Former Reserve Bank Deputy Governor Michael Patra on Monday termed India Inc as a "missing actor" not investing enough, saying if corporates start investing sufficiently, GDP growth can accelerate to over 8 per cent.
"Now we are seeking to head back (to 8 per cent). The most important missing actor in this is corporate India, which is not investing enough," Patra said while speaking at an Elara Capital event here.
Patra, who used to head the monetary policy department, said there was a cyclical correction in FY25 when the growth slipped to 6.5 per cent, but added that the Q1FY26 print at 7.8 per cent suggests that we are heading towards the 8 per cent mark.
Diagnosing the factors restricting corporates from making investments, Patra said a major part of the issues lie on the lack of clarity on the demand front, which means revenue growth is not certain if an investment is made.
Patra said GDP growth can get a fillip through consumption, investments and exports, and added that the last of the aspects (exports) may not be counted on in the current scenario.
Hence, a boost to consumption, which is followed by investments, mark the beginning of a virtuous cycle in the economy, Patra said.
It was essential to take care of inflation to boost the consumption, he said, justifying RBI's post-Covid rate hikes as a necessity from a long term growth perspective.
We must not worry too much about the impact of the US tariffs, Patra said, adding that targeted government support to the impacted sectors can be of help.
The career central banker also said that banks are getting increasingly inactive as loans are going to alternative markets and deposits are flowing into mutual funds.
Patra suggested that he is not a votary of liquidity management being included in the rate setting panel's framework because it has to be done real time and added that we can look at adding one more member to the monetary policy committee to assuage concerns around the governor getting casting vote.
India needs to seriously address the labour issues at hand, Patra said, suggesting that over half of the countrymen are not in right jobs.
An overhauling of the education system, increasing women participation in labour force, upping infrastructure spends and an openness to internationalise will also help in the long-term growth aspirations.
"Climate change is a big challenge before an India, which can halt all our ambitions," Patra said, adding that we don't even admit the issue.
