BUSINESS

China slowdown ‘a significant risk’ for global economy: Rajan

Raghuram Rajan  

The Reserve Bank of India (RBI) Governor Raghuram Rajan cautioned about a “sharp” slowdown in Chinese economy which, he said, remained a “significant risk” for the global economy.

Spill-over

A sharp contraction in China’s imports over the past year, for instance, had already led to spill-overs through the trade, confidence, tourism and remittance channels and SAARC nations had not been able to avert its impact, Mr. Rajan said during his inaugural speech at the SAARCFINANCE Governors' Symposium.

“Bad loans in the banking system were likely to grow over current levels and in addition there might be serious weaknesses in the shadow banking system, which could feed back to banks,” he said.

Lauds government

The RBI Governor also lauded the efforts taken by the government in implementing structural reforms to revive growth.

“Leaving aside the Goods and Services Tax (GST) reform, a number of other significant reforms have also taken place, including the recent passage of the new Bankruptcy bill, which is likely to speed up the resolution of distress tremendously,” Mr. Rajan said.

Mr. Rajan, during his speech, also touched upon the government’s decisions to allocate public resources like spectrum and mines as well as the process of appointing critical personnel in sectors such as public sector banks. “This is significantly increasing transparency in our system,” he said.