Reserve Bank stuck to a GDP growth projection of 5-5.5 per cent saying that the economy is strong with soft interest rates, low price level and all time high foreign exchange reserves.

RBI Governor Bimal Jalan, however, warned that there should not be any complacency, adding the regulator has to be always on the guard to ensure that India emerges as one of the "safest" markets in the world.

"Despite economic sanctions, border tensions, oil price hikes and other problems, we have been able to increase our forex reserves to all time high. Strong economic fundamentals are important," he told non-resident Indians at the Pravasi Bharatiya meet in New Delhi.

Although India's GDP grew by 5.8 per cent till September, Jalan said, "We will stick to our projection of 5-5.5 per cent GDP growth for this fiscal."

Although Jalan declined to elaborate on the interest rate outlook, he said the rates were "soft".

RBI reduced bank rate to a 29-year low of 6.25 per cent in its busy season Credit Policy as part of its softer interest rate bias.

Jalan ruled out reduction in the repurchase rate of government papers saying, "there is no proposal for repo rate cut."

Markets were expecting a repo rate cut in view of high liquidity and fall in yields of government and corporate debt papers to near 6.0 per cent.

In case of price level, Jalan said "inflation rate was benign." Inflation rate, based on wholesale price index, rose to 3.22 per cent during the week ended December 22.

Jalan assured NRIs that the regulator was making all efforts to make the Indian market safe for committing funds.

"One should be assessed to be in line with the international standards in terms of prudential norms, safety norms and recognition. I am glad to tell my NRI friends that

World Bank, International Monetary Fund and Bank for International Settlement has put us (India) in one of the best categories. Over the next few years, India is going to be the safest market," he said.

The RBI Governor, however, admitted that the country had problems on the efficiency, high costs and integration of markets but said the government and regulators were working on debt market reforms.

"1990s was the most volatile as far as financial sector was concerned. The swings were not only large but also unpredictable. We have been able to avoid some of the problems. But we can't be complacent, we have to be always on the guard," he said.

Referring to the recent fluctuation in US dollar and euro and the East Asian crisis some years ago, the RBI chief said, "We witness the contagious effect on other economies mainly due to the integration of markets."