RBI sees 5-6% economic growth in 2014-15

Says inflation risks likely to stay

The Reserve Bank of India (RBI) today said it expects a modest recovery in economic growth in 2014-15 but cautioned that inflation risks may continue despite some moderation in prices in recent weeks.

"On current reckoning, growth in 2013-14 is likely to fall somewhat short of the Reserve Bank's earlier projection of 5%. However, a moderate paced recovery is likely to shape in the next year with support from rural demand, a pick-up in exports and some turnaround in investment demand. The growth in 2014-15 is likely to be in the range of 5-6%," the banking regulator said in its third quarter review of macro-economic and monetary developments report.

The central bank said the pace of growth may accelerate beyond 5-6% if project clearances translate into investment, outlook on global growth improves and inflation softens.

"Despite moderation in December and some further softening expected in near-term, inflation risks have to be watched carefully as we enter into the next year. This is due to upward revision in domestic energy prices, expected growth acceleration, structural bottlenecks affecting food inflation and adverse base effects," RBI said.

It expects the headline CPI inflation to remain above 9% in January-March quarter and between 7.5-8.5% in the fourth quarter of 2014-15.