Business News Desk, Modi government is moving ahead with the dream of making the country a developed India by 2047. PM Modi has also mentioned this from different platforms. Now the Chief Economic Advisor (CEA) of the Finance Ministry, Dr. V. Anant Nageshwaran has warned the country about the need to avoid financialization while moving towards the goal of becoming a developed nation by 2047 and said that India’s economic growth prospects are one of the brightest global prospects.
This has to be kept in mind
Nageshwaran said that India’s stock market cap is about 140 percent of the gross domestic product (GDP). The record profitability of the Indian financial sector and the high level of market capitalization, or the ratio of market capitalization to GDP, generate another factor that needs to be investigated in depth. The CEA said that when the market becomes bigger than the economy, it is natural, but not necessarily appropriate, that market views and priorities dominate public discussion and also influence policy discussions. I am talking about a phenomenon called financialization or the dominance of the financial market over policy and macroeconomic outcomes.
What is financialisation?
At the CII Financing 3.0 summit, he said that financialization means dominance of financial market expectations trends and importantly interest in public policy and macroeconomic outcomes. However, he clarified that these are his personal views and not any statement made as Chief Economic Advisor. Nageshwaran said that it is important to maintain policy autonomy and protect the economy from the uncertainties of global capital flows. India is dependent on global capital flows despite a modest current account deficit.
