Economic growth rate above expectations

Earlier,finance minister Pranab Mukherjee as well as PMEAC had projected 8.5 per cent growth for 2010-11. However,the economy has shown recovery since the impact of global financial crisis that hit in 2008 and Indias GDP has grown at 8.9 per cent in the first half of the current fiscal. Hence,the government has now projected growth rate that is higher than 8.5 per cent. On whether high industrial production and GDP growth rate would prompt the RBI to tighten monetary policy,Rangarajan said,I think RBIs decision will depend upon how the inflation behaves. Thats the key factor.

Rangarajan said inflation is still well above the comfort zone,adding,if there is still tendency for inflation to fall in the next few weeks that would be the guiding factor as far as RBI is concerned.