The upward revision was done on the account of continuous depreciation of rupee which is further expected to hike inflation. On the hand, Reserve Bank of India has also given hints about no reduction in interest rates in the near future.
The rupee has been one of the worst performing currencies in the current times. It touched an all time low of 57.37 to the dollar during trading last Friday.
In its mid-quarter policy review last week, RBI sounded hawkish, going back to its inflation management role after giving signals of easing due to the sharp dent in growth in its earlier policy announcements.
"We expect CPI inflation for industrial workers to rise by 8.1 percent in 2012-13. It was 8.5 percent in 2011-12," it said, adding the government is unlikely to meets its target of containing fiscal deficit at Rs 5.1 lakh crore or 5.1 percent of the GDP, and rise up to 5.4 percent on higher than- estimated-subsidy burden.