Trust, Deregulation & Reciprocity Key To Avoiding Middle-Income Trap: CEA Nageswaran

New Delhi, May 29 (KNN) At the Confederation of Indian Industry’s Annual Business Summit on Thursday, Chief Economic Adviser (CEA) V. Anantha Nageswaran underscored trust, deregulation, and reciprocity as key to helping India escape the middle-income trap. 

Nageswaran emphasised that substantial regulatory overreach frequently originates from the private sector's failure to reciprocate institutional trust, creating systematic barriers to economic advancement.

The CEA counseled against excessive preoccupation with global economic uncertainties, highlighting India's domestic economy structure where private consumption constitutes 60 percent of gross domestic product. 

This domestic consumption foundation provides inherent resilience against external volatilities and positions the economy for sustained internal growth momentum, according to his assessment.

Nageswaran stressed the critical importance of comprehensive deregulation initiatives, particularly emphasising the need for enhanced focus on reducing business operation costs within government frameworks. 

He argued that streamlining internal government processes represents a significant opportunity for improving overall business environment efficiency and reducing administrative burden on commercial enterprises.

The CEA challenged conventional capital-intensive growth models, asserting that such approaches do not align with India's fundamental economic strengths and competitive advantages. 

He emphasised that sustainable economic development should eliminate trade-offs between capital interests and labor welfare, advocating for growth strategies that simultaneously benefit both stakeholders rather than creating competing priorities.

Addressing profitability and compensation dynamics, Nageswaran noted that profit growth has exceeded capital formation rates while simultaneously trailing behind compensation growth, which encompasses both salary increases and employment expansion. 

He identified this trend as indicative of balanced economic development that supports both business sustainability and workforce prosperity.

(KNN Bureau)