India should focus on ease of doing business, AI to boost capital flows and ease rupee pressure, says Gita Gopinath
New Delhi, June 3
Former IMF Deputy Managing Director and Chief Economist Gita Gopinath has said India's policy focus should shift toward improving ease of doing business and building a positive AI narrative to attract capital flows and take pressure off the rupee amid West Asia-related macro risks.
In an exclusive interview with ANI, Gopinath said she identified two key levers for India: "doing further reforms in terms of improving the ease of doing business, having a positive story on AI in terms of the fact that AI can be net positive for India. These are the kinds of actions that would help increase interest in India as a destination for investment capital, and that would also take the pressure off the rupee."Gopinath pointed to the impact AI is already having on global markets and growth.
She said countries like South Korea, Taiwan and the US are seeing stock markets at all-time highs despite West Asia risks because of the AI boom. "What's happening in the US and in Korea, and in Taiwan is the AI story. On the one hand, you do have the problem coming out of West Asia, but there's a huge AI boom right now happening in the US and in the countries that we just talked about. That is driving up stock market valuations," she said.
She added that AI is also driving a meaningful share of growth in the US. "If you look at the most recent quarter for growth in the US, think about half of it is coming from AI, and it's coming because of AI investment. The building up of data centres, investment in chips, data processors, and so on. You've seen a large amount of investment, and that is an important driver of growth in the US and since the US is a big part of the world economy, that has spillovers to the rest of the world."
Gopinath also flagged energy transition as a resilience tool, saying India can reduce import dependence by shifting "away from reliance on fossil fuel imports towards more reliance on renewable energies but also nuclear."
Combined with trade agreements, including one with the European Union, she said this reorientation of global supply chains can help India play a bigger role as an input provider. With oil potentially staying elevated till mid-next year, she said a stronger investment story built on ease of doing business reforms and AI will be India's key medium-term buffer against external shocks.
— ANI
Reader Comments
Interesting perspective from a top economist. India has huge potential in AI, but we need to fix basic infrastructure and red tape first. The fact that AI is driving half of US growth is staggering. If India can capture even a fraction of that investment, it could be a game-changer for the rupee. 🇮🇳
Good points, but I worry about the human cost. AI will disrupt many traditional industries in India, especially in smaller towns. We can't just jump on the AI bandwagon without a robust social safety net. The energy transition to renewables is welcome, but nuclear is controversial. Need more debate on that.
Finally someone talking sense about AI for India. We have the talent pool and digital infrastructure. Ease of doing business reforms should focus on reducing compliance burden for SMEs, not just big corporations. Trade deals with EU could be a major boost. 👍
West Asia risks are real, and oil prices impact our import bill heavily. Moving to renewables and nuclear is smart for energy security. But Gopinath should also talk about boosting domestic manufacturing and exports more directly. Rupee pressure can't be solved just by capital flows.
As someone who works in tech, I see the AI boom firsthand globally. India needs to invest heavily in semiconductor fabs and data centers to ride this wave. The ease of doing business reforms are long overdue - getting permits for tech hubs is still painful. Gopinath is right on track. 🚀
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