India’s economic expansion will lead to genuine transformation only if its benefits are equitably distributed between employees and businesses, Chief Economic Adviser (CEA) V Anantha Nageswaran said, emphasizing that fairness is not a charitable gesture but a prerequisite for a robust and sustainable market-based economy.
He stated during a keynote speech at an AIMA event here that economic growth transforms a nation only when its benefits are fairly shared between those who perform the work and those who provide the capital.
He contended that the discussion about fairness should not be cast as a conflict between employees and companies.
Rather, he maintained, both sides participate in the same economic agreement, where investors are entitled to a reasonable return and workers must receive a substantial share of the wealth created by their labor.
“Fairness is certainly not the same as charity,” he said, noting that a durable market ultimately relies on consumers having sufficient purchasing power to purchase the goods and services that companies offer.
A robust market requires customers who can afford to spend, and those customers are, ultimately, the employees of someone, he added.
Acknowledging that capital is entitled to a reasonable return, he said there are both legitimate and ultimately harmful ways to achieve it.
If businesses suppress wages, postpone payments to suppliers, and retain the gap as profit, the strategy eventually backfires, working only as long as customers still have savings to spend.
The legitimate approach, he argued, is to reduce real costs, a responsibility that partly falls on governments.
On the government’s role, Nageswaran said it should provide cheaper electricity, ensure access to affordable land, and cut compliance requirements so that the overall cost of doing business declines.
Reducing the cost of doing business is central to what governments can and should do to foster employment. Governments themselves do not generate enduring jobs, instead, they can facilitate economic activity, and it is this activity undertaken by businesses that ultimately produces jobs, he said.
Emphasizing that India’s economic task is no longer just to accelerate growth, the CEA stated that the real priority is to make sure this growth leads to improved employment opportunities, higher incomes, and stronger economic security for ordinary citizens.
He further contended that the nation must now concentrate on converting growth into "transformation".
He explained that growth shows how much the economy expands each year, while transformation concerns the character of that growth who gains from it, how many workers shift from precarious jobs into secure and productive employment, and whether households genuinely see their living standards improve.
He highlighted the steps implemented since the government resumed office in June 2024, such as a first Budget centered on employment, trade deals designed to open overseas markets, initiatives to ease compliance burdens, moves toward fiscal consolidation, a more robust banking sector, and expanded access to credit.
Growth turns into transformation only when it is equitable, the CEA stated, emphasizing that fairness should be seen not just as a moral ideal but in the straightforward accounting sense of how the newly generated wealth is distributed and to whom.
