The Reserve Bank of India, Raghuram Rajan, today said there is a pick-up in the economy and expressed hope that rural demand will get stronger if the monsoon improves.
“We do believe that there is pick-up,” Rajan said, while speaking at the second SBI Banking and Economics Conclave here.
In comments that came two days after Moody’s Investors Service lowered its India growth forecast on poor monsoon concerns, Rajan said the sowing is good and he hopes that the rains do not deteriorate.
“Hopefully, if the monsoon does not deteriorate and in fact improves, sowing has been very good, you may see rural demand coming back more strongly,” he said.
Rajan added that this will be a “tremendous bonus” to the economy relative to where we are.
Moody’s has cut its growth estimate to 7 per cent in 2015 from the earlier 7.5 per cent, citing worries on rains and the lack of pace of reforms.
The government has been targeting growth to come at over 7.8 per cent for the fiscal and gradually accelerate further to close to double digits.
RBI had also cuts its growth projection in the June policy statement to 7.6 per cent, and maintained it in the August month review.
Following the Moody’s statement, the Minister of State for Finance, Jayant Sinha, had affirmed the government’s commitment to carry on with reforms.