4. Growth Rate

According to Rajan the prospects for reinvigoration of growth have improved modestly. Pick up in export growth should support manufacturing and service sector activity.

5.5 percent GDP growth target is expected by the governor. If the recent pick-up in the industrial activity is sustained in an environment conducive to the revival of investment and unlocking of stalled projects, with ongoing fiscal consolidation releasing resources for private enterprise, external demand picking up and international crude prices stabilizing.

5. Cautious optimism

RBI is of the opinion that the recent cautious optimism that is building in the economy on the back of improved business sentiment needs to be placed on solid foundations through a step-up in investment. "In this context, the resumption of stalled projects should provide a boost to inventory and capex cycles, while reducing distressed bank loans and revitalizing growth," RBI further stated.