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Slowdown passing phase: Montek

New Delhi: Economy will grow by 8.2 percent in 2011-12, slower than the previous fiscal but it is not "sinking" despite global headwinds, Planning Commission Deputy Chairman Montek Singh Ahluwalia has said.

He said though the economy is facing headwinds, "I dont think that our economy is sinking. There is a temporary slowdown".

However, he said if the world economy is facing some difficulty, then India would get affected.

"We will grow at 8.2 percent this fiscal. It will be worse than 2010-11 but 8.2 is very high growth rate…I think, yes there is slight slowdown, I don`t think it is permanent slowdown. In the next year 2012-13 why should we not go back to over 8.5  percent plus economic growth," he said.

As for inflation, Ahluwalia admitted that it is a sticky affair. "I think at the end of the year, inflation will be lower. This time inflation was more difficult to control, " he said yesterday.

Under impact of high interest rates, factory output fell to 5.6 percent in May this year from 8.5 percent in the same month last year, as the manufacturing and mining sectors fared poorly.

While Finance Minister Pranab Mukherjee had pegged economic growth for the current fiscal at around 9 percent in his budget speech, the government and the RBI both subsequently lowered their projections.

The central bank has hiked key policy rates 11 times since March 2010 to curb demand and tame inflation.  In its recent quarterly review on Tuesday, RBI hiked its short term borrowing and lending rates by half a percentage point.

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