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2026 could be deemed as inflection point for India, focus should be on building domestic capabilities: CEA
Oct-30-2026

At a time when India is facing global shocks and supply-side disruptions, Chief Economic Advisor V Anantha Nageswaran has said that the year 2026 resembles 1991 and it could be deemed as an inflection point for the economy. He added that while the 1991 balance of crisis brought four decades of accumulated constraints to a head- a moment of reckoning more than a passing shock- the external stress of 2026 has brought India to a fork in its growth journey and invites a fundamental re-examination of strategy. He flagged that the economy is facing both external challenges and structural constraints in manufacturing, energy, agriculture and technology. To address these challenges, he suggested that governments and industries must focus on building domestic capabilities and reducing dependence on supplies that could be restricted during geopolitical tensions.

Emphasizing the significance of monetary policy in coming period, Nageswaran said that the next 20 to 30 years will be different from the 40 years pre-pandemic as most of the shocks before the pandemic were largely demand deficiency shocks. He added that every single crisis was met with a standard playbook of low interest rates, together with or without quantitative easing, and some fiscal stimulus as well, and it is easy to stimulate when the problems as only a matter of demand deficiency. However, in the next 30 years, monetary policy will be much more difficult to execute in a world of supply shortages causing real economic disruptions, both to output and to inflation.

On war in Middle East, he said that the conflict has underscored India's vulnerability, not just with respect to crude oil, but also with respect to several other commodities, natural gas, fertilizer, and cooking gas. Unlike the import-substitution policies followed in the decades after Independence, he suggested that the current approach must require industries to demonstrate export competitiveness or the ability to compete with imports at comparable prices.

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