India’s GDP growth will stay at 8.5 percent: central bank


Mumbai : The Reserve Bank of India reposed confidence in the Indian growth story by retaining its GDP growth forecast at 8.5 percent during fiscal 2007-08 in the mid-term review of the monetary policy presented here Tuesday. The central bank has kept all key rates unchanged.

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The central bank said India’s gross domestic product (GDP) would continue to grow at 8.5 percent for the rest of the financial year provided there was no further escalation in international crude oil prices and barring domestic or external shocks.

RBI placed real GDP growth during the first quarter of 2007-08 at 9.3 percent, compared to 9.6 percent in the corresponding quarter a year ago.

The year-on-year (YoY) wholesale price index inflation eased from its peak of 6.4 percent on April 7, 2006 to 3.1 percent by Oct 13, 2007, it said.

It however showed concern over the Y-o-Y CPI inflation for industrial workers, which showed a sharp increase to 7.3 percent in Aug 2007, compared to 6.3 percent a year ago.

RBI reaffirmed its intention to condition inflation expectations in the range of 4-4.5 percent, with a medium-term objective of keeping it at around three percent.

RBI governor Y. Venugopal Reddy has left all the key bank rates unchanged.

The bank rate at six percent, repo rate at 7.75 percent and reverse repo rate at six percent will all remain the same. The cash reserve ratio (CRR) has however been hiked by 50 basis points to 7.5 percent with effect from Nov 10.