Jaipur, Jan 8: Despite turbulence in developed economies, India's gross domestic product (GDP) will grow by 7 percent in the current fiscal and is geared to return to a higher growth path of 9-10 percent in the medium term on the back of strong fundamentals, Prime Minister Manmohan Singh said on Sunday.
"Despite an adverse international environment, the Indian economy is expected to grow by about 7 percent this financial year ending March 31," the prime minister said after inaugurating the 10th annual diaspora meet called the Pravasi Bharatiya Divas (PBD) here.
India's GDP growth fell to 7.5 percent in the first half of the year against the budgetary target of around 9 percent growth for the current fiscal. The economic growth declined to 7.7 percent in the first quarter of 2011-12 and it fell further to 6.9 percent in the second quarter.
The prime minister said although the economy was passing through "difficult times", its fundamentals were strong and the GDP growth would rebound to 9-10 percent in the medium term.
"We hope to bring back the rhythm of our growth processes to sustain an annual growth rate of 9-10 percent in the medium-term," he said.
Manmohan Singh said the main driver of India's economic growth in the medium term would be the high savings rate. "Our domestic savings rate, which currently stands at 33-35 percent of our GDP, will greatly facilitate the realisation of our growth objectives."
On inflation, the prime minister said the sustained battle of the policymakers have paid results and finally the prices were easing.
"Our efforts to battle inflation are producing results and there has been an improvement in the situation," he said.
After remaining near double-digit for almost two years, food inflation has dropped sharply in the last two months. In fact, food inflation slipped into negative for the first time in six years. Food inflation dipped to minus 3.36 percent for the week ended Dec 24 as compared to 20.84 percent during the corresponding period of last year.
However, the headline inflation based on the wholesale price index remain at an elevated level. It was recorded at 9.11 percent in November, according to the latest available data.
Nearly 1,900 delegates from almost 60 countries are participating in the annual conclave.