London : Reserve Bank of India Governor Raghuram Rajan has said it will be “a long time” before India can replace China as a growth engine for the global economy, even if it grows at a faster rate. The comments assume significance in the wake of a China-led slowdown hurting the markets worldwide in the recent days, which has led to calls in India for taking this crisis situation as an “opportunity” as the global economy may need alternative growth engines.
Rajan said in an interview to BBC, “India is one-fourth to one-fifth of China’s size. Even if we can overtake China in terms of growth rates, the magnitude of the effect will be far smaller for a long time to come.” As per the latest data available with the World Bank, GDP of the US is over $17 trillion. This compares with China at over $10 trillion and India $2 trillion. After Monday’s market crash, Prime Minister Narendra Modi had stressed on the need to further strengthen the Indian economy and said that the present global crisis should be converted into an opportunity for India.
Rajan said that China was a big country that has “become very important to the global economy”, and every adverse development anywhere in the world would certainly impact the rest as well. He, however, said that it was wrong to attribute the problems for global markets entirely to China, as there were a number of other concerns too. Rajan, who is credited to have seen the global financial crisis of 2007-08 coming, allayed fears of any major crisis being round the corner.
