Long Way to Go for India to Become Global Growth Engine: Raghuram Rajan
August 27, 2015: According to Raghuram Rajan, it will be a long journey for India to be a Global Growth Engine. To become a growth engine, India has to grow at a faster rate and replace China.
These Statements have come after the global market erosion and share market crisis in the recent days. The Global Market has experienced a loss of $12 trillion recently from their 2015 share peaks. India’s loss is only 3.7% while China, world’s largest economy, has experienced the greatest loss of 41% out of the total loss of $12 trillion. After China, it is the US on the list with a loss of 21% followed by Hong Kong with 14% loss.
Dr. Rajan was asked in an interview that whether India can replace China as a Growth Engine, he replied to BBC, "India is one-fourth to one-fifth of China's size. Even if we can replace China in terms of growth rates, the magnitude of the effect will be far smaller for a long time to come."
According to the latest statistics of World Bank, Gross Domestic Product Rate of the US is over $17 trillion. This compares with China at over $10 trillion and India $2 trillion.
The Monday’s Market Crash has been named as Black Monday in the market. According to the Prime Minister Mr. Modi, this crash should be converted into an opportunity for India, and we need to strengthen our economy.
Arun Jaitley has said that if the Growth Engines are not performing well, then the world needs alternate engines. Read the Full Story here: India is well positioned to get through Global Turmoil.
China contributes to almost half of the global market growth. After China, it is only India that can contribute as a growth engine. The growth rate of India is 7-8 per cent.
Dr. Rajan has also witnessed the global financial crisis of 2007-08 year. He said, "Based on what I have seen so far there is no strong reason to believe that we are on the verge of another crisis... But we have to be vigilant about kinds of those fragilities that have built up in the last few years."
India is among the top 10 largest stock markets in the world. It made its way in May 2014. It is also the 10th largest market in the world by market capitalization.