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New Delhi: India's economy is likely to grow eight-nine per cent this fiscal year despite signs of slowing industrial activity, while inflation will ease by the October-December quarter, a top adviser to the government said yesterday.
"I would still say 8.5 per cent plus/minus 0.5 percentage points," Arvind Virmani, chief economic adviser to the Ministry of Finance, said when asked about growth prospects for the financial year to March-end.
In earlier forecasts, the central bank has said it expects the economy to expand 8-8.5 per cent this fiscal year, while some senior policymakers have pegged expected growth at eight per cent.
Trend growth
"I am absolutely confident that the trend growth is 8.5 per cent. I believe this year growth will be plus or minus 0.5 per centage points of that," said Virmani.
Recent data has suggested growth may be flagging with industrial production slowing to an annual three per cent in March, but Virmani said he expects factory output to rebound in the later half of the year.
He also said the inflation rate would moderate by the third quarter of the fiscal year which began in April as monetary and fiscal steps taken begin to have an effect.
"I expect, by and large and leaving oil aside, that we should have a softening of prices, and that, along with the measures taken, should have the effect," Virmani said.
India's annual inflation rate headed towards eight per cent in early May, clocking a three-year high at 7.83 per cent. The government and the central bank have taken a slew of steps to cool prices in Asia's third-largest economy.
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