RBI projects GDP growth to accelerate to 6.3 per cent in FY16

The Reserve Bank of India on Tuesday said the country's GDP growth, which it estimates to be 5.5 per cent in the current fiscal, will improve to 6.3 per cent in 2015-16.

"For 2014-15, real GDP growth is projected to lie between 5 and 6 per cent, with a central estimate of 5.5 per cent... For 2015-16, real GDP growth is projected to rise to 6.3 per cent," RBI said in its monetary policy report released on Tuesday.

The central bank said that the 5.7 per cent growth in the first quarter of the current fiscal surprised on the upside and stated that the same has slackened in the second quarter.

One of the major contributors for the decline in growth will be the monsoon deficiency, which also affects non-agricultural sectors through demand effects, the RBI report said.

However, the GDP will grow towards the end of the fiscal, it said, adding that an improvement in exports driven by positive sentiments in the global markets and an increase in the yield-chasing fund inflows into the country will be the primary contributors for the rise.

A survey of professional forecasters conducted by the central bank pegged the growth for 2014-15 at 5.5 per cent and expects a major improvement in the number to 6.5 per cent in fiscal.

On the risks to growth, RBI said uncertainties around global recovery, any adverse effect on the commodity prices, a below-normal monsoon in the next fiscal, a depreciation in the rupee and inabilities to augment supply capacities are the biggest detrimental factors.

It can be noted that the country has had two consecutive fiscals of sub-5 per cent growth and clocked a growth of 4.7 per cent in the FY14.

Even though the April-June quarter growth at 5.7 per cent was healthy, RBI Governor Raghuram Rajan said the recovery process in the country is "uneven", pointing to data releases like a fall in factory output during July.