GDP to moderate to 8.1 per cent

Domestic private consumption demand will also provide some support to the economy against slowing external demand. Sectoral forecasts for industry and services have also been adjusted downwards to 8 per cent and 9.8 per cent respectively. Assuming a normal monsoon this year, we expect agriculture will grow at 3 per cent.

Mr. Dharmakirti Joshi, Principal Economist, CRISIL, elaborates, "Our earlier GDP forecast of 8.5 per cent had assumed a cut in the policy interest rate by the central bank in response to the slowing economy. This is now ruled out since current inflation and inflationary expectations are way beyond the RBI's comfort zone of 4.5 to 5.0 per cent. This, coupled with, the recent scaling down of global growth projections has resulted in us revising our growth projections downwards for 2008-09. The growth will be slower but still a healthy 8.1 per cent."

The current pressure in inflation is from primary commodities and oil