Planning Commission Deputy Chairman Montek Singh Ahluwalia said that the retardation in the Indian financial system has been on projected lines and a healthy recovery is expected by the coming fiscal year thanks to the measures being taken by the administration.

"The slowdown was not unexpected," Ahluwalia told, referring to the sharp decline in the development of India's gross domestic product (GDP) to 7.9% during in the first quarter of 2008, as against 9.2% in the same period of the last year.

He said, “What I also want to say is a growth of almost eight percent is also healthy and impressive. We should expect revival to a higher level next fiscal.”

Montek Singh Ahluwalia said that 9-10% growth was attainable.

He also said that the tight monetary plan of the central bank (RBI), in a bid to control price increase, was one of the key reasons for the decline in manufacturing growth to 5.6% from 10.9% in the first quarter of last fiscal.

The Oxford-educated economist, who had started his career with the Washington-based World Bank, said, “So you can also expect the inflation rate to start moderating from the next few months.”

“Inflation will begin softening within a few months time. The prices of crude oil appear to be softening in the global market. Good monsoon will make a big difference,” said Mr. Ahluwalia.

The RBI had also trimmed the growth projection to 8%, from 8.5% on account of global as well as domestic developments when it reexamined its monetary plan for the current fiscal late last month.

Ahluwalia also anticipated reforms to get a big push forward, mainly in the area of public-private partnerships in infrastructure projects, covering roads, ports, airports and energy.

He said, “Lot of good things are happening in the states. Some of them are quite ahead in inking infrastructure projects through the public-private partnerships (PPPs).”

In the same vein, Ahluwalia said that there was a requirement to execute the projects at a fast speed in order to hold the growth momentum.

"Infrastructure projects intended for capacity building have to be implemented with a strong supportive policies and administrative support," he said.

"Accelerating the pace of PPP contracts in infrastructure is extremely important. Policies have already been shaped, and the ministries are required to the projects fast. I think quite a lot has been done," said Ahluwalia.