India will eventually surpass China in economic size and will be in a better position to create the infrastructure being promised by the Chinese side in South Asian countries, former RBI governor Raghuram Rajan said.
Addressing a session on Strategic Outlook for South Asia, Rajan said Indian economy would continue to grow while growth rate is slowing down in China. “Historically, India had a bigger role in the region but China has now grown much bigger than India and has presented itself as a counter balance to India in the region,” Rajan said at the World Economic Forum Annual Meeting 2019.
“India will become bigger than China eventually as China would slow down and India would continue to grow. So India will be in a better position to create the infrastructure in the region which China is promising today. But this competition is good for the region and it will benefit for sure,” he said.
The comments assume significance with China working on a lot of infrastructure projects across the region, including in Nepal and in Pakistan.
In 2017, India became the sixth largest economy with a GDP of $2.59 trillion while China was the second larges with a GDP of $12.23 trillion, as per World Bank data.
Rajan said there is an opportunity to create regional companies, and cited as an example that someone can just study how people in South Asia borrow and that would be great insight for banks.
Besides Free Trade Agreement, there is a lot of scope for work to be done. Apart from business, social sector can be another way and we can have more sharing of students across the region, he added.
While noting that people movement and especially youth going to another country can have a strong impact, Rajan said that India is the largest country in the region and it must play the role it needs to play.
There are many places where India has funded the process, but a lot more can be done, including on trade side, so that tariffs can come down, he noted.
Rajan also asked industries to work towards convincing their governments for taking the necessary steps.
Rajan said he is hopeful of results, if not today, then may be at Davos meetings later.
The former RBI governor also said consumers are benefitting in a big way from the business of scale with several services in the new technology age coming for free or very cheap, but it needs to be seen whether this can continue going ahead.
Rajan said we benefit tremendously from business of scale, there are benefits of efficiency at large corporations and consumers are gaining in a big way from low prices.
For example, Google provides a big amount of free services, said Rajan, who teaches at the Chicago University and is regarded as a global voice on economy.
Rajan said we all know nothing is free, so it needs to be known who is paying for it when consumers get it for free.
He also wondered whether the business of scale is creating “super star firms” and who has the real power—is it large corporations or the governments? “Obviously they are making money somewhere and we need to know whether the two revenue sides of consumers and advertisers are comparable when it comes to data and technology platforms,” he added.
Rajan said we need to think whether competition would continue in the future.
“The concern is not so much about today, but about tomorrow. We need to think whether these benefits from scale would continue for the consumers,” he said and added that “more than being about too big to manage, it is about too big to control. Our corporations are becoming too big to control for our political systems”.
The panellists at the session also discussed big ticket mergers, digital platforms and market uncertainty that are transforming industries across the world.
Addressing a session on Strategic Outlook for South Asia, Rajan said Indian economy would continue to grow while growth rate is slowing down in China. “Historically, India had a bigger role in the region but China has now grown much bigger than India and has presented itself as a counter balance to India in the region,” Rajan said at the World Economic Forum Annual Meeting 2019.
“India will become bigger than China eventually as China would slow down and India would continue to grow. So India will be in a better position to create the infrastructure in the region which China is promising today. But this competition is good for the region and it will benefit for sure,” he said.
The comments assume significance with China working on a lot of infrastructure projects across the region, including in Nepal and in Pakistan.
In 2017, India became the sixth largest economy with a GDP of $2.59 trillion while China was the second larges with a GDP of $12.23 trillion, as per World Bank data.
Rajan said there is an opportunity to create regional companies, and cited as an example that someone can just study how people in South Asia borrow and that would be great insight for banks.
Besides Free Trade Agreement, there is a lot of scope for work to be done. Apart from business, social sector can be another way and we can have more sharing of students across the region, he added.
While noting that people movement and especially youth going to another country can have a strong impact, Rajan said that India is the largest country in the region and it must play the role it needs to play.
There are many places where India has funded the process, but a lot more can be done, including on trade side, so that tariffs can come down, he noted.
Rajan also asked industries to work towards convincing their governments for taking the necessary steps.
Rajan said he is hopeful of results, if not today, then may be at Davos meetings later.
The former RBI governor also said consumers are benefitting in a big way from the business of scale with several services in the new technology age coming for free or very cheap, but it needs to be seen whether this can continue going ahead.
Rajan said we benefit tremendously from business of scale, there are benefits of efficiency at large corporations and consumers are gaining in a big way from low prices.
For example, Google provides a big amount of free services, said Rajan, who teaches at the Chicago University and is regarded as a global voice on economy.
Rajan said we all know nothing is free, so it needs to be known who is paying for it when consumers get it for free.
He also wondered whether the business of scale is creating “super star firms” and who has the real power—is it large corporations or the governments? “Obviously they are making money somewhere and we need to know whether the two revenue sides of consumers and advertisers are comparable when it comes to data and technology platforms,” he added.
Rajan said we need to think whether competition would continue in the future.
“The concern is not so much about today, but about tomorrow. We need to think whether these benefits from scale would continue for the consumers,” he said and added that “more than being about too big to manage, it is about too big to control. Our corporations are becoming too big to control for our political systems”.
The panellists at the session also discussed big ticket mergers, digital platforms and market uncertainty that are transforming industries across the world.
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