India needs years of strong growth to match China, says Raghuram Rajan

RBI Governor Raghuram Rajan has said India has a long way to catch up with China on per capita GDP and will need years of strong growth but cautioned against expanding economy at the cost of environment. China’s per capita GDP is about four times of India’s, he said.

“So yes, we have a long way to catch with the level of per capita GDP and that means many years of strong sustainable growth. I want to emphasise here, because a few years of growth will not help. After those few years, we have very slow growth. We need sustainable growth which is why we need systems in place, we need macro-stability in addition to the growth,” he added.

Rajan was speaking here at an interactive session at National Institute of Rural Development and Panchayati Raj. The per capita income in India at current prices is estimated to be Rs 93,293, as per data on Provisional Estimates of Annual National Income and Quarterly Estimates of Gross Domestic Product 2015-16.

Rajan also highlighted that India’s credit to GDP is 50 per cent, significantly below when compared to some emerging markets such as China, where the value is 150 per cent. The Governor further said growth should not happen at the cost of environmental sustainability.

“Now whether just the GDP numbers are not enough to say that we have developed...absolutely not. It is good we reach their level of per capita GDP without the environmental damage that has occurred in some parts of China, that is also occurring in some parts of India.

“We have to have an environmental sustainable development path and also we have to have equitable development path,” he added.