New Delhi: India will continue to be one of the fastest growing economies of the world despite expectation of lower growth this fiscal mainly due to deficient rains and higher oil prices, Minister of State for Finance S S Palanimanickam said today (Dec 3, 2004).

Government was conscious of the need for realising higher growth rates to address the problems of unemployment and poverty, he said in a written reply to Lok Sabha.

The economy logged 7.4 per cent growth in the first quarter of this fiscal but RBI (Reserve Bank of India) has scaled down the growth to 6-6.5 per cent against 8.2 per cent in 2003-04, mainly due to deficient rainfall and higher oil prices.

Palanimanickam said the Government had taken a number of measures to improve the growth prospects of the economy, including a comprehensive policy on credit aimed at doubling the flow of agriculture credit in three years, decision to set up an Investment Commission and additional provision of Rs 10,000 crore of gross budgetary support for annual plan.

He also said the country's Forex reserves have gone up to more than $ 125 billion.

Asked whether Government proposes to use the excess Forex reserves in infrastructure development, he said, "Any decision to utilise a part of Forex reserves for this purpose requires careful assessment of the impact of such a measure on the fiscal situation, money supply, exchange rate, domestic interest rates and inflation.

To a query, the Minister denied that the proposal to hike the FDI (Foreign Direct Investment) cap in the insurance sector to 49 per cent from the existing 26 per cent was made under pressure from IMF (International Monetary Fund), World Bank and MNCs.