Kolkata, Apr 8 (PTI) The Chairman of the Economic Advisory Council to the Prime Minister (EAC-PM), S Mahendra Dev, on Wednesday said that the Indian Rupee is expected to stabilise around the 92–93 level against the US dollar and expressed optimism that foreign investment flows will improve in the near future as geopolitical tensions ease and macroeconomic fundamentals remain strong.

He also said that India must sustain 7-8 per cent growth and reforms to achieve developed nation status by 2047, the centenary year of Independence.

Dev said the currency had faced pressure due to global uncertainties, including the West Asia conflict and the withdrawal of foreign institutional investors (FII).

His remarks come amid a temporary ceasefire between the US and Iran, which helped calm global markets.

“Rupee is stabilising around 92-93. Because of global war-related headwinds and FII withdrawals, there was pressure, but despite these odds, the rupee will stabilise at these levels. One should not worry,” Dev said on the sidelines of an interactive session organised by the Bharat Chamber of Commerce.

He noted that India’s economic resilience and sound macroeconomic fundamentals provide the capacity to absorb external shocks.

According to Dev, India’s fiscal position allows continued spending on infrastructure and welfare even during global uncertainty.

“We can continue capital expenditure and social spending, which many countries cannot do. Our fiscal management is also good,” he said.

Dev said the country has a comfortable headroom on the current account deficit, which is currently at 1.3 per cent of GDP.

He also described the Reserve Bank of India’s Monetary Policy Committee’s decision to keep policy rates unchanged as appropriate in the current economic environment.

On growth prospects, Dev said he remains optimistic that India could achieve 6.9 per cent and even around 7 per cent growth in 2026–27, despite global uncertainties.

Outlining the broader economic trajectory, Dev said India has emerged as a “global bright spot” but must sustain high growth and undertake structural reforms to achieve developed nation status by 2047.

He said the country would need to maintain nominal growth of around 11-12 per cent, translating into real growth of about 7-8 per cent, to reach that milestone.

The EAC-PM chief identified investment as the primary engine for this transformation.

“Investment rate is presently 31 to 32 per cent. You need to increase it to 34–35 per cent,” he said, stressing that private sector investment is critical as the government’s capacity for capital expenditure is limited compared with the total investment required.

He noted that several states, including Uttar Pradesh and Maharashtra, have already set ambitious GSDP targets in line with the national vision.

Dev also warned of a shift in the global economic order away from the “peak of globalisation” towards protectionism and fragmented supply chains.

The economist cited policy moves such as the CHIPS and Science Act and the European Green Deal as examples of advanced economies returning to aggressive industrial policies.

India’s response, he said, involves a strategy of adjusting tariffs, diversifying exports and accelerating free trade agreements, while focusing on strategic sectors such as semiconductors, critical minerals and defence manufacturing to strengthen technological self-reliance.

Highlighting structural challenges, Dev pointed to the “missing middle” in India’s manufacturing sector, where the landscape is dominated by very small firms and very large corporations, with relatively few mid-sized enterprises employing 200-500 workers.

While initiatives such as the Production Linked Incentive Scheme have helped strengthen manufacturing, particularly in mobile phone production and exports, he said manufacturing and services should be viewed as complementary sectors rather than substitutes.

Dev also stressed the importance of addressing social sector gaps, noting that India has world-class higher education and healthcare institutions but weaker foundational learning and primary health services, particularly in rural areas.

With a median age of about 28, India has a significant demographic advantage compared with ageing economies like Japan and China, he said.

However, this demographic dividend can only be realised through improvements in education, health and skill development, the EAC-PM chief said.

Dev also emphasised that domestic savings remain the primary source for financing investment, even as foreign direct investment plays a supportive role.

He praised India’s digital public infrastructure, particularly the Unified Payments Interface (UPI), and advocated the development of “inclusive AI” as a public good.

Dev cautioned policymakers to avoid the middle-income trap, noting that only a limited number of middle-income economies have successfully transitioned to high-income status.

Looking ahead, Dev said India’s share of global GDP in purchasing power parity (PPP) terms could reach around 25 per cent by 2043–44, comparable to the country’s economic prominence in 1700 when its share of global GDP was estimated at 24 per cent.

The economist said India’s political stability, reforms and a large domestic market of 1.4 billion people provide resilience against global shocks as the country moves towards its goal of becoming a developed nation by 2047. PTI BSM NN