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Rajan on what will boost economic growth in India

Last updated on: August 20, 2015 12:01 IST

Image: Reserve Bank Governor Raghuram Rajan makes remarks during a seminar in Washington. Photograph: Mike Theiler/Reuters

Reserve Bank Governor 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 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.

The RBI had also cuts it's 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, Minister of State for Finance Jayant Sinha had affirmed the government's commitment to carry on with reforms.

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