‘Work In Progress': India to grow at 7.6% this year, RBI says

Reserve Bank of India (RBI), in its annual report released on August 29, 2016 said that India’s growth is likely to be pegged at 7.6% in the current fiscal year.

Raghuram Rajan, Governor, RBI, said, “Both the Government and RBI have been engaged in the last few years in restoring macroeconomic stability to the economy. While the policy actions have had positive effects, there are a number of areas which should be considered “work in progress”. 

Interestingly, Arvind Panagariya, Vice-Chairman, NITI Aayog, said that India can clock growth rate of 8% on the back of good monsoon and policy reforms.

RBI, in its annual report, said, "Expectations of a good monsoon (which has already started to show some positive signs) coupled with more money in the hands of government servants (as a result of the implementation of the 7th Pay Commission recommendations) should boost consumer demand."

The implementation of 7th Pay Commission will boost consumption by Rs 4,511 crore (0.30% of GDP) and increase savings by Rs 3,071 crore (0.20% of GDP), said India Ratings in a research note. 

The agency estimates that demand-boost to the economy, as a result of the revision in the salaries or pensions of state government employees, will be at least four times the 7th Pay Commission award.