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RBI sticks to 8% growth forecast

The Reserve Bank of India (RBI) on Thursday maintained 8% growth forecast for 2011-12 for economy, which grew by 8.5% in previous year but cautioned that downside risk for the growth have increased due to uncertainty in global economy.

business Updated: Aug 25, 2011 21:49 IST
HT Correspondent

The Reserve Bank of India (RBI) on Thursday maintained 8% growth forecast for 2011-12 for economy, which grew by 8.5% in previous year but cautioned that downside risk for the growth have increased due to uncertainty in global economy.

“After above trend growth during 2010-11, growth is expected to decelerate but remain close to the trend of about 8% in 2011-12,” said Subir Gokarn, deputy governor, RBI while releasing the annual report for 2010-11. “Global uncertainties have increased. If global financial problems amplify and slows down growth markedly, it would impart a downward bias to the growth projection.”

The RBI also said that moderation in commodity prices due to global slowdown is not significant. “Currently, global oil and commodity prices even, after some correction, remain high and could adversely impact growth,” said the deputy governor. “Inflation is likely to remain high and moderate only towards latter part of the year to about 7% by March 2012,” he added.

The RBI also said that though India had adequate foreign exchange reserves to handle external pressures, its current account deficit could be under pressure if the global economy weakens.

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