Mumbai: India’s economic growth is expected to pick up faster than the rest of the world once a global revival begins, though it is difficult to predict when, the country’s central bank governor was quoted as saying.
In an interview with BBC World, broadcast on Sunday, but conducted before he left for a meeting of the Group of Twenty in London, Reserve Bank of India governor D. Subbarao said Asia’s third biggest economy could be an engine for global growth. “India can be a growth engine. Not that India can recover ahead of the world. But when recovery starts, India’s recovery is going to be sharp and rapid,” Subbarao said.
In January, the International Monetary Fund cut its forecast for global growth in 2009 to a slight 0.5%—the weakest since World War II—from a November estimate of 2.2%.
Even though India’s exports account for 14% of its gross domestic product, much lower than some of its Asian peers, Subbarao said the global crisis has hit the Indian economy through the financial and manufacturing sectors, and said it was difficult to predict the timing of the recovery.
The Indian economy has slowed sharply as exports were hit and consumer sentiment was dented. It is expected to expand at a six-year low of 7.1% from an average rate of around 9% in the past three years.
Subbarao said India’s financial sector remains sound, safe and well capitalized and this was because of prudent policy actions taken by the government and the central bank.