CEA Nageswaran: India growth story intact despite valuation worries, global uncertainty

In an interview with CNBC-TV18, Chief Economic Adviser (CEA) V Anantha Nageswaran said concerns over market valuations, sustained foreign institutional investor (FII) outflows and uncertainty surrounding signals from the United States have weighed on markets, but stressed that India’s growth story remains intact.

The CEA observed that markets and the real economy can decouple temporarily due to specific triggers, but tend to realign over time. He said the current bout of market anxiety has been driven largely by valuation concerns and persistent FII selling.

During the interview, he noted that FII outflows reflect uncertainty over tariff-related developments and mixed policy signals from the US. Investors, he added, are also cautious owing to the limited presence of artificial intelligence-linked plays in Indian

markets and apprehensions about the long-term impact of tariffs on the China-plus-one strategy.

Concerns surrounding H-1B visas and signals emerging from the US services sector have further added to unease, the CEA said. Alongside these global factors, certain sector-specific issues within India have also contributed to the divergence between market performance and underlying economic fundamentals.

Despite these headwinds, the CEA reiterated that, over time, markets will recognise that India’s growth fundamentals remain robust and that the current divergence between markets and the economy will narrow.

Placing the volatility in a broader context, he said the world is transitioning to a new global order. Established frameworks are being disrupted, resulting in heightened uncertainty. He described the present phase as an interregnum between two global orders.

The CEA cautioned that this period of flux may last longer than anticipated, with uncertainty likely to persist beyond 2026. The transition, he said, will not be short-lived, and volatility and structural change are expected to define global markets and economies over the next few years.