India's Financial Future: Balancing Growth with Caution

Chief Economic Advisor V Anantha Nageswaran emphasized the need for India to avoid financialization while pushing towards becoming a developed nation by 2047. He highlighted the country's robust economic growth prospects and warned of the negative consequences the phenomenon could impose, drawing lessons from developed nations' experiences.

India has one of the brightest global economic growth prospects, but according to Chief Economic Advisor V Anantha Nageswaran, the country must tread carefully to avoid 'financialization' as it aims to become a developed nation by 2047.

India's stock market capitalization is around 140% of the GDP, contributing to record profitability in the financial sector and presenting risks that deserve closer examination, Nageswaran stated.

He warned that financialization leads to the dominance of financial market expectations, impacting public policy and macroeconomic outcomes. Addressing the CII Financing 3.0 Summit, he advised retaining policy autonomy and cushioning the economy against global capital flow vagaries. Nageswaran emphasized finding a balance between national imperatives and investor interests.

(With inputs from agencies.)