RBI seeks faster clearances of projects for high growth

The Reserve Bank on Monday pitched for creation of a conducive environment for investment and faster clearances of projects to boost economic growth which slowed to a decade low of 5 per cent in the previous fiscal.

"Key to reinvigorating growth is accelerating investment by creating a conducive environment for private investment, improving project clearance and implementation and leveraging on the crowding-in role of public investment," RBI Governor D Subbarao said in the mid-quarter monetary policy review.

The continuing weakness in manufacturing activity needs to be urgently reversed, he added. The growth of industrial production decelerated to 2.3 per cent in April after picking up in the preceding month.

The RBI said that all constituent categories of industry have slowed, with a persistent contraction in mining activity. "The sharp weakening in the growth of capital goods production points to still damped investment demand whereas a pick-up in consumer non-durables could be indicative of a fragile return of consumer confidence," the RBI said.

On the domestic front, RBI said, the last year's robust rabi production and the current monsoon performance so far augur well for growth prospects.

It further said the spatial and temporal distribution of rainfall over the next three months "will be crucial in determining the performance of agriculture". The onset of the south-west monsoon has been strong and on time.

Pulled down by poor performance of farm, manufacturing and mining sectors, economic growth slowed to 4.8 per cent in January-March quarter and fell to a decade's low of 5 per cent for 2012-13 against 6.2 per cent in the previous fiscal year.

The newly set up Cabinet Committee on Investment (CCI) has cleared several large investment projects.