As the Government takes measures to rein in inflation ahead of the Lok Sabha polls slated for early next year and the RBI tightens monetary policy, Asian Development Bank today projected Indian economic growth to moderate 8 per cent this fiscal from 8.7 per cent in 2007-08.
However, the Indian economy will rebound to 8.5 per cent growth rate during 2009-10 on the back of a pick-up in consumer spending and more accommodative monetary policy, the Manila-based ADB said in its Asian Development Outlook, 2008.
Along with GDP growth rate, ADB expected inflation to slightly moderate to 4.4 per cent this fiscal as the Government and RBI take measures to curb it against 4.5 per cent in 2007-08.
But inflation will again rise to 5 per cent in 2009-10 as growth rebounds and monetary policy softens, said Narhari Rao, principal economist with ADB's India Resident Mission, describing the recent rise in prices as the "biggest worry" for India at the moment.
As per the Central Statistical Organisation's advance estimates, Indian economy is anyway likely to show a moderate economic growth rate of 8.7 per cent in 2007-08 against 9.6 per cent in the previous year and 9.4 per cent in 2005-06.
"Following the slowdown that began in 2007-08, economic growth will likely moderate further to eight per cent in 2008-09. Overall GDP growth in 2009-10 is predicted to return to around 8.5 per cent, nudged along by a broad-based pick-up in spending," the outlook said.