India to achieve 7.5 to 8 pc growth: RBI Governor

Hyderabad, Sept 2: Reserve Bank of India Governor Y V Reddy today said India was set to achieve a growth rate of 7.5 to eight per cent during this fiscal, keeping the inflation in check between five to 5.5 per cent and added that there was no need for any review of the projections.

"Though there may be intra-year differences in the inflation rate, all evidences with us show that it is possible to contain it in the range of five to 5.5 per cent for the whole year, he told reporters here.

Though the monsoon conditions were unclear and global risks too existed, the country was well in position to achieve a GDP growth rate of 7.5 to eight per cent as originally envisaged, he said.

Asked whether any upward revision in fuel prices would lead to further increase in bank lending rate, he said "there is no relationship between the two". Monetary policy mesures were taken, keeping in mind several domestic factors, Mr Reddy added.

The RBI Governor said though India could not totally be insulated from economic developments elsewhere, any slowdown in economic growth in the US would only have a minimal adverse impact on India when compared to other emerging markets.

RBI was closely monitoring the moves of the Central Banks in other countries, including the USA, to assess their impact on the country, he added.

Asked about the increasing fiscal deficit of the Union and state governments, he said there was no cause for concern. The borrowings by the Centre and states were well within the projections made in their budgets, Mr Reddy said.

To a query about fuller capital account convertibility, he said an important recommendation of the committee concerned, which had been put on the public domain, was that there were gaps between regulatory intent and procedural aspect.

He said a set of measures suggested for the year 2006-07 should be initiated in the next few weeks by the banks, in consultation with the Government, as it was already September.

Replying to a question, he said there were differences within the committee on the question of ban on investing in Participatory Notes (PNs) by Foreign Institutional Investors (FIIs).

UNI