Inflation target at 5% a challenge; macro stability key: Moody's

RBI's target to bring down retail inflation at 5% by March 2017 will face some risks from monsoon uncertainty and execution of 7th Pay Panel recommendations, while macro-economic factors will be critical for sustaining growth, Moody's Investors Service said today.

It also said that a growth-oriented forthcoming Budget, while controlling inflation at the same time, will help support India's sovereign credit rating.

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The Reserve Bank expects retail inflation to be around 6% in January 2016 and lower further to 5% by March 2017.

"The budget announcement at the end of February should offer some insight into the Pay Commission implementation, other fiscal measures and their likely impact on growth and inflation.