RBI’s 5.7% growth forecast pessimistic: Montek

Sticking to the Government’s projection of economic growth of 6.1-6.7 per cent for this fiscal, Planning Commission Deputy Chairman Montek Singh Ahluwalia today said RBI’s projection of 5.7 per cent was more “pessimistic”.

“The Reserve Bank is clearly more pessimistic than the Government is. I think that the Government forecast as of now is feasible. Critically what matters is how effective we are in restoring the momentum of investment in large projects,” he said while commenting on the Reserve Bank’s monetary policy announcement.

RBI in its monetary policy for 2013-14 reduced the repo (short-term lending) rate by 0.25 per cent and pegged the economic growth rate for the fiscal at 5.7 per cent as against the Finance Ministry’s projection of 6.1 to 6.7 per cent.

“I have no idea what Reserve Bank thinks...we are working hard and over the next few weeks we would see that many impediments are removed,” Ahluwalia said and exuded confidence that growth would improve to over 6 per cent in the current fiscal.

On RBI’s decision to reduce the repo rate by 0.25 per cent, he said, “I welcome the move. The RBI is clearly signalling that policy space on the monetary side has increased. They are taking actions which will essentially support revival of the economy.”

Repo rate, he added, was an important signal, though its effectiveness would depend on the willingness of banks to lend to fuel growth and demand.

Observing that several risks remain to the economy, Ahluwalia said, “The bottomline is that having looked at all these things, the RBI is moving into a more supportive monetary policy.”

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