Economy to grow by 7.5 pc in this fiscal: RBI

Mumbai: The Reserve Bank of India (RBI) on Friday projected an impressive 7.5 percent growth for the Indian economy in the current fiscal even as it hiked the outlook for annual inflation rate to 8.5 per cent by end-March.

The central bank had earlier pegged the growth rate at 6 per cent and inflation at 6.5 per cent.

"Assuming a near-zero growth in agricultural production and continued recovery in industrial production and services sector, the baseline projection for gross domestic product growth for 2009-2010 is now raised to 7.5 per cent," the central bank said.

"Keeping in view the global trend in commodity prices and the domestic demand-supply balance, the baseline projection for wholesale price inflation for end-March 2010 is now raised to 8.5 per cent."

RBI Governor D Subbarao, while presenting the third quarterly update of the monetary policy before chief executives of commercial banks, said he also expected the country's growth rate of 7.5 per cent to be sustained in the next fiscal.

"As with growth, we shall formally announce our inflation projection for 2010-11 in our monetary policy in April. But on the assumption of normal monsoon and global oil prices remaining around the current level, it is expected inflation will moderate from July."