‘India should pursue investment-led growth’

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inflation is that theirs is driven by wages and over-employment whereas ours is driven by supply-side shortages. So for us, the answer is very clear," Nayar said, arguing for more measures by the government to boost production. He said India’s economic growth now is quite robust in spite of global shocks but in the next phase of growth, the government cannot keep spending from the balance sheet.

“You have to mobilize private savings, private capital expenditure, and the private sentiment has to come back, which I think is reviving. Demand is picking up. We see it in aviation, hospitality, telecom and financial services.

A little bit of pickup is there in terms of the supply side, new capacities, new orders of planes, more equity being raised and more public offers. That's what we need to encourage and crowd in big time. That is happening but maintaining that focus after the elections is what we need to sustain the 7.5-8% growth rate because one cannot keep depending on government balance sheet to keep spending," said Nayar.

Nayar said household savings should flow more into Real Estate Investment Trusts (REITS) and Infrastructure Investment Trusts (INVITS), than into mutual funds. “Today, household savings are mostly going towards capital markets. We have created new instruments like REITs and INVITs which have really worked and are crowding in retail savings into infrastructure and real estate, which is in a way very good becuse you're bringing the savings towards the real sector and then whatever saving-investment gap you have, obviously, India is a great destination for foreign capital," said Nayar.