The Indian economy is likely to grow by eight per cent in the next fiscal, propelled by domestic demand, financial services firm Nomura has said.
"The fundamental drivers of domestic demand are falling into place. We ... Expect growth to rebound to eight per cent in FY'11," Nomura said in a report.
It further said that there is an upside risk to its six per cent GDP forecast for the current fiscal.
The global slowdown has pulled down India's economic growth to 6.7 per cent during 2008-09 from about nine per cent a year ago. In the first quarter of this fiscal, the economy expanded by 6.1 per cent.
Nomura further said it expects the spurt in industrial activity to gradually boost growth in the services sector next year.
Industrial production accelerated 9.1 per cent in September against six per cent a year ago. During the first half of this fiscal, it has grown 6.5 per cent.
However, it said, there are still concerns about the sustainability of this recovery.
"Many believe that inventory restocking and fiscal stimulus are the primary reasons for the positive economic data and that their effects will soon fade," Nomura said.