'Financialisation' already sharpening inequalities: Congress on CEA remarks

With chief economic advisor V. Anantha Nageswaran cautioning against 'financialisation', the dominance of financial markets in public policy, the Congress on Monday said this is already sharpening inequalities in the country and needs a policy response.

Nageswaran said on Monday that India has one of the brightest global economic growth prospects but cautioned against 'financialisation' as the country marches to the goal of becoming a developed nation by 2047.

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

Nageswaran made the comments at the CII Financing 3.0 Summit in New Delhi, while clarifying that these were his personal views and not his views as CEA.

Reacting to Nageswaran's remarks, Congress MP and general-secretary (communications) Jairam Ramesh said, "Over the decades, Chief Economic Advisors in the Ministry of Finance have often expressed themselves as professionals. This is indeed as it should be since public education is one of the CEA's key tasks." The present CEA has rightly "drawn our attention to the fact that stock market capitalisation now stands at 140% of GDP", he said.

"He (Nageswaran) has raised an alert to the rapidly increasing 'financialisation' of the economy, which he defines as the dominance of financial markets over public policy and macroeconomic outcomes. Such financialisation is already sharpening inequalities which need a policy response," Ramesh said in a post on X.