MUMBAI (Bloomberg) — India's economy may grow as much as eight percent in the current financial year, Finance Minister Pranab Mukherjee said, adding he will consider removing some fiscal stimulus steps in the next two months.

"Recent economic data confirm that the green shoots are now finally taking root," Mukherjee told a business conference in New Delhi yesterday. "At this rate, in the next two-to-three years, our economy will resume the spectacular growth rate of nine percent experienced during the pre-downturn period."

India's benchmark stock index rose the most in seven weeks after Mukherjee raised his forecast for India's economic growth. India injected fiscal and monetary stimulus equivalent to more than 12 percent of gross domestic product between September 2008 and April this year as the world slid into a recession. That helped Asia's third-largest economy to grow 7.9 percent last quarter, the fastest pace in one and a half years.

Industrial production jumped 7.1 percent between April and October compared with a 4.3 percent gain in the same period last year. Faster growth is reviving investor confidence in the Indian economy, Mukherjee said.

The Bombay Stock Exchange's Sensitive Index added 539.11, or 3.2 percent, to 17,231.11 at the 3:30 p.m. close in Mumbai, the most since November 4.

Policy makers in Asia have started to exit monetary stimulus as the global economic recovery causes the focus to shift from reviving growth to fighting inflation. Australia and Vietnam have already begun raising interest rates as inflation accelerates across Asia.

Mukherjee said he will decide on rolling back some of the fiscal stimulus in next year's budget statement, scheduled for the end of February.

Stronger growth in the industrial and other sectors of the economy is likely to help bridge the shortfall in farm output, hurt by the weakest monsoon in almost four decades, Mukherjee said. Lower farm production has resulted in food-price inflation accelerating to the highest in 11 years.

That is creating pressure on the Reserve Bank to tighten monetary policy. Bimal Jalan, who served as the central bank governor between 1997 and 2003, said last week that excess cash should be drained from the economy to reduce speculation in commodities.