Ahead of the monetary and credit policy to be announced by the central bank next week, Finance Minister P. Chidambaram Friday assured moderate interest and tax rates to encourage investment and growth.

"We in government promise to maintain moderate and reasonable tax rates, encourage investment and continue to maintain high rate of economic growth," said Chidambaram.

He was addressing a conference on 'Resurgent India' organised by the Associated Chambers of Commerce and Industry of India (Assocham) to mark its 85th annual meeting here.

Admitting that India's trade deficit is currently quite high, the finance minister said it is no cause for worry as it reflects a growing demand from the manufacturing sector.

Pointing to India's strong economy, Chidambaram said the foreign direct investment (FDI) inflow of $2.57 billion during the 2005 calendar year so far has been the highest since 2000-01.

The FDI inflow of $1.909 billion during April-Aug is 20 percent more than the inflow during the corresponding period last year, he said.

"We have seen strong FII inflow, modest but still the highest FDI inflow, reasonably strong rupee, export growth at 20 percent and import 33 percent. The trade deficit may seem large but it is a healthy sign of a growth economy so there is no cause for concern," said Chidambaram.

On the strength of the rupee, he said despite the 3.1 percent depreciation against the dollar there is no cause for worry as the Indian currency has gained 4.4 percent against the euro, 3.3 percent against the pound and 4.3 percent against the yen.

"So we are on a good wicket," the finance minister said.

India is expecting to register over seven percent economic growth this year with farm sector also expected to perform well.