<b>Credit Policy</b>: GDP growth rate hiked to 8.5-9%

The Reserve Bank of India (RBI) today hiked the expected GDP growth for the year ending March 31, 2007 to 8.5-9%.

"Real GDP growth originating from agricultural and allied activities has been somewhat lower than expected in the first half of 2006-07 based on the likely production in the kharif season.

Pending a clearer assessment of the kharif crop performance and taking into account the favourable water storage conditions that should augur well for the rabi season, it is reasonable to expect that agriculture will maintain its trend growth of 3% as anticipated in the Annual Policy Statement and the Mid-Term Review.

"On the other hand, the momentum of growth has been sustained in the industrial and service sectors and the outlook remains bright. Accordingly, real GDP growth for 2006-07 is currently expected to be in the range of 8.5-9% as compared with around 8% projected in the mid-term review, and 7.5-8% in the annual policy statement and the first quarter review," the central bank said in the third quarter policy review issued today.