India Should Prioritise Investment Led Reforms Not Consumption Push Says NITI Aayog Vice Chairman

India must focus on accelerating reforms to attract investments rather than boosting consumption, NITI Aayog Vice Chairman Ashok Kumar Lahiri said, emphasising that the country’s growth debate is centred on the wrong priority. He said policymakers should remove barriers to capital flows and strengthen investment conditions instead of prioritising consumption-led stimulus.

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

Investment-Led Growth Focus

Lahiri said India’s investment rate remains lower compared to the levels seen in East Asian economies and China during similar stages of development. He stressed that investment, not consumption, should be the primary driver of growth, noting that infrastructure creation such as roads, ports, airports and power supply is essential for long-term expansion.

He added that consumption support should be limited to specific sectors and not used as a broad policy tool at this stage.

Ease Of Doing Business And Investor Sentiment

Highlighting investor concerns, Lahiri said market uncertainty and geopolitical tensions have made investors cautious, leading to a wait-and-watch approach. He stated that improving ease of doing business and reducing regulatory friction is critical to restoring confidence.

He said investment decisions are influenced by policy clarity and ease of execution, adding that the economy must “facilitate investment rather than create obstacles.” He also noted that while incentive schemes such as the Production Linked Incentive (PLI) programme have shown results in certain sectors, broader investor sentiment remains sensitive to global and domestic uncertainties.

Global Risks And Energy Supply Concerns

On global developments, Lahiri pointed to geopolitical tensions linked to the Strait of Hormuz, describing it as a key route for petroleum and natural gas trade. He said uncertainty in energy markets can impact prices, shipping costs and insurance premiums.

He added that India is working on diversification of oil supply sources and strengthening strategic reserves, while noting that such reserves come at a cost and reflect risk management choices.

He also said rising crude oil prices and logistics disruptions could affect inflation and imports, although conditions have not reached a supply crisis stage. India currently holds foreign exchange reserves of about $700 billion, which provides a buffer against external shocks, he said.

Inflation, Growth And Macroeconomic Position

Lahiri said inflation remains below 4%, while growth projections above 6% indicate a stable macroeconomic environment. He noted that while external shocks such as oil price movements and weather risks can impact short-term conditions, current buffers in food and foreign exchange reduce immediate risks.

He added that supply-side shocks require caution in demand stimulation, as excessive spending could add inflationary pressure.

Structural Reforms And Development Priorities

The primary reform priorities, according to Lahiri, included rationalisation of welfare services, better targeting of beneficiaries and a stronger focus on education and skill development. “Productivity growth depends on the outcomes of primary education, industry-linked skill training, quality of higher education and STEM-based innovation,” he said.

He also highlighted the need for stronger primary healthcare systems and continued infrastructure expansion in transport, energy sector and logistics.

Policy Direction

On currency and privatisation, Lahiri said exchange rate movements should remain market-driven with intervention only to maintain orderly conditions. On public sector privatisation, he said asset valuation and timing require careful consideration and should not be driven by short-term market conditions.

He concluded that structural reforms are an ongoing process and remain central to India’s long-term development goals, including the vision of Viksit Bharat by 2047.