New Delhi, Dec 22: The economy is likely to grow by 7.5 per cent in 2012-13 and public finances of various state governments are likely to see consolidation during the next fiscal, ratings agency Fitch said today.
 "Fitch expects Indian economic growth to rebound to 7.5 per cent in FY-13 from 7 per cent in FY12 ... the Indian economy is expected to perform better than the developed economies," Fitch Ratings said in its '2012 Outlook: Indian Subnationals'.
 According to Fitch, after a period of pause in reforms the government has again taken up initiatives on special economic zones and increasing foreign participation in the government and corporate debt market and these are likely to have a positive impact.
 The agency had earlier revised down its growth projection for the Indian economy in 2011-12 to 7 per cent, from 7.5 per cent earlier, on account of sustained inflation, the global slowdown and high domestic interest rates.
 The Indian economy had expanded by 8.5 per cent in 2010-11. It said that though growth will rebound in 2012-13, the economic performance in the states will vary. "States with better infrastructure and growth-oriented policies are likely to grow faster and will improve their fiscal performance. The smaller states, especially the special category states, will depend on the federal government for revenue and their performance will mirror the federal government's," it said.

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