Mumbai: Reserve Bank of India has projected the country's economic growth at 7.3 percent this fiscal, even as it has assessed the inflation rate to rule at around 6.5 percent by end-March, 2013.

"The global outlook looks slightly better than expected earlier. Overall, the domestic growth outlook for 2012-13 also looks a little better than in 2011-12," Reserve Bank of India (RBI) Governor D. Subbarao said in a statement.

"Accordingly, the baseline Gross Domestic Product (GDP) growth for 2012-13 is projected at 7.3 percent," he said, presenting the central bank's monetary policy for this fiscal before chief executives of commercial banks here.

"Even though growth has fallen significantly in the past three quarters, our projections suggest the economy will revert close to its post-crisis trend growth in 2012-13, which does not leave much room for monetary policy easing without aggravating inflation risk."

RBI, unsure of drop in inflation rate

The central bank, however, did not expect much of a drop in the inflation rate based on the wholesale price index (WPI), which has declined marginally to 6.89 percent in March as compared to 6.95 percent in the previous month as per data released Monday.

"Keeping in view the domestic demand-supply balance, global trends in commodity prices and the likely demand scenario, the baseline projection for WPI inflation for March 2013 is placed at 6.5 percent. Inflation is expected to remain range bound during the year."

The Central bank governor also warned that the inflation scenario remained challenging in the upcoming months as food prices had begun to rise after seasonal declines, crude oil prices were expected to remain high and there was suppressed inflation in fuels.

At the same time, the prices of non-food manufactured products were expected to remain contained and corporate performance numbers indicated that pressures of raising prices had reduced, the central bank said.

"Consequently the risk of adjustment in administered prices translating into generalised inflationary pressures remains limited, though there is no room for complacency," the apex bank governor added.