India’s real GDP is expected to have grown at an average of 8.6% in the four years to 2006-07, the Reserve Bank of India (RBI) said in its recap of macroeconomic and monetary developments during 2006-07.

Quoting CSO, RBI said real GDP is likely to have grown at 9.2% in the fiscal year ended March 30, compared to the previous one. The acceleration in growth during the past financial year was driven by the continued momentum in the services and manufacturing sectors, both of which were expected to record double-digit growth. Agriculture and allied activities’ growth, however, slowed from 6% in 2005-06 to 2.7%, it said.

The report has extensively described the pressure on prices being felt in several economies such as the US, the UK and Euro region. It has pointed out that many central banks raised key interest rates to combat price rise and controlling inflation has become the primary concern for many of them.

In that context it says, ‘‘In India, prices of primary food articles and manufactured products exerted upward pressures on headline inflation in 2006-07.’’

As the country increasingly integrates with other world economies, the RBI needs to take into account actions of regulators and central banks in those countries as they could have a bearing on India’s prospects. For example, many non-resident Indians who are now attracted to Indian banks for deposits because of high interest rates may choose to withdraw from here and invest elsewhere if rates were to fall.

RBI has continued to tighten monetary policy by raising interest rates and reducing cash available with banks to lend to check untrammeled credit expansion. RBI said it was pursuing a medium term inflation target of 5%. Inflation has stayed above 6% this year, except for a week ended March 30. Its liquidity management operations were aimed at ensuring maintenance of appropriate amounts of cash in the system.