Indian economy to grow at 8.5 per cent: Chidambaram

The Indian economy is set to grow at a rate of 8.5 per cent during 2008-09 after factoring in the volatility of the current global financial turbulence, says FM.

The Indian economy is set to grow at a rate of 8.5 per cent during 2008-09 after factoring in the volatility of the current global financial turbulence, Finance Minister P Chidambaram said at the World Economic Forum on Thursday.

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Chidambaram, who is leading the Indian delegation to the annual event, told reporters that India expected the turbulence to continue for "a few months" but added that the country was not in favour of imposing capital controls to dampen capital inflows.

The move by the US government to lower interest rates will increase the differential with the Indian rate, which could see greater capital inflows into the Indian market, he said.

However, he said a distinction needed to be drawn between "good and bad" capital inflows, the former category including foreign direct investment, remittances from non-resident Indians and tourism revenues.