India's economic growth will decline in the range of 7-7.5% in the current financial year ending March 31 as compared to 8.4% expansion in the previous year, Prime Minister Manmohan Singh said on Friday.
"Growth in the current fiscal year is likely to be lower, between 7 and 7.5%, in a large measure due to the continuing uncertainty in the global economic environment," the prime minister said while addressing a conference of chief secretaries.
In the budget for the current financial year, presented in February last year, the government had set a target of around 9% growth for 2011-12.
The prime minister said 8.4% expansion in the Indian economy in 2010-11 was a creditable performance considering the turmoil in the global economy.
"Our economy grew at the rate of 8.4% in 2010-11. This was a creditable performance when seen in the background of a crisis-ridden world economy," he said.
As per the data released by the statistics department earlier this week, the country's gross domestic product (GDP) at factor cost at constant (2004-05) prices in 2010-11 is estimated at Rs 4,885,954 crore, which is 8.4% more than the previous year's Rs 4,507,637 crore.
The GDP had grown by 8% in 2009-10.
The prime minister said monetary tightening by the Reserve Bank of India has also impacted economic growth in the current financial year.
"Monetary tightening together with a difficult global economic environment, particularly the lingering Eurozone crisis, has impacted the rate of growth adversely," he said.
The Reserve Bank of India (RBI) hiked key policy rates 13 times since the beginning of 2010 in a bid to curb inflation.
In the third quarter review of monetary policy announced last week, the RBI had kept the key rates unchanged for the second time. However, the RBI has cut the cash reserve ratio (CRR), the amount against deposits which commercial banks have to keep as liquid assets such as cash, by 50 basis points to 5.5%, in a bid to boost liquidity in the market.
The prime minister said monetary tightening, coupled with the government measures, has helped curb inflationary pressure.
"Our government undertook several measures to ease the supply constraints that were a cause for rising prices. This coupled with the policy of monetary tightening that the Reserve Bank adopted has led to a continuous decrease in inflationary pressure in primary food articles in recent weeks. The overall inflation has also eased," he said.
The headline inflation based on the wholesale price index fell to a two-year low of 7.47% in December as compared to 9.11% in the previous month, as per the latest available data.
Annual food inflation was recorded at minus 1.03% for the week ended Jan 14. This was the fourth consecutive week of decline in general food price.