New Delhi, March 12 (IANS) Finance Minister Pranab Mukherjee Friday assured every step to tame inflation, which he feels may be higher than 8.5 percent by end-March, and said a 7.2-percent economic growth was not a fantasy given the industrial rebound.

'A 7.2-percent growth is not my pipedream, even though I have given up smoking pipes,' Mukherjee told the Lok Sabha, the lower house of parliament, replying to a debate on the federal budget for the next fiscal, which he had tabled Feb 26.

'Last year, I proposed my budget against the backdrop of an economic slowdown, worsening agricultural scenario and a global financial crisis. But the scene has changed now,' he said, assuring members that they can now expect India to return to a high growth path.

'The situation of uncertainty prevalent last year is no longer relevant.'

According to the finance minister, also the leader of the Lok Sabha, the lower fiscal deficit of 5.5 percent projected for the next fiscal, as opposed to the revised budget estimate of 6.7 percent for this year, will help rein in prices.

'I assure you that lower fiscal deficit will help correct inflation,' he said.

'Nobody is denying inflation is a problem. But we have taken steps to check it. We have taken measures to remove the supply-side bottlenecks. We have ensured the availability of food items in the market and we have revised import tariffs.'

Towards the end of his address, Mukherjee was specifically asked if he would roll back the hikes in the excise and import tariff on crude oil and transport fuels. With 'no' for an answer the entire opposition staged a walkout.

'I would have loved to roll back but my financial condition has not permitted me.'

Mukherjee's remarks also came on a day when the Central Statistical Organisation (CSO) said India's factory output was up by an impressive 16.7 percent in January from 16.8 percent 16.8 percent in December.

'The industrial growth crossed the 15-percent mark in two consecutive months. It shows growth is driven not by government expenditure alone. Our manufacturing and industrial sectors are also contributing,' said the finance minister.

Mukherjee also refuted allegations that his budget proposals were against the interests of the poor, and said the major hikes in outlays for social welfare programmes were all targeted at the weaker sections of the society.

The finance minister also said that the government will take steps to make the Indian rupee fully convertible in a caliberated manner so that any mechanisms can be in place for tackling any adverse impact.

'Full convertibility of rupee is our destination. We are taking gradual steps towards this. But it is felt that it is not time to jump to that destination at one go. There is need for caliberated approach.'