NEW DELHI (Reuters) - India's economy is likely to grow between 9 and 10 percent from the next fiscal year that starts from April 1, after growing 8.5 percent in the current fiscal year, Prime Minister Manmohan Singh said on Saturday. India's domestically-powered economy grew 8.9 percent in the September quarter -- matching the revised figure for the previous quarter -- defying weakness elsewhere. Singh's forecast was above the previous official forecast of 9 percent. "Despite the uncertain global economic scenario, I am happy that our economic recovery is progressing very well," Singh told the annual meeting of non-resident Indians in New Delhi. "We expect that from the next year onwards, we will be able to grow at a rate between 9 and 10 percent." India, Asia's third largest economy, grew at an average of 9.5 percent for three years to the year ending March 2008, before being hit by a global downturn that slowed the pace of annual economic expansion to 6.7 percent in 2008/09. Even as the economic recovery seems to be on track, Singh's government is under pressure to rein in inflation, particularly soaring food prices. India's annual food inflation accelerated to 18.3 percent in the week to Dec. 25, its highest level in more than a year, from 14.4 percent in the previous week. Although unseasonal rains are officially blamed for pushing up prices of vegetables such as onions and tomatoes, some commentators point instead to poor agricultural productivity and transport after years of few reforms and weak government investment. Food articles have a weight of 14.34 percent in the wholesale price index , India's most widely watched gauge of inflation, but a relentless rise in food prices is seen stoking broader inflationary expectations and eroding purchasing power of consumers. Singh remained silent on inflation, but Finance Minister Pranab Mukherjee -- speaking at the same event -- acknowledged the need to control it. "We have to take all measures to keep inflation at a moderate level," Mukherjee said. The Congress-led government's failure to control inflation and a series of graft scandals including an alleged $39 billion telecoms scam, corruption accusations over last year's Commonwealth Games and the resurrection of a 25-year-old defence contract kickback scandal are seen eroding its public support. A poll conducted by AC Neilsen early this month showed the ruling Congress party would lose over 40 seats if an election were called tomorrow. Prime Minister Singh said he is trying to make his government more transparent. "We are examining seriously how to make systemic changes and ensure more transparent procedures and safeguards in our governance process," he said. Meanwhile, India's central bank will assess the liquidity situation before taking further decisions on open market operations (OMO), a deputy governor aid on Saturday. Liquidity has improved in recent weeks due in part to government spending and the central bank's open market operations, Shymala Gopinath told reporters on the sidelines of a conference. The Reserve Bank of India said in December that it would conduct OMOs to buy up to 480 billion rupees ($10.59 billion) of bonds to ease the tight cash conditions in the banking system. "480 billion rupees is kind of an upward feeling but even that is indicative," Gopinath said. She said the central bank would decide on whether it needs to do more, or less, open market operations depending on the turnout in the liquidity situation going ahead. "If the government is spending then the liquidity goes back to the market. So we will accordingly calibrate how much OMOs to do." INFLATION CONCERNS The Reserve Bank of India has been the most aggressive major central bank in Asia, lifting interest rates six times last year to fight surging prices being spurred by rising food costs in an economy growing at nearly 9 percent. India's food inflation rose for the fifth straight week to the highest in more than a year, reinforcing fears it has spilt over to broader prices and cementing expectations of a January interest rate hike. "We have seen the inflation and it is not comfortable. It is not something we can say now what we will do and what we will not do," Gopinath said when asked if the central bank could raise interest rates ahead of its policy review on Jan. 25. Gopinath also said the RBI will review India's growth and inflation projections for the year ending March at its upcoming policy review. The RBI had said earlier it expects WPI inflation to ease to 5.5 percent by the end of the fiscal year in March 2011. . Central bank governor Duvvuri Subbarao said on Friday a pause in its tightening cycle should be interpreted as a comma and not a full stop, indicating further monetary policy tightening going ahead.