October 26, 2010 11:59 AM EDT
India's economy is seen growing by 8.5-9.7 percent in the 2010/11 fiscal year and monetary tightening should ensure the pace of recovery in Asia's third-largest economy is not hit, the finance ministry said in a report released on Tuesday.
India had earlier said its GDP would expand around 8.5 percent in the year to March 2011 while the International Monetary Fund projects growth at 9.7 percent for calendar 2010.
The report also said measures to temporarily ease liquidity were consistent with the Reserve Bank of India's (RBI) policy stance of containing inflation and anchoring inflationary expectations.
The RBI has raised its key policy rate five times by a total of 125 basis points since March, to help stamp down inflation that stood at 8.6 percent in September.
The Reserve Bank will review policy on Nov. 2 and analysts expect a 25-basis point hike in key rates.
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