New Delhi: Banking reforms and job creation are the two biggest current challenges, said Arvind Panagariya, vice-chairman of the NITI Aayog.

The country is close to achieving eight per cent annual growth in gross domestic product (GDP), on the back of good infrastructure development, he added.

“The advance estimate for 2015-16 pegs GDP growth at 7.6 per cent and the fourth quarter is expected to clock 7.8 per cent, quite close to the target of eight per cent,” he said, at the annual session of CII.

Amitabh Kant, chief executive officer at the government’s think tank, said there was a need for more reliance on the domestic market.

“We’re creating jobs but there is gross under-employment. To counter this, we need big manufacturing firms,” said Panagariya. Wages were rising in China and India needs to capitalize on this. “The Centre is working on this through its skill development initiatives and in two years, the numbers of seats in industrial training institutes has risen by 20 per cent,” he added.

On the government’s retreat regarding a tax on the employees provident fund, he said taking half a step backward after taking two-three steps forward was okay as long as one was walking. “Reforms will happen under the present government but we need to be patient,” he said.

Kant felt India needed to look at manufacturing for export. “The challenge is to look at the right size and scale, and think of global markets to drive growth, as was done by China.”

Jamshyd N Godrej, chairman, Godrej & Boyce Manufacturing, said the two biggest deficits the country needed to bridge were in physical and social infrastructure.