Avoid financialization for Viksit Bharat goal: CEA

Mumbai: India has one of the brightest global economic growth prospects, Chief Economic Advisor (CEA) V Anantha Nageswaran said on Monday, cautioning that the country needs to avoid ‘financialization’ as it marches towards the goal of becoming a developed nation by 2047.

India’s stock market capitalization (mcap) is around 140 per cent of the GDP, he said, adding, the record profitability of the Indian financial sector and high levels of market capitalization, or the ratio of market capitalization to GDP, give rise to another phenomenon, which deserves closer examination.

“When the market becomes bigger than the economy, it is natural, but not necessarily reasonable, that the considerations and priorities of the market dominate the public discourse and also influence the policy discourse. I am referring to the phenomenon called financialization, or the financial market’s dominance of policy and macroeconomic outcomes,” he said. Financialization is the dominance of financial market expectations trends, and importantly, interest in public policy and macroeconomic outcomes, he said at CII Financing 3.0 Summit here while making a disclaimer that these are his personal views and not as CEA.