Washington:  Finance Minister Pranab Mukherjee on Wednesday said the economy will grow by around 8.5 per cent in the current fiscal despite the conscious decision of the Reserve Bank to sacrifice growth to contain inflation.

"I am still holding the projection which I had that is 8.5 per cent plus... We shall have to wait for some time. But it would not be less than 8 per cent plus," he told a news agency.

The Finance Minister was here to participate at the 'US-India Economic and Financial Partnership' jointly organized by the Confederation of Indian Industry (CII) and Brookings Institute, a Washington-based think-tank.

Mukherjee said the government and the Reserve Bank have been trying to strike a balance between containing growth and promoting inflation.

"One need not cancel the other, but controlling inflation is essential. In a developing economy like ours, if we cannot bring inflation within a manageable limit, the hardship goes to the weaker sections of the people... they are the worst sufferers," the Minister said.

Sacrificing growth, the RBI has raised key policy rates ten times since March, 2010, to contain inflation, which is hovering at around 9 per cent. Inflation stood at 9.06 per cent in May.

Controlled inflation is needed, Mukherjee said, adding that the "best course would be to reduce inflation to have it at the acceptable moderate level and also to have reasonable high growth rate... because if you want to have high growth which is not realistic, that would lead to inflationary
pressure.

On the other hand, he said the country cannot afford to have very low growth as it would mean less jobs and no wealth creation. "So we shall have to strike a balance and exactly we are doing that," the Minister said.

The Reserve Bank, which is slated to hold its next review of the monetary policy on July 26, has pegged India's GDP growth in 2011-12 at 8 per cent, lower than the 8.5 per cent rate recorded in the previous fiscal.

(Agencies)