India's growth rate below 6%: RBI report

India's growth rate below 6%: RBI report

With growth trending below the 5 per cent mark for three successive quarters, the Reserve Bank today pegged economic expansion at less than 6 per cent from the earlier expectation of over 8 per cent.

“The wide range of estimates using alternative techniques, on balance, suggests that currently the potential growth may be even somewhat lower than 6 per cent,” RBI said in its Macroeconomic and Monetary Developments Report released on Tuesday. It said a decline in financial savings, sluggish growth in capital formation over successive quarters, persistently high inflation and low business confidence are the major reasons for the revised estimate.

However, it said a modest recovery is likely to take shape in 2014-15. The document said potential growth, which hovered at 8-8.5 per cent levels in the period from the second quarter of 2005-06 to the second quarter of 2008-09, has gone down to 6 per cent.

RBI Governor Raghuram Rajan's predecessor D Subbarao had once suggested that the potential growth of the economy was 7.3 per cent. A survey of potential forecasters done by the RBI revised growth for FY15 to 5.5 per cent from the earlier estimate of 5.6 per cent.