RBI sees economic growth moderating in 2011-12

Mumbai, Jan 25 (PTI) The Reserve Bank today said India''seconomic growth rate will moderate in the next financial year,even as it retained the forecast for the current fiscal at 8.5per cent with an upward bias.

"Looking beyond 2010-11, the Reserve Bank expectsdomestic growth momentum to stabilise, though the GDP growthrate may decline somewhat, as agriculture reverts to its trend(assuming a normal monsoon)," the central bank said in itsthird quarter review of monetary policy.

As regards inflation, the RBI said that it would ease inthe first quarter of the next fiscal (2011-12) but added thatseveral upside risks are already visible in the globalenvironment and more may surface domestically.

For the current fiscal, it projected 7 per centinflation by March-end. The 1.5 per cent upward revision ininflation projection is based on high global commodity pricesand demand-supply imbalances.

The RBI''s projection of India''s GDP growth ratestabilisation comes amidst talks of double-digit growth tomatch China''s economic growth rate of 10.3 per cent in Junequarter.

The Reserve Bank of India (RBI) retained the GDP growthprojection for this year at 8.5 per cent.

"...the baseline projection of real GDP growth isretained at 8.5 per cent as set out in the Second QuarterReview of Monetary Policy of July 2010 but with an upsidebias," it said.

The central bank expressed satisfaction that Indianeconomy has bounced back to its pre-crisis growth trajectory,at 8.9 per cent in the first half of 2010-11, powered bydomestic factors, including good agricultural growth andrising exports.

It expects the country''s growth momentum to persist inthe coming years, on the back of robust corporate sales andhealthy tax collections, along with a booming service sector.

"Overall, robust corporate sales, large indirect taxcollections, advance tax payments and leading indicators ofservice sector activity suggest persistence of the growthmomentum," it said.