Former RBI governor Raghuram Rajan has said that it is too premature to think that India will replace China when it comes to influencing global economic growth. However, he said the situation may change going forward as India is already the world's fifth largest economy, it is growing and has the potential to keep expanding.
Rajan also said any recovery in the Chinese economy would definitely boost the global growth prospects. He said policymakers at this point of time are looking at the labour market and also at the housing market. Referring to the US, he said housing sales are not happening there, but prices are not falling. He said there are still 12 months to go and if China improves, that could be good.
He further said China is working its way through pandemic and there would be a Chinese recovery this year, probably as early as March or April. Some of that would be in domestic services which may not have any impact outside. But any improvement in manufacturing may have some impact by way of softening prices outside.
