The government chose to paint a rosy picture of the income despite high inflation concerns. In fact, finance minister Pranab Mukherjee believes that there will be an encore of the growth show of 2010-2011 inthe current fiscal year.

“I am so far hopeful that we should be able to repeat the growth performance of 2010-11 in 2011-12 as well,” finance minister Pranab Mukherjee said at Assocham banking conclave. India's GDP grew at a rate of 8.5 percent in the last fiscal.

The finance minister bold assertion came even after growth for the fourth quarter GDP growth during the fourth quarter of the fiscal 2010-11 declined to 7.8 per cent. Major reports released by the world bank, UN and others have predicted moderate growth for India in the current fiscal year. The Economic and Social Survey of Asia and the Pacific (ESCAP) survey released last month said that rising inflation is putting pressure on the India’s economy.

Mukherjee, however, admitted that inflation is a major concern for the government. “Inflationary pressures persist both from higher global commodity prices and domestic structural demand-supply imbalances in several commodities,” he added.

The finance ministry also supported Reserve Bank of India’s measures to control inflation. “Monetary measures may moderate growth rate in the short-term if it continues. The medium term growth prospects continued to remain buoyant.”

Mukherjee also said the country is aiming to grow at 9 to 9.5 percent in the entire plan period of 12th five year plan (2012-17). 

He added that financial inclusion poses  ahuge challenge for the banking sector as the Indian economy is racing ahead on a high growth curve. ”True potential of banking in the rural areas is yet to be realised.”

India has the second-highest number of financially excluded households in the world, the report released by the finance minister at the banking conclave ‘Trillion dollar economy: opportunities and challenges for banks.’

“There are 600,000 unbanked villages in India and only 38 percent of the country’s bank branches are in rural areas,” the report by Ernst & Young and Assocham said.