RBI lowers growth forecast to 5% for 2013-14
Mumbai: The Reserve Bank on Tuesday scaled down the growth forecast for current fiscal to 5 percent from the earlier projection of 5.5 percent, citing downside risk stemming from domestic constraints.
" ... Headwinds to growth from domestic constraints continue to pose downside risks, and vulnerabilities to sudden shifts in the external environment remain," RBI Governor Raghuram Rajan said in the second quarter review of monetary policy.
The RBI had projected a growth of 5.5 percent for 2013-14 in its first quarter monetary policy on July 30.
The economy grew by 4.4 percent in the first (April- June) quarter of current fiscal. It had expanded by 5 percent in 2012-13 fiscal, the lowest level in a decade.
"Strengthening export growth and signs of revival in some services, along with the expected pick-up in agriculture, could support an increase in growth in the second half of 2013-14 relative to the first half," Rajan said.
He said the revival of large stalled projects and clearances by the Cabinet Committee on Investment (CCI) would buoy investment and overall economic activity towards the close of the year.
The RBI's projections are in line with that of the World Bank and International Monetary Fund (IMF) which lowered the growth forecast for India earlier this month.
The World Bank slashed India's economic growth forecast for the current financial year to 4.7 percent from an earlier projection of 6.1 percent. Besides, IMF projected an average growth rate of about 3.75 percent for India in 2013-14.
Rajan said industrial activity has weakened with a contraction in consumer durables and capital goods sector, reflecting ongoing downturn in both consumption and investment demand.