Indian economy to grow by 7.7% next fiscal: EIU

India is likely to grow by 7.7 per cent in the next fiscal and by 8 per cent in 2011-12 driven by strong domestic demand, Economist Intelligence Unit (EIU), an arm of UK-based magazine The Economist said today.

"Continued strong domestic consumption, spurred by rising incomes and a growing middle class, will be the primary drivers of India's growth," EIU South Asia senior analyst Anjalika Bardalai told reporters here.

However, she also warned that high inflation and weak fiscal position could hamper growth.

"Although we forecast robust growth for India, we must be aware of the risks to the country's macroeconomic stability, including high inflation," Bardalai said emphasising the need for cautious optimism.

The Indian government in its Economic Survey, tabled in Parliament last month, had said the economy could grow up to 8.75 per cent during the 2010-11 from an estimated 7.2 per cent in the current financial year.

"High saving rates and investment levels will support India's continued economic acceleration," Bardalai said ahead of the 13th business round table with government officials.

According to the EIU, India will be continue to reap the benefits of a relatively young demography and strong economic fundamentals.

"The government's weak fiscal position poses another important challenge that needs to be addressed to maintain the country's growth and resurgence," Bardalai further said.

According to the EIU, India will be the ninth fastest growing economy in the world and the second fastest growing major economy.

India will see robust investment inflow in the year ahead, Bardalai added.