Economy to grow 6-7 pct in FY10 says Pranab Mukherjee

NEW DELHI (Reuters) - The economy could expand between 6 and 7 percent in the year to March 2010 despite a bad monsoon, the finance minister said on Saturday as data showed accelerating inflation in October.

Speaking in the Sri Lankan capital Colombo, Pranab Mukherjee said there were risks to an early global economic recovery and signs asset price bubbles were re-emerging.

"Overall, the economic growth is expected to be in the range of 6-7 per cent in 2009/10, despite the setback due to a poor monsoon," Mukherjee said. The remarks were made available via a government email sent to journalists in New Delhi.

The growth rate in Asia's third largest economy fell to 5.8 percent in each of the December and March quarters as the global slowdown trimmed factory output and slashed exports.

The economy grew 6.7 percent in 2008/09 (April-March), slowing from 9 percent or more in the previous three years.

"The effort now is to bring the economy back on the growth path of 9 percent per annum," Mukherjee said without giving a time frame.

PRICE PRESSURES

The government had cut duties twice since December and stepped up public spending, while the central bank slashed its policy interest rate by 425 basis points between October and April, and pumped in extra cash to stimulate a slowing economy.