CEA Flags 30% Profit Jump, Yet Low investment Activity

India’s Chief Economic Advisor V Anantha Nageswaran criticised the private sector for weak investment despite strong profits. He urged companies to reflect on their reluctance to invest. He said this hesitation may have increased demand uncertainty in the economy. He made these remarks at a policy conference hosted by Ashoka University.

Nageswaran highlighted that top listed companies recorded strong profit growth after Covid. He noted that firms in major indices saw profits rise by over 30% annually. However, he pointed out that private sector capital formation remained below expectations. He stressed that investment activity did not match the pace of earnings growth.

Also Read : Doctors Stir Today as BMC Fails to Implement Revised DA

Firms post gains, yet investment cycle stays slow

He said many corporates chose to retain profits instead of investing in real assets. Some businesses diverted funds into financial holdings or overseas structures. He added that improving regulations at state and central levels should have encouraged spending. He called on industry leaders to align business goals with national development.

The CEA also warned about a tightening global environment affecting trade and investment flows. He said companies may find it harder to shift supply chains away from China. He urged India to build its own frameworks to secure supply chains and attract investments. He suggested using market access as a strategic tool to draw global companies.

Nageswaran noted that currency trends and trade agreements offer fresh opportunities for India. He said a narrowing gap between the rupee and yuan could support exports. He also highlighted the need to better utilise free trade agreements. He added that manufacturing has held steady but needs stronger momentum to grow further.

Also Read : Exit polls aimed at influencing markets, we’ll secure 200+ seats: Mamata Banerjee