Profit growth has outpaced wage growth in recent years: CEA Nageswaran

Chief Economic Adviser (CEA) V Anantha Nageswaran has said income inequalities widened after the 2008 global financial crisis and again during the COVID pandemic, noting that profit growth has outpaced wage growth in recent years.

He was speaking at the launch of the book “Reimagining India’s Economy: The Road to a More Equitable Society”, penned by Arun Maira, here on Monday.

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A panel discussion on the book urged policymakers and industry to rethink India’s growth model and measurement systems, saying GDP alone is insufficient to capture social and economic well-being.

Nageswaran agreed on the limitations of GDP, but emphasised that growth remains necessary.

“Inequalities widened after the 2008 global financial crisis and again during the Covid-19 pandemic, noting that profit growth has outpaced wage growth in recent years. If your cars are made by robots, remember, robots won’t buy your cars,” he said, arguing for stronger domestic demand supported by living wages and reskilling.

The CEA also called for regulation that is smarter rather than merely more extensive.

“We do not need more regulation, we need better regulation,” he said, while stressing that deregulation in some areas can help micro, small and medium enterprises shed the fear of growth. On industrial policy, he said the next quarter-century will require focused strategies that combine strategic resilience with employment generation and sunset clauses for protection.

Maira, a former member of the Planning Commission, argued that the economy must be treated as a complex, self-adaptive system whose health cannot be summarised by a single number. “GDP is not the economy; it is a number about the economy,” he said, adding that other gauges for social well-being and equity are essential if growth is to be sustainable and inclusive.

He recalled that India once matched China in manufacturing capability and said that policy choices made after the 1991 economic reforms had contributed to a loss of industrial learning.

The solution, he said, lies in rebuilding institutional capacity and national learning systems so enterprises and policymakers can acquire complex manufacturing capabilities over time. “Development is people learning together,” he added.

Sunil Kant Munjal, chairman, Hero Enterprise said India must cultivate a culture of questioning and experimentation in education and business. He urged schools to prioritise inquiry and communication over rote learning and called for recognising efforts as well as outcomes within corporate culture.

“We are growing, but not enough and not in the right areas,” he said, adding that the art of communication had suffered amid changing social and political discourse.

The book has been published by Speaking Tiger Books.