in its economic growth prospects, Mr Nageswaran said.

Plenty of value to be unlocked in agriculture

“There is much to be unlocked there (in the agriculture sector) as we move from cereals to other value-added crops and allied sectors, which is mainly fisheries, poultry, etc., and using all these three allied services and crop diversification to improve food processing and cold storage and agro-based entrepreneurship, etc. There is much more value to be unlocked rather than consigning agriculture as a vocation of the past,” Mr Nageswaran said.

“And you have to remember that it's an opportunity but also a challenge because human bandwidth is relatively limited, and so is the bandwidth of policymakers or the private sector or the economists. But we need to focus on all applications and all sectors, whether it is services, education, medical care, health sector information technology, banking and insurance,” he added.

According to the Economic Survey 2023-24, released in July ahead of the annual budget, India's goal of becoming a developed nation by 2047 faces global and domestic challenges. The country's priorities include securing supply chains, balancing energy needs with economic and environmental goals, and addressing the impact of emerging technologies.

The survey identified several critical factors hindering India’s medium-term economic growth, which include growing geo-economic fragmentation leading to resource nationalism and a trade-off between operational efficiency and resilience.

Industries of all kinds needed

“And when it comes to industry, low and medium and high skilled industries, we need all of them because in the global context, sometimes we need to focus on the high-tech sector as well, because some of the critical supply chains may not be made available,” he added.

Responding to criticism that India's economy is not industrialised enough, Mr Nageswaran highlighted two major setbacks for its manufacturing sector and capital formation: the non-performing asset crisis, which slowed private investment in machinery, and the non-banking finance company crisis.

He said governments across the world can only achieve two of the three between technology and artificial intelligence, maintaining labour share of income, and maintaining fiscal prudence.

“So, in other words, the private sector has to have a lot of medium- to longer-term horizons and look at the social implications of some of the things that we are forced to do," he said.

“Therefore, the challenge is not just for policy-makers, but also for chroniclers to help by maintaining balance and objectivity and consideration of all facts, circumstances, and context, and remembering the fact that India's journey is truly extraordinary and unprecedented,” he added.

(By arrangement with livemint.com)