India can recover from global economic slowdown faster than China as the economy is driven by domestic consumption, but the country needs to "get its act together" for this to happen, Reserve Bank deputy governor Anand Sinha said in Beijing on Sunday.
Sinha also said "confidence
issues like the general pessimism and not-so-good-feel factor also affected the economy".
"Both economies (India and China) are affected by the global economic slowdown but India being a domestic consumption driven economy could recover faster," he said.
"But for that we have to get our act together. Being dependent on domestic economy, we would be less affected by export sector performance. So, that could be our strength. But we have to get our act together and whatever weaknesses we have to get around them," he said responding to a question.
When asked what should be done by India to arrest the slide in growth, he said, "We have to get hold of inflation. If we get hold of it, growth will have better prospect. Once growth takes off things would be better.
Retail inflation in India is in double digits at 10.03%. RBI had been repeatedly saying that focus of its monetary policy is on controlling inflation.
"We must realise that even if we put our domestic situation on sound footing, what happens in the rest of the world, we cannot be totally immune to that. So you will not have the same growth rate as we would have had if the world economy is in good shape."
Sinha also said "not so good feel factor", besides the global economic slowdown, for the current domestic situation.
"One reason is global economic slowdown. That has affected us is the trade channel. We are not export dependent but exports suffered due to global economic crisis. Apart from trade issues, confidence issues like the general pessimism and not so good feel factor also affected the economy," Sinha said apparently referring to criticism about policy paralysis.
"Sentiments are very important when it comes to taking business decision," he said.