FY08 GDP growth to be 8.5%: Rakesh Mohan

Rakesh Mohan, deputy governor, Reserve Bank of India, said inflation had been contained and the growth of investment in the Indian economy remained high.

Mohan said growth in India's gross domestic product (GDP) for the current financial year had met the central bank's expectations.

The government in its first advance estimate said the GDP for 2007-08 (April-March) was likely to grow at 8.7%. RBI expects the Indian economy to grow around 8.5% in the current year.

"It is (GDP growth) consistent with what we have been saying," Mohan said.

"I think you have to observe the kind of real growth that we have achieved in the last 4-5 years. You have to look at the growth in investment that is going on. High investment growth is taking place which is promising for the future," he said.

In its review of the monetary policy last week, the central bank had said while inflation had remained within tolerable levels, underlying demand pressures remained.

Risk to inflation had increased from high oil, food, and metal prices pointing that the upside risks to inflation were likely to be stronger, going ahead.

India's headline inflation had hit a 21-week high of 3.93% in the week ended January 19, though it is still way below the over two-year high of 6.69% in January 2007.

RBI is targeting inflation close to 5% at the end of March. For the week ended January 26, inflation rate is seen at 3.97% from 3.93% a week earlier.