UPDATE 1-Global crisis to hit India economy more in 2009-WEF

(Recast with growth forecast, official's comment)

NEW DELHI, Nov 14 (Reuters) - Indian economy is likely to expand by 7.4-7.8 percent during 2008/09 fiscal year, slower than 9 percent of last year, as credit crunch and global downturn trims growth, industry bodies said on Friday.

The World Economic Forum (WEF) and Confederation of Indian Industry said in a report the global downturn will pressurise the economy more next year and the government has to speed up reforms and boost investment to sustain high growth rates.

"There is a pressure on bottomlines (of companies). Production is down. We do see economic growth moderating to 7.4-7.8 percent this fiscal," CII director general, Chandrajit Banerjee told a joint news conference with WEF.

"Since inflation is down, we expect more fiscal and monetary measures to give a momemtum to growth. The government should increase expenditure in infrastructure sector and put on-going projects on the fast track," he said, but dispelled fears of large-scale lay-offs by companies.

CAPITAL OUTFLOWS A WORRY

The WEF-CII report, released ahead of the India Economic Summit starting Nov. 16, also said India could see a sharp outflow of capital, and a fall in share and asset prices due to the global financial crisis.

"India's dependence on capital flows to finance its current account deficit is a macroeconomic risk and the global crisis could generate a sharp increase in capital outflows and a reduction in the availability of finance," it said.

The global credit crisis has rattled Indian markets as foreign investors sold shares worth more than $12.5 billion so far this year while the rupee fell by more than 20 percent.