Digitisation does not mean deregulation: CEA Nageswaran

There is a "misperception" among the administration  around deregulation, wherein digitisation is confused with deregulation, Chief Economic Advisor V Anantha Nageswaran said on Tuesday.

Speaking at an event organised by alternative investment industry's lobby grouping IVCA in Mumbai, Nageswaran stressed that what is essential is to do away with needless regulations, whether they are to be complied with online or offline.

"There is a misperception that the moment a government department across the country ...they put something on the digital platform, they think it is deregulation.

"But that is not deregulation, you just made it online rather than offline," Nageswaran said.

"Digitisation per se is not deregulation," the CEA, whose Economic Survey presented recently focused on the need to deregulate to help expand GDP growth," he added.

Any country which has attained developed status has to look at small businesses and unclogging challenges like regulations which can help ensure that such enterprises do not waste bandwidth on compliance.

India has to depend on domestic economy to drive much of the growth going forward, the academic-turned-policymaker said, explaining that globalisation is not expected to deliver gains the same way it did in the past.

The de-globalisation is part of a cyclical trend seen over a century, he said, adding that as people realise the limitations of the current model a decade from now, a new trend may emerge.

In the current cycle across the globe, inflation is likely to be more sticky than it was in the past as the ability to drive efficiencies goes down, he said.

However, if India can reduce its inflation to the 3-4 per cent level from the 4-5 per cent over the last few years, it will help to contain the rupee depreciation, he said.

Nageswaran explained that over a long term, we can see that the rupee has depreciated at 3 per cent per annum, which is the differential between the inflation rate between India and the US.

He also said that India cannot sacrifice energy security as energy transition to greener sources assumes greater focus, and added that we should be pragmatic and not make green energy into a "religion" as some countries in Europe have done.

The CEA also said that nuclear energy has to play a much important role in energy transition, and pointed out that the Budget announcement on allowing private players into this sector is a part of the same focus.

A country has to have the resources to undertake goals like energy transition, and those can come only through growth, which is dependent on adequate energy, he said.

India has the potential to grow at 6.5-7 per cent every year for a longer period, which makes it among the few large economies to have such growth, he said.

Additionally, the country will also be enjoying a demographic sweet spot which will last for the next 15-20 years and help growth, he said.