Digitisation does not mean deregulation: CEA Nageswaran

MUMBAI: There is a "misperception" among government departments that digitisation equates to deregulation, Chief Economic Adviser (CEA) V Anantha Nageswaran said on Tuesday.

Speaking at an event organised by the alternative investment industry’s lobby group IVCA, Nageswaran emphasised that removing unnecessary regulations is essential, regardless of whether compliance is required online or offline.

"There is a misperception that the moment a government department puts something on a digital platform, they think it is deregulation. But that is not deregulation; you just made it online rather than offline," he said.

"Digitisation per se is not deregulation," he added, pointing out that the recent Economic Survey had highlighted the need for deregulation to boost GDP growth.

Nageswaran stressed that developed economies have achieved their status by addressing challenges faced by small businesses, particularly regulatory burdens that consume time and resources. He underlined the importance of streamlining compliance processes to support economic expansion.

He also noted that India must rely more on its domestic economy for growth, as globalisation is unlikely to deliver benefits as it did in the past. "De-globalisation is part of a cyclical trend seen over a century," he said, adding that a shift in global economic models could emerge in the next decade.

Discussing inflation, the CEA said it is likely to remain more persistent than in the past due to diminishing efficiency gains. However, if India can lower inflation to 3-4 per cent from the 4-5 per cent seen in recent years, it would help stabilise the rupee.

"Over the long term, we can see that the rupee has depreciated at 3% per annum, which is the differential between the inflation rate in India and the US," he explained.

Addressing energy security, Nageswaran said India cannot afford to compromise on its energy needs while transitioning to greener sources. "We should be pragmatic and not make green energy into a 'religion' as some countries in Europe have done," he remarked.

He also emphasised the critical role of nuclear energy in the transition, highlighting the recent budget announcement allowing private sector participation in the industry.

"A country needs resources to achieve ambitious goals like energy transition, and those resources come only through sustained economic growth, which in turn depends on sufficient energy availability," he said.

India has the potential to grow at 6.5-7 per cent annually over the long term, making it one of the few major economies capable of such expansion, he noted. Additionally, the country’s demographic advantage is expected to last for the next 15-20 years, further supporting its economic growth.