Mumbai, Apr 18 (UNI) Riding the crest of good industrial and services sector performances, the Indian economy is poised to continue to grow by 7.5-8 per cent this fiscal and linked with the promise of a normal monsoon that would propel agricultural growth, says the Reserve Bank of India.
The Apex bank has also projected inflation at 5-5.5 per cent this fiscal, but admitted that reining in inflation will continue to pose a challenge to its monetary policy due to volatile global oil prices.
''GDP growth may be placed in the range of 7.5-8 per cent during 2006-07 assuming accelerated growth in agriculture under normal monsoon conditions and barring domestic or external shocks,'' the central bank said in its Annual Policy statement for 2006-07.
Though, the forecast for the south-west monsoon is yet to be released, the RBI is anticipating a normal monsoon, which if turns out true, would accelerate farm sector growth rate.
''Despite some uncertainties, the overall industrial outlook continues to be positive. Services sector growth is expected to sustain the momentum,'' it said.
The Apex bank noted that its forecast of 7.5-8 per cent GDP growth was in line with the advanced estimate of the Central Statistical Organisation.
In its policy announced today, the Central bank did not tinker with bank rate, repo and reverse repo rates and cash reserve ratio.
It said that the monetary policy will aim to ensure a monetary and interst rate environment that enables continuation of growth momentum consistent with price stability.
''The policy endeavour would be to contain the year-on-year inflation rate for 2006-07 in the range of 5-5.5 per cent,'' it said.
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