PMEAC pegs GDP growth at 8.2% this fiscal, inflation at 6.5%

NEW DELHI: Amid a difficult global economic scenario, India's GDP growth will slow down to 8.2 per cent in the current fiscal and the inflation rate is expected to remain high at 9 per cent till October, the Prime Minister's Economic Advisory Council said today.

In its report on the state of economy, the PMEAC said: "The projected growth rate of 8.2 per cent, though lower than the previous year, must be treated as high and respectable given the current world situation."

It further said that the global economic and financial situation was unlikely to improve (in the foreseeable future) and this could impact the domestic economy.

The Indian economy grew by 8.5 per cent in the last fiscal, ended March 31, 2011.

The PMEAC's projection for 2011-12 is higher than the 8 per cent growth forecast made by the Reserve Bank in its annual monetary policy, but it is lower than the government's target of 8.5 per cent.

On inflation, the PMEAC said that it was likely to come down to 6.5 per cent by March, 2012, but would remain high at 9 per cent till October.

"There will be some relief starting from November and (inflation) will decline to 6.5 per cent by March, 2012," it said.

Hinting at further interest rate hikes, the PMEAC also said the RBI would have to continue with its monetary tightening policy measures to contain inflation.

The RBI has already hiked benchmark rates 11 times since March, 2010, as part of efforts to tame inflation.

Headline inflation has been above 9 per cent since December, 2010.