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India to grow faster in 2012-13

The Indian economy would grow a little over 7 percent this fiscal ending March 31, and it would turn around in 2012-13, the government's Chief Economic Adviser Kaushik Basu said Tuesday. In the current financial year, growth rate will be less than 7.5 percent for sure, may be just a little bit above 7 percent," Basu said at a press conference here.

On inflation, Basu said the overall inflation would fall below 7 percent in January.

"The next WPI number that you get in mid-February should show that inflation has gone below 7 percent," he said.

The headline inflation based on the wholesale price index (WPI) fell to a two-year low of 7.47 percent in December as compared to 9.11 percent in the previous month, according to the latest available data.

Presenting an outlook of the economy, Basu said the Indian economy was at an "inflection point" from where the things would be "beginning to turn around".

"On growth scenario don't expect a huge buoyant but we will probably turn around and I do expect that the figures are going to improve."

"We expect the growth next year will be higher than the growth this year. Not higher by a large major and we won't even be back to our potential but we should see improvement in 2012-13," Basu added.

After growing at 7.7 percent in the first quarter, India's gross domestic product (GDP) growth fell to 6.9 percent in second quarter of the current financial year.

Growth is unlikely to improve substantially in the third quarter as factory output has remained sluggish.

The factory output, measured in terms of the Index of Industrial Production (IIP), grew by 5.9 percent in November after a contraction of 4.7 percent in October.

Basu said credit to manufacturing sector has increased substantially in the last few months raising hope for a turnaround in the industrial growth.

India Tuesday revised economic growth downward to 8.4 percent from the earlier estimate of 8.5 percent.

GDP at factor cost at constant (2004-05) prices in 2010-11 is estimated at Rs.48,85,954 crore, which is 8.4 percent more than the previous year's Rs.45,07,637 crore.