India has the potential to grow at double-digit rate in the medium term but it must tighten monetary and fiscal policy further to control inflation, the Organisation for Economic Cooperation and Development (OECD) said in a report on Tuesday.
"Inclusive growth of 10% per year is feasible given that demographic developments are set to push up saving, but it will only be achieved if the administrative and regulatory barriers facing companies are reduced," OECD said in an Economic Survey of India.
OECD noted that sustainability of high GDP growth in India would hinge on increased capital inflows and higher domestic savings.
It also called for further reductions in trade and FDI barriers but added that growth is set to remain strong in the near term on the back of private consumption and investment.
The Paris-based group of 34 industrialised nations warned that India's rising oil subsidy bill could mean under-achievement of the Government's fiscal deficit target for FY12.
Speaking on the occasion, Prime Minister's Economic Advisory Council (PMEAC) Chairman Dr. C. Rangarajan said that India's GDP is likely to grow by about 8.5% in FY12 and has the potential to grow by 9% annually.