The chairman of Prime Minister’s Economic Advisory Council (EAC), C. Rangarajan said that the average growth rate will remain 7.5-8 per cent for the current financial year.

He added that some domestic and international factors are responsible for stagnation of economic growth. The reserve Bank of India is taking various monetary measures to tame the inflation rate. It has increased the short-term lending (Repo) rate by 50 basis points to 9 per cent and CRR by 25 basis points to 9 per cent. Thus, high interest rates by banks may hamper the growth rate.

The GDP (gross domestic product) growth was quite satisfactory last year. But tight monetary policy by RBI can impact the growth. The efforts of government of India to cool down inflation rate can also minimize the growth rate.  

C. Rangarajan expressed hope that the inflation rate would come down to 8-9 per cent by the end of the current fiscal in March 2009. The country is witnessing high inflation rate of 12 per cent as of now. Rangarajan said that high prices of crude oil are responsible for rise of inflation in country. The rate of crude oil touched to $147 per barrel in July.