India on the rise

DW: Mr. Banerjee, the state of the Indian economy is one of the topics being discussed here in Davos. How would you assess its condition at the moment?

Chandrajit Banerjee: India seems to be a very strong and bright spot in the global economy today, at a time when the economies of a large number of countries and the global economy as a whole are showing signs of strain. We have seen a very very good management of the Indian economy over the past 1.5 years or so, despite challenges like the current account deficit or the fiscal deficit.

We have solid growth in a number of areas in India. Currently, we expect 7.3 to 7.4 percent overall growth, and that figure could have been even higher if the monsoon had been better. But for the years to come, we expect to grow at a rate of around 8 percent or even more. So our own sense and also the feedback we are getting here in Davos is that corporations from around the world are looking at India with great interest. The foreign direct investment in India has increased by more than 40 percent just this past year. So yes, the Indian economy is doing well.

So do you think that India can now outplay China?

China's growth story has been a very very strong and good growth story. There are many lessons to learn from China. How they increased their manufacturing, for example. But we are seeing that China has played out and there are strong challenges and headwinds that China is facing at this point in time.

In India today, only 15 percent of our GDP is generated in manufacturing but we have renewed our focus on that sector and we aspire to increase that figure to 25 percent. Our prime minister launched the Make in India campaign and we hope it will help to make India the fastest-growing emerging economy for some time to come.

So how long will it take until the Indian economy is bigger than the Chinese economy?

Well, that takes a lot of time. India is currently just about a $2.2 trillion [2-trillion-euro] economy. In and of itself that is very strong but given the growth, I think we will be a very formidable economy in Asia and not only Asia, we will be at the forefront globally as well. Of course, we will be very close to China but our aspirations are also different. We each face different types of challenges. India is looking at a very inclusive growth model. We would like the fruits of our development, the fruits of India's growth to be spread across the value chain in India.

Now you are saying the outlook is very positive for India but on the other hand the outlook for the general economy of the world is not very positive. Does that worry you?

That does worry us, you are absolutely right. India cannot grow in isolation. India is connected to the world and there are challenges, there are pressures on the market. The challenges related to global commodity prices, for example, are also felt in India. But we need to find ways to take advantage of that. Say, for instance when we look at the oil prices today.

You see, while our exports may be increasing, their value goes down because a big part of our export is petroleum products. But we are also a big oil importer so we can use savings we had due to the depressed oil markets to redirect subsidies into sectors that suffer because of the global commodity prices.

But yes, the longer-term global outlook would have to improve. We are all in one family, so to say, and India would like and need to get much better access to the markets in Europe and America, for example. This entire Make in India campaign is not just about companies coming and making products in India for India because there is a market of 1.3 billion people there. It's also about making things for the rest of the world.

But will it be as easy as you're just describing it? I mean it seems to be quite a challenge, and the Indian economy is currently benefiting a lot from low oil prices. This is obviously not something that can go on forever, so you have to be prepared for rising oil prices again sooner or later. So how do you prepare?

As you rightly said, the global economy has to pick up for everyone to benefit. So we think this is the time for us to prepare, to get integrated better with the global value chains, for instance. In the longer term the focus in India would be to have our own companies that are on par with Microsoft of India or Google of India. Our aim would be to build such corporations. Initially, they may not be at the same scale but these corporations could bring new ideas, new technologies, new innovations that would really help India to stay ahead. They would also help India establish itself as a strong, formidable, global leader and help its integration with the world.

It sounds like you are very happy with the policies of the government of Prime Minister Modi?

Absolutely, because we believe that India needs many different engines of growth. So you have digital India, for instance, which looks at how we can connect India digitally with proper broadband connectivity. We have Make in India, which is about not only manufacturing but manufacturing as well as services and that we can export those goods to the rest of the world.

We also talk about a start-up or an entrepreneurial India, so these are various campaigns, which are missions, which we have launched. Or the 175 gigawatts of renewable energy to be added, these are big big numbers and there are huge opportunities and many types of economic activity and the trickle-down effect of all of this in India is phenomenal. So yes, obviously I am very upbeat.

This interview was edited and condensed for clarity.