S. Mahendra Dev, Chairman of the Prime Minister’s Economic Advisory Council (EAC-PM), has called on Indian companies to stop hoarding cash and start making fresh investments, stating that the corporate sector is now financially sound and global uncertainties should not stall India’s growth momentum.
In an interview with Mint, Dev underscored that “India Inc has to make new investments instead of keeping the cash,” noting that many companies have become debt-free and have significantly improved their balance sheets. “There is no problem of capital availability,” he said.
While acknowledging early signs of a recovery in private investment, Dev pointed out that growth in this segment will pick up once global headwinds, such as trade disruptions and overcapacity in countries like China, subside. In the meantime, he emphasised that government capital expenditure remains crucial for short-term stimulus.
“An investment-led growth strategy is the best choice for India,” Dev said, citing a recent study by economists C. Rangarajan and D.K. Srivastava published in Economic and Political Weekly. He added that such a strategy also leads to more sustainable consumption growth.
Consumption and Capex Trends
Private final consumption expenditure — the largest component of GDP — grew by 7.2% in FY25, up from 5.6% in FY24. According to Dev, rural demand was a key driver of this rise. “The India Meteorological Department expects an above-normal monsoon this year, which augurs well for agriculture, rural consumption, and inflation control,” he noted.
India’s agriculture sector has shown resilience despite weather-related volatility. Between 2017-18 and 2024-25, agricultural output grew at an average of 4.6% per year — the same as in FY25 — contributing substantially to gross value added (GVA) growth of 6.4% last fiscal.
Investment Climate and State-Level Reforms
Dev highlighted that while India is on track to become the world’s fourth-largest economy by the end of FY26, sustained reforms at the state level are essential to attract both foreign and domestic private investment.
“There is a need for more progress on the ease of doing business at the state level. Factors such as availability of land, logistics, manpower, and governance capacity play a huge role,” he said. “States have to make more effort to invite foreign direct investment and domestic private investment.”
He welcomed the growing competition among states to set GDP and per capita income targets. “Improving state capacity and decentralised governance are crucial for raising incomes and delivering essential services like education and healthcare,” he added.
Structural Drivers and the 2047 Vision
Dev outlined a vision for India’s long-term economic transformation, suggesting that the country can sustain a real growth rate of 7–8% and nominal growth of 11–12% to meet its developed-nation goals by 2047. “India has the potential to achieve these growth rates,” he asserted.
He also flagged key structural enablers: a rising working-age population with a median age of 28, growing urbanisation, improved human capital, and rapid adoption of technology, including artificial intelligence (AI). “AI presents both challenges and opportunities, but overall it will have a positive impact on jobs in India,” he said.
Additionally, Dev noted that the increase in household savings, structural transformation from agriculture to industry and services, and growth in service and manufacturing exports will also help fuel India’s next phase of economic expansion.
“Increasing women’s empowerment and improving infrastructure for urban areas will also contribute significantly to India’s future growth,” he said, adding that inclusivity and sustainability must remain central to the country’s 2047 goals.
