29-05-2025
Must move savings into productive assets for 8-8.5% growth: RBI MPC member Nagesh Kumar
India faces a 'major issue' of domestic savings not getting 'translated' into productive assets, according to Nagesh Kumar, director of New Delhi-based Institute for Studies in Industrial Development and one of the three external members on the Reserve Bank of India's (RBI) Monetary Policy Committee. Speaking at a panel discussion on Thursday at the Confederation of Indian Industry's Annual Business Summit, Kumar said that without more investment in productive assets, India will not be able to increase its growth rate to 8-8.5 per cent from 6-6.5 per cent.
India's GDP growth rate in 2024-25 is seen at 6.5 per cent, the lowest in four years, as per the statistics ministry's second advance estimate, released in February 2025. The ministry will announce the provisional estimate for 2024-25 GDP on Friday. For the current fiscal, the finance ministry has forecast a growth rate of 6.3-6.8 per cent, while the RBI has projected an expansion of 6.5 per cent.
Kumar argued for the re-direction of Indian households' savings from speculative assets into productive investments. Fellow panelist Sudipto Mundle, chairman of the board of governors of Centre for Development Studies, also voiced his concerns about households' financial savings, which he said had to be increased. As per latest data, net financial savings of Indian households edged up to 5.2 per cent of GDP in 2023-24 from a multi-decade low of 5.0 per cent in 2022-23.
Skill gap
Mundle also warned of a skill gap in India's work force and said the government, in the short term, had no option but to encourage the growth of labour-intensive industries. In the long-term, the country faced the challenge of staying competitive in the face of transformations caused by generative artificial intelligence. To tackle this challenge, Mundle called for skilling the workforce and putting 'very serious' investment in research and development.
Ipsita Dasgupta, managing director of HP India and another member on the CII panel, echoed Mundle's views, going on to warn that 90 per cent of the 15 lakh engineers that graduate in India every year 'are unemployable as engineers'.
'We are the country that is actually going to power the rest of the aging world. And we need to seriously address the fact that there is 200-250 million students today who need to be employable, who need to be able to find work, and who need to fit into the global economy,' Dasgupta said.
