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Prime Minister Dr Manmohan Singh on Tuesday said the economy is expected to grow by 8.5 percent this fiscal year (2010-2011). "We are closely monitoring inflation. Price rise is one of the major problem at hand," said Dr Singh while presenting the United Progressive Alliance (UPA) Government's report card on its first anniversary. "The government would monitor the situation and "take whatever corrective steps are necessary to rein in" prices," he added. "The year, 2009-10, showed clear signs of recovery with the rate of growth being estimated at 7.2 per cent. This has occurred, despite a decline of 0.2 per cent in agricultural output on account of sub-normal monsoons," the report said. "The recovery has been marked by renewed momentum in the manufacturing sector, which grew by 8.9 per cent in 2009-10, compared to 3.2 per cent in 2008-09. The recovery of the Indian economy owes largely to the stimulus measures initiated by the Government," it added. India recorded 7.4 percent growth for the fiscal year 2009-10, which was more than the 7.2 percent projected earlier. "This is one of the best performances in the world. There are uncertainties on the horizon, but on the whole I look to the year ahead with cautious optimism," said Dr Singh. "India must withdraw fiscal stimulus to boost economic growth and reduce deficit in a calibrated manner," he added sounding cautious on the developing crisis in Europe, triggered by Greece's sovereign debt crisis and bank failures in Spain.

Indian economy to grow by 8.5 percent this year: Manmohan Singh