Cannot rest on tailwinds, have to be conscious of risks, says PM's Principal Secretary

India must be vigilant about geopolitical risks and take steps to reshape its economy, according to Pramod Kumar Mishra, the Prime Minister's Principal Secretary. At the State Bank of India's Banking & Economics Conclave, Mishra emphasized that the country faces four main challenges: fragmented global alliances, reliance on imports, pressure on external accounts, and rapid advancements in artificial intelligence.

Despite successfully navigating the pandemic, war in Ukraine, and West Asia crisis, Mishra urged India not to become complacent and to remain conscious of emerging global risks. These risks include shifting alliances, weaponization of supply chains, fluctuating capital, and trade barriers. Mishra also highlighted the need for India to focus on manufacturing, skilling its workforce, and attracting foreign direct investment.

Additionally, he stressed the importance of preparing for the rapid development of artificial intelligence and the financial sector's role in enabling growth by mobilizing capital for infrastructure, manufacturing, energy transition, and innovation. Mishra cautioned against relying solely on banks for financing, emphasizing the need for a deeper bond and equity market, and more efficient domestic savings conversion into productive investments.

He reiterated the importance of appraising credit based on project economics rather than momentary enthusiasm to avoid another cycle of excessive lending, stressed assets, and subsequent clean-up.