RBI's 5.7% growth forecast for FY14 pessimistic: Montek

'Critically what matters is, how effective the govt are in restoring the momentum of investment in the large projects'

Sticking to government's projection of economic growth of 6.1-6.7% for this fiscal, Planning Commission Deputy Chairman Montek Singh Ahluwalia today said RBI's projection of 5.7% was more "pessimistic".

"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 the 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% and pegged the economic growth rate for the fiscal at 5.7% as against the finance ministry's projection of 6.1 to 6.7%.

"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% in the current fiscal.

On RBI's decision to reduce repo rate by 0.25%, 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 willingness of the 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."