The Centre for Social and Economic Progress (CSEP) hosted a seminar titled ‘India’s Saving-Investment Conundrum’ on Tuesday, November 19, 2024.

The seminar featured opening remarks by the chair, Rakesh Mohan, President Emeritus and Distinguished Fellow, CSEP and Former Deputy Governor, RBI. This was followed by presentations by Shishir Gupta, Senior Fellow, CSEP and Nikhil Gupta, Chief Economist, Motilal Oswal. The presentations were followed by comments from Montek Singh Ahluwalia, Distinguished Fellow, CSEP and Former Deputy Chairman, Planning Commission, Govt. of India.

About the event

India’s real GDP needs to grow at upwards of 8 per cent per annum if it wants to achieve the starting per capita income of today’s developed countries by 2047. At an incremental capital-output ratio of around 4.5, sustaining this growth requires an investment of around 36 per cent of GDP. This was indeed the case between 2003 and 2011 when compounded annual GDP growth was around 8 per cent and investment of around 36 per cent of GDP. However, the average investment has been around 31 per cent for the past 4-5 years.

The seminar was aimed at discussing these trends over time, the reasons for the decline, whether we are seeing an uptick (or not), why (or why not), the likely evolution from here on, and the policy implications. Getting clarity on the underlying dynamics of saving-investment is quintessential to get a good handle on India’s future growth trajectory.

Opening Remarks

• Rakesh Mohan is President Emeritus and Distinguished Fellow at CSEP. Prior to this, he was President and Distinguished Fellow, CSEP from October 2020 till May 2023. In March 2024, he was appointed to serve on the World Bank Group’s Economic Advisory Panel. He has been a part of the Prime Minister’s Economic Advisory Council (EAC-PM) since October 2021. Before joining CSEP, Dr Mohan was Senior Fellow in the Jackson Institute for Global Affairs, Yale University and was also Professor in the Practice of International Economics and Finance at the School of Management at Yale University, 2010-12. He has also served as Distinguished Consulting Professor at Stanford University in 2009. Dr Mohan was also a Distinguished Fellow with Brookings India. He has been closely associated with the Indian economic reforms process from the late 1980s. He was Executive Director on the Board of the International Monetary Fund, Deputy Governor of the Reserve Bank of India, Secretary, Economic Affairs, and Chief Economic Adviser of the Indian Ministry of Finance, and Economic Adviser in the Ministry of Industry. He was also Chairman of Government committees that produced the influential reports on infrastructure: The India Infrastructure Report (1996), The Indian Railways Report (2001) and The India Transport Report (2014). After the North Atlantic Financial Crisis, he co-chaired the G20 Working Group “Enhancing Sound Regulation and Strengthening Transparency” (2009), and the CGFS/BIS Working Group on “Capital Flows and Emerging Market Economies” (2009). He has authored three books on urban economics and urban development; two on monetary policy: ‘Monetary Policy in a Globalized Economy: A Practitioner’s View’ (2009), and ‘Growth with Financial Stability: Central Banking in an Emerging Market’. His most recent book (edited) is ‘India Transformed: 25 Years of Economic Reforms’. He has a BSc (Eng) from Imperial College of Science and Technology, University of London (1969), a BA from Yale University (1971) and an MA and PhD in economics from Princeton University.

Discussant

• Montek Singh Ahluwalia, an economist, and civil servant, was former Deputy Chairman of Planning Commission, Government of India. He joined the Government in 1979 as Economic Adviser in the Ministry of Finance, after which he held a series of positions including Special Secretary to the Prime Minister; Commerce Secretary; Secretary in the Department of Economic Affairs; Finance Secretary in the Ministry of Finance; Member of the Planning Commission and Member of the Economic Advisory Council to the Prime Minister. In 2001, he was appointed as the first Director of the newly created Independent Evaluation Office of the International Monetary Fund. He resigned from that position in 2004 to take up the position of Deputy Chairman of the Planning Commission which he held from 2004 to 2014. Mr Ahluwalia has been a key figure in Indian economic policy. He writes on various aspects of development economics and has been published in prominent Indian and international journals and books. He co-authored Re-distribution with Growth: An Approach to Policy, which, published in 1975, was a path-breaking book on income distribution. In February 2020, he published his book, Backstage: The Story Behind India’s High Growth Years, an insider’s account of policymaking from 1985 to 2014. For his outstanding contribution to economic policy and public service, he was conferred the prestigious ‘Padma Vibhushan’ in 2011, India’s second highest civilian award for exceptional and distinguished service. Mr Ahluwalia graduated from Delhi University and holds an MA and an MPhil in Economics from Oxford University. He is an Honorary Fellow of Magdalen College Oxford.

Presenters

• Nikhil Gupta is Chief Economist, Motilal Oswal Financial Services Ltd and author of ‘The Eight Per Cent Solution’. Nikhil brings with him 16+ years of experience in Economics Research field and has worked on various economies from India, China, US, Euro zone, UK etc. He has recently authored a book on the Indian economy titled ‘The Eight Per Cent Solution’, which was featured in Financial Times’ Best Books of 2023 – Economics by Dr Martin Wolf. Nikhil presents his grand theory on how India can achieve 8% GDP growth on sustainable basis. Prior to joining Motilal Oswal Securities, he was handling the Economist desk at a brokerage firm, Nirmal Bang Securities. Nikhil has also tracked European economies (Eurozone/UK) at ICICI Bank; started his career as US and China Economist at First Global Securities in 2008. Nikhil Gupta has a Post Graduate degree (M.A.) in Economics from Gokhale Institute of Politics and Economics (GIPE), Pune, one of the most renowned PG institute in Economics in the country. He is a Gold medalist. Nikhil completed his Under Graduation (B.A.) in Economics from Shri Ram College of Commerce, Delhi University.
• Shishir Gupta is a Senior Fellow at CSEP in New Delhi. His work focuses on many aspects of the Indian economy, including economic growth, governance and institutions, urbanisation, and sub-national reforms, among others. Before joining CSEP in August 2020, Shishir was a Fellow with the McKinsey Global Institute for 14 years, where he led multi-ethnic teams in India and the US on policy research and client studies across multiple domains. He has written widely on these topics in MGI reports and research papers as well as in popular media. He is an economist by education, with an MA and MPhil from the Delhi School of Economics.

Please contact Gurmeet Kaur at GKaur@csep.org for general queries and Ayesha Manocha at AManocha@csep.org for media queries.

All content reflects the individual views of the speakers. The Centre for Social and Economic Progress (CSEP) does not hold an institutional view on any subject.

In the media

No commitment to lowering fiscal deficit, says Montek Singh Ahluwalia – Business Standard