update

     The Reserve Bank of India (RBI) expects that Indian economy is likely to recover to 5.5 percent growth in current fiscal year from 4.7 percent in the last financial year. The RBI Governor Raghuram Rajan stated that the country is in a much better position as compared to previous year and overall business sentiments and economic activity have improved.

     On improvement in India’s macro-economic indicators, the Governor has stressed that the current account deficit (CAD) has been brought under control and the foreign exchange reserves are significantly higher over last year. Further, the revival of investments, pick-up in external demand, unblocking of stalled projects and stabilisation in global crude prices could help achieve the growth estimates. By adding further he said that the Government is committed to control the fiscal deficit. The government during budget 2014-15 has set fiscal deficit target at 4.1 percent of GDP this year and decided to lower it to 3 percent of GDP by 2016-17. Further, the set-up of stable government and political stability in the country has also improved the economic growth prospects.

     India's economic growth stayed below 5 percent for the second year in a row at 4.7 percent during FY14. However, over the past few months, macro-economic indicators have been witnessing some improvement. Industrial production growth soared to a 19-month high of 4.7 percent in May mainly driven by improved performance of the manufacturing sector. India’s export growth remained in double digit for the second month in a row at 10.22 percent in June. The strong growth in overseas shipments will provide impetus to country’s manufacturing and services sector.