India's economy to grow about 8 pct - Ahluwalia

By Rajkumar Ray

NEW DELHI (Reuters) - India's economy is expected to grow around 8 percent in the current fiscal year, and annual inflation, now at its highest in more than three years, may moderate in a few weeks, a top official said on Tuesday.

The country's central bank and most other forecasts have pegged growth in Asia's third-largest economy at 8.0-8.5 percent in the 2008/09 financial year as the global economic slowdown and monetary tightening takes its toll.

The Indian economy is estimated to have grown at 8.7 percent in 2007/08, slower than the previous year as higher interest rates hurt consumer demand.

"My projection was 8.0-8.5 percent," Montek Singh Ahluwalia, deputy chairman of India's Planning Commission, which charts the country's five-year economic plans, told reporters.

"I will be happy at the lower end. A growth of around 8.0 percent is quite acceptable."

An independent New Delhi-based economic think-tank said the economy is expected to grow by 8.5-8.8 percent in 2008/09, if interest rates remains stable, while average annual inflation may be higher than last year.

The National Council for Applied Economic Research (NCAER) said an expansionary fiscal policy would help India weather the adverse effects of a global slowdown during 2008/09.

While still strong the economy has lost altitude from scorching 9.6 percent expansion in 2006/07, which was the highest in 18 years.