Davos: Stating that monetary policies alone cannot change the world, RBI Governor Raghuram Rajan Wednesday said the governments need to create an underlying framework for growth in the long term for the world economy.
He also downplayed concerns about China and said that the good thing about China is that they keep making fresh efforts to resolve their economic problems.
Speaking here at the WEF Annual Meeting, the RBI Governor said the governments across the world need to realise that there are various other tools to carry forward reforms and boost growth.
"The good news across the world is that we have realised that monetary policies are not going to change the world and there are much more to the reforms.
"Not just enabling but also creating the underlying framework for growth is the one which will take us a long way," he said.
He, however, refused to comment on whether the US Federal Reserve would hike the rate again.
"I can't comment on Fed," he said.
"Problem is monetary policies get into all... Risks do build up when we change the monetary policy stance," he said, while adding that there have been cases when impact has been seen on oil prices.
He also raised concerns over the reverse impact on asset prices when the rate stance change and said there are bigger concerns such as those emanating from the corporates getting into over-leveraging of loans.
On concerns from China, Rajan said China has kept changing its models. The pre-financial crisis model did not work.