Reserve Bank of India Governor Raghuram Rajan has said that India will need years of strong growth to catch up with China on per capita GDP.
He also cautioned that chase for the GDP numbers shouldn’t come at the cost of the environment.
“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 said.
Rajan said India’s credit to GDP is 50 per cent, much below when compared to some emerging markets such as China, where the value is 150 per cent.
“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.
According to a Goldman Sachs study, India’s urban middle class of 27 million is a fraction of China’s 150 million that powered the first wave of China’s consumer growth story between 2002 and 2012.
India’s personal consumption expenditure per capita, at just $1,012, is one-third of China’s.