Upcoming Economic Survey to look into deregulation, employment: CEA Nageswaran

Addressing an event organized by industry body Assocham, Nageswaran underscored the need for deregulation at the state and local levels, drawing attention to the barriers limiting women’s participation in the labour force and the restrictions on occupations available to women in various states.

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“If you add them up, it comes to (about) 118 restrictions. These occupations are deemed risky for women to participate in at a time when women are operating fighter planes, participating in defence and flying commercial airlines (airplanes)," Nageswaran said.

“So, if you want to increase female labour force participation or employment, more generally speaking, the focus has to be on the plumbing of deregulation that has to happen in state and local governments," he added.

The upcoming Economic Survey, which analyses India’s economic performance and makes policy recommendations, is set to be presented in Parliament on 31 January 2025, ahead of the Union Budget 2025-26 presentation by the finance minister.

“We touched upon it quite a bit in the Economic Survey in July, and that is going to be the big theme. Deregulation or letting go is the big theme for the coming economic survey as well," he added.

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Nageswaran pointed out that in some states, mandatory setbacks, parking requirements and a low floor space index siphon off significant portions of land, leaving minimal space for constructing factory buildings.

“Many states have rules and regulations which are slightly better for medium and large enterprises. But it is the small enterprises that get affected by these regulations," he added.

Nageswaran said India faces the critical challenge of creating eight million jobs annually to meet the country’s growing workforce demands.

“We are doing our best to incentivize job creation by providing cash incentives and contributions to the provident fund for first-time hires, for new employee hires, etc.," he said.

“There is also a necessity for the private sector to find the right balance between capital-intensive growth and labour-intensive growth," he added.

Nageswaran also noted that the staff costs of privately listed companies, including those in the information technology sector and others, have been declining, indicating that compensation growth has been steadily weakening.

“Earnings growth has vastly outpaced growth in wages… There has to be a better balance between the share of income going to capital in terms of profits and the share of income going to workers as wages," he said.

“Without that, there will not be adequate demand in the economy for corporations’ own products to be purchased," he added.

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India’s gross domestic product (GDP) growth slowed to 5.4% in the September quarter, down from 6.7% in the previous quarter, marking the slowest pace in nearly two years due to a downturn in manufacturing, urban consumption and corporate earnings.

Discussing the ongoing economic slowdown, Nageswaran stated that the first estimates released last month could be revised later, noting that key indicators such as external debt as a share of GDP and non-performing assets in the banking system show robust economic health.

“I think in reacting to this number, we should not throw the baby out with the bath water because the underlying growth story remains very much intact," he added.