Indian economy seen growing at 9% in 2007-08

NEW DELHI: Indian economy is expected to grow at a slightly lower rate of nine percent during this fiscal after the robust 9.4 percent expansion in 2006-07, the Prime Minister's Economic Advisory Council said on Monday.

"The council assesses that the economy will grow by nine percent during 2007-08, assuming reasonably benign monsoon and other external conditions," the council, chaired by C. Rangarajan, former Reserve Bank governor, said in a report.

The council also expected the inflation rate to moderate to around four percent but said the hardening of the rupee against the dollar may slow export growth to around 18 percent.

"After factoring in future correction in petroleum products prices, it should be possible to maintain the headline rate close to four percent," it said.

Projecting an export figure of $147 billion, against the government's target of $160 billion, the council said the government must absorb capital inflows into reserves and liberalise capital outflows to counter the rupee appreciation.

Among the other forecasts, the council projected foreign direct investment of $15 billion in the period under review against $8.4 billion last fiscal and a net portfolio investment inflow of $12.5 billion.