In the backdrop of the Reserve Bank of India's tight monetary policy and high inflation, PMEAC Chairman C Rangarajan said on Tuesday India's economic growth in the 2011-12 fiscal is likely to be about 8.5 per cent, lower than the Budget projection.

"I believe (it would be closer to) 8.5 per cent," he said at an Organisation for Economic Cooperation and Development event.

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In his Budget speech, Finance Minister Pranab Mukherjee had pegged economic growth for 2011-12 at 9 per cent.

However, the Reserve Bank, in its monetary policy in May, said that gross domestic product growth during 2011-12 would be only around 8 per cent.

The Chairman of the Prime Minister's Economic Advisory Council, however, exuded confidence that India has the potential to clock GDP growth of 9 per cent in the medium term.

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". . . Potential (for Indian economy) to grow at 9 per cent exists," he added.

Mukherjee, too, said on Monday that the growth drivers of the country were intact, as the government aims at GDP growth of 9-9.5 per cent during the XII Five-Year Plan, starting April, 2012.

The Reserve Bank of India has hiked key policy rates nine times since March, 2010, in a bid to tame inflation, which was over 9 per cent in May.

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The central bank is scheduled to come out with a mid-term monetary policy review on June 16.

On the performance of the economy in 2011-12, he said there may be some slowdown in agricultural growth, but the expansion in the industrial and services sectors is likely to be higher year-on-year.

The 8.5 per cent annual growth in 2010-11 was backed by robust numbers from the agriculture sector.

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Agriculture and allied sectors grew by 6.6 per cent during the fiscal, as against a meagre 0.4 per cent in the previous year.

The growth of services, including banking and insurance, improved to 9.9 per cent in 2010-11 from 9.2 per cent in the previous fiscal, while manufacturing sector growth slowed down to 8.3 per cent.