IANS

Mumbai, Oct 27: India's central bank has retained its growth projection for the country's economy at 6 percent for the current fiscal but significantly raised its expectations on the annual inflation rate to 6.5 percent by the end of March.

"The baseline projection for gross domestic product (GDP) growth for 2009-10 is placed at 6 percent with an upside bias," Reserve Bank of India (RBI) Governor D. Subbarao said while reviewing the monetary policy for this fiscal.

"Keeping in view the global trend in commodity prices and the domestic demand-supply balance, the baseline projection for wholesale price index (WPI) inflation at end-March 2010 is placed at 6.5 percent with an upside bias."

Earlier, the central bank had projected the annual inflation rate at 5 percent at the end of this fiscal.

"As always, the Reserve Bank will endeavour to ensure price stability and anchor inflation expectations," Subbarao told the chief executives of commercial banks during the half-yearly review of the monetary policy.

"The conduct of monetary policy will continue to condition and contain the perception of inflation in the range of 4-4.5 percent. This will be in line with the medium-term objective of 3 percent inflation consistent with India's broader integration with the global economy."

Subbarao said the Reserve Bank was mindful of its fundamental commitment to price stability and would continue to monitor the situation in its entirety and take measures as warranted swiftly and effectively.