India forecasts growth of 7.1 percent for 2008-09

The estimate for the year ending March 31 was released by the Central Statistical Organisation (CSO).It would be the slowest growth rate since 2003 and will place further pressure on Prime Minister Manmohan Singh's government ahead of general elections expected in April.

A number of economists have predicted that India's growth could fall below 7.0 percent this year as the global downturn takes its toll.The CSO said growth in manufacturing output was expected to be around 4.1 percent, half the 2007-08 figure, while agricultural output would expand 2.6 percent, down from 4.9 percent.

Economists also believe India's fiscal position -- already one of the world's worst -- will deteriorate further with the interim budget to be presented February 16 by the government.The budget deficit for the current year is expected to be up to triple its planned target of 2.5 percent of gross domestic product due to populist spending announced even before the global crisis hit.

"The global scenario is turning gloomier by the day and export-oriented sectors are feeling the heat," said Dharma Kriti Joshi, principal economist at Crisil credit rating agency.The Indian government's stimulus packages and interest rate reductions should start having some effect from October onwards but "meanwhile we'll have a very tough time," he said.Most economists are pencilling in growth of around 5.6 percent for next year.