Economy will grow by 8.5 pc in 2011-12 : Pranab

New Delhi: Attributing the fall in stock markets in the past few days to selling by FIIs, Finance Minister Pranab Mukherjee on Wednesday asserted that the fundamentals are strong and the economy will clock 8.5 per cent growth in

the current financial year.

The volatility in stock market has been on account of "continued selling by FIIs," he said, adding the Indian economy has "strong fundamentals".

"While the stock market has its own mind and it take cues from developments all around, I want to take this opportunity to retreat the strong fundamentals of the Indian economy," Mukherjee said.

The benchmark index Sensex of the Bombay Stock Exchange had lost 5.90 per cent in the past five trading sessions with investors resorting to hectic selling in wake of Egypt crisis and high inflation etc.

The markets, however, recovered today gaining 68 points to close at 18,090.62 points.

The government, Mukherjee said, would stick to the growth projection of 8.5 per cent for the current fiscal. The economy expanded by 8 per cent during 2009-10 and recorded 8.9 per cent growth rate in the first half of the current fiscal.

"I am confident that we will meet our growth projection for the year...(2010-11) will end with a better than projected fiscal balance and more moderate inflation," Mukherjee added.

While the price rise had been a problem for the government after the food inflation soared to 18.32 per cent for the week ended December 25, the fiscal deficit is likely to moderate on the back of higher revenue growth and better

the anticipated realisation of funds from sale of 3G spectrum to telecom companies.

"There has been fluctuations (in inflation). At one point of time, food inflation went as high as 18.32 per cent. In the large economy like India, these kinds of periodic fluctuation's are not unusual," he said.

In the remaining three months, the Minister added, "there may be some fluctuations".