The Reserve Bank of India (RBI) on Tuesday said that inflation is likely to be around the target level of 6 per cent by January 2016.
As regards the path of inflation in 2015-16, the RBI said it will keenly monitor the revision in the Consumer Price Index (CPI), which will rebase the index to 2012 and incorporate a more representative consumption basket along with “methodological improvements.
RBI Governor Ragahuram Rajan said that the forthcoming budget is an important factor for the monetary policy. “There’s the budget coming. That’s a significant change in the fiscal space. It’s going to be an important change.”
“We’ve got new GDP numbers coming on February 9, which will reflect a whole new view of what’s happening in the economy,” he added.
RBI said that the baseline projection for growth using the old GDP base has been retained at 5.5 per cent for 2014-15. For 2015-16, “projections are inherently contingent upon the outlook for the south-west monsoon and the balance of risks around the global outlook.”
Domestically, conditions for growth are slowly improving with easing input cost pressures, supportive monetary conditions and recent measures relating to project approvals, land acquisition, mining, and infrastructure.
The estimate for real GDP growth in 2015-16 is expected to rise to 6.5 per cent with risks broadly balanced at this point, it added.
“The revised GDP statistics (base 2011-12) released on January 30 along with advance estimates for 2014-15 expected on February 9, 2015 will need to be carefully analysed and could result in revisions to the Reserve Bank’s growth projections for 2015-16,” said RBI.
On Non-Performing Assets (NPAs) of banks, Governor said that “We should not attribute stigma to an NPA. This is a misconception both among producers and lenders. Producers think if their account has been labeled NPA – it means they are at fault. It just means the account is not paying. It’s an accounting statement, and no a statement of blame or reputation. Even an account that is NPA banks can lend to it. New loans are not considered NPAs. Projects that are stalled can be restarted with new loans that are not NPAs.”