Indian economy to grow 7 per cent this year, premier Singh says

Jan 8, 2012, 9:46 GMT

New Delhi - India's economy will grow by 7 per cent this fiscal year, Prime Minister Manmohan Singh said Sunday, and was geared to return to a higher growth rate of 9 to 10 per cent in the medium term.

'Despite an adverse international environment, the Indian economy is expected to grow by about 7 per cent this financial year ending 31st March,' Singh told an annual gathering of the Indian diaspora in the north-western city of Jaipur.

'We hope to bring back the rhythm of our growth processes to sustain an annual growth rate of 9 to 10 per cent in the medium term,' he said.

The key driver of economic growth would be the high savings rate, the prime minister said. 'Our domestic savings rate, which currently stands at 33 to 35 per cent of our gross domestic product, will greatly facilitate the realization of our growth objectives.'

There have been concerns over India's sluggish growth, which was 6.9 per cent in the July-September quarter, its slowest pace in two years.

Singh said the fight against high inflation was yielding results. Food inflation has dropped sharply in the last two months, after remaining near double-digits for almost two years,

But the headline inflation based on the wholesale price index remains at an elevated level of 9.11 per cent, according to the latest available data.