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Informist, Thursday, Sept. 24, 2026

 

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--CEA: Supply shocks now rule global economy
--CONTEXT: CEA Nageswaran speaking at 13th SBI Conclave 
--CEA: Demand for energy will continue to put pressure on prices going forward 
--CEA: Tariff issues, energy price pressure pose near-term headwind for India 
--CEA: Absence of AI play pose near-term headwind for India 
--CEA: Have to be prepared to tackle supply-price variable in crude 
--CEA: BOP will remain challenge going forward 
--CEA: Need to have buffer stocks for many commodities 
--CEA: Need to focus on creating jobs that use AI 
--CEA: Don't expect rupee to remain under continuous depreciation pressure 
--CEA: FTAs act as catalyst for AI 
--CEA: Have opportunities to grow in textile, footwear sectors
 

 

MUMBAI – The limited presence of Indian companies in artificial intelligence, US tariffs, and volatile energy prices pose near-term headwinds to India's economy, finance ministry Chief Economic Advisor V. Anantha Nageswaran said at the 13th SBI Banking and Economics Conclave here. Supply shocks currently rule the global economy, he said.

 

Amid current global uncertainties and volatile crude oil prices, Nageswaran said the country should also be prepared to tackle both supply and price risks over the next eight months. "Our own energy market is concerned, we came down to below $85 (per barrel) in June, July and partially in August. So this is something for us to keep in mind and how we are going to manage this," he said.

 

He added that inflation will remain "sticky" due to physical supply constraints on commodities, increased demand for power and water for artificial intelligence development, and trading restrictions. Global demand for energy would continue to put pressure on prices, Nageswaran said.  

 

Nageswaran also stressed the need to build buffers for several commodities. "... today, it's important not to focus on the important item as the one that is non-negotiable. But if we are able to get our niche place in producing even small items which are irreplaceable because of the global production chain, then we will become resilient and we will achieve some strategic leverage," he said. 

 

Balance of payments will remain a challenge, not just episodically but also strategically, he said. Rising imports and dependence on key commodities will keep pressure on the balance of payments, while recent measures by the Reserve Bank of India to attract foreign capital inflows are not a lasting solution, Nageswaran said.

 

Nageswaran said the rupee's real effective exchange rate has become competitive over the last 18 months, contributing to net export growth. However, he does not expect the rupee to remain under continuous depreciation pressure.

 

On the impact of artificial intelligence on jobs, Nageswaran said paradoxically the new technology will force India to focus on labour-intensive growth. "We inherited a capital-intensive model of development because that is what the legacy industrial revolution from the West gave us," he said. "But AI is going to force us to look at labour-intensive growth, labour-intensive manufacturing."

 

He said India's free trade agreements with multiple countries will continue to provide momentum for export growth and create employment opportunities in export-oriented sectors. He said the country needs resilience, not just self-reliance. "We need to aim for diversified abundance because replacing the foreign single source with domestic single source is not exactly resilient," Nageswaran said. 

 

The official said the country has to focus on growth in niche manufacturing areas. Engineering and chemicals, electronics and electronic components have scope for growth. "On the labour-intensive side, I would focus on basically both textiles and footwear. We still have opportunities to grow there," he said.   End
 

Reported by J. Navya Sruthi and Nandini Sinha

Edited by Saji George Titus

 

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