Reserve Bank of India Governor Raghuram Rajan acknowledges that India needs "many years" of strong, sustainable growth to catch up with China's GDP, but that chase for GDP numbers alone shouldn't come at the cost of the environment.
"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," Rajan said on Monday.
Noting that China's per capita GDP is about four times of India's, he stressed that India will needs sustainable and equitable development, macro-stability, and years of sustainable growth. He 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.
Rajan also has a different view on issue of devaluing the rupee, which some believe could boost exports, similar to China's currency devaluation strategy that has kept its exports competitive.
According to Rajan, the issue of devaluing rupee is a complex one, and any attempt to devalue the currency may trigger inflationary pressures and quickly offset any benefits from rise in exports, he said, noting that rupee is currently at reasonable levels.
"There are, strictly, ways of doing it (devaluation), but lot of them require significant actions on the financial system that some of our neighbouring countries used for long time," Rajan said.
Currency devaluation is a controversial strategy China has used for many years to keep its exports cheap and boost its manufacturing sector.
Rajan was speaking at an interactive session at National Institute of Rural Development and Panchayati Raj in Hyderabad on Monday.
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.
With PTI inputs