India's economy will grow by six per cent this fiscal while inflation would rise to around four per cent, the central bank said here on Tuesday while announcing a 25 basis points cut in key rates in its annual economic policy review.

"With the assumption of normal monsoon, real GDP growth for 2009-10 is placed at around 6.0 per cent," said Reserve Bank of India Governor D Subbarao. GDP growth for 2008-09 was 7.1 per cent.

The India Meteorological Department in its forecast of south-west monsoon had said last week it expects a normal rainfall at 96 per cent of its long period average for the current year.