“Energy is an important driver of economic growth. It is energy security that is coming under a lot of pressure thanks to geopolitical developments and climate change, etc. (For) India, if there is a single-most important worry in my mind, for sustaining the growth rate that we have been able to achieve in the last 2-3 years, it is energy security,” he said while speaking at CII Annual Session 2023.

Nageswaran said though India cannot completely swear off fossil fuels, it does have a target to balance the proportion of non-fossil fuels and fossil fuels in the energy mix in terms of installed capacity by the year 2030. “It is equally important that we understand that there are important roles for fossil fuels — if not coal, then for gas, etc. And therefore, if the financial industry completely avoids funding fossil fuel-based power generation projects, then we will be placing in jeopardy economic growth. And if we place economic growth in jeopardy, then the generation of fiscal and private sector resources will also be in jeopardy and therefore our ability to provide the right mind of financing for dealing with climate change will also be in doubt,” he said.

Nageswaran showed optimism for private sector capital formation in the country. “We see signs of the corporate sector beginning to make investments. There are some new investment announcements,” he said.

As per data available for the first six months of the last three years, he said, it was Rs 2.1 lakh crore in 2020-21, it was Rs 2.7 lakh crore in 2021-22 and Rs 3.3 lakh crore in 2022-23. “So, it has been rising and once we get the full year data the picture will be clear. We know that internal resource generation of the companies is at a very high level. Therefore, they may not necessarily have to tap either the capital market or the banking channel,” he added.

While he refused to comment on the Reserve Bank of India’s monetary policy stance for the upcoming June 6-8 monetary policy meeting, he expects the US Fed to pause in June. “I think they (US Fed) have given the indication that they would be on pause in June and I also don’t believe that in the US case, rate cuts are imminent,” he said.

Nageswaran also said that the US is expected to reach an agreement on its debt ceiling, considering the gravity of the situation.

In a letter on May 1, US Treasury Secretary Janet Yellen had warned that the US was likely to run out of cash by as early as June 1 if the country failed to raise its debt ceiling before the deadline. Since then, several rounds of talks have taken place on raising the borrowing limit but an agreement hasn’t been reached yet.