IEG lowers FY09 growth target to 7%

NEW DELHI: The tides of global financial turmoil would have ���significant impact��� on Indian shores and would pull down its economic growth rate to 7% in fiscal 2009, an economic think tank has said.

���The impact of this financial crisis on India is also going to be significant as India is not decoupled with the global macro economic behaviour,��� the Institute of Economic Growth (IEG) said in its monthly monitor, adding the growth will slip to 7% from 9% in the previous year.

The impact of global meltdown, the report said, will also ���spill over to the next fiscal... and would derail the 11th Plan growth target of 9%���.

The Reserve Bank in its mid-term monetary policy review, also revised its growth forecast to 7.5-8% from its earlier projection of 8% for 2008-09, in view of the global crisis.

Prime Minister Manmohan Singh had stated that India will achieve a growth rate of 7.5% to 8% this year despite the current economic global turbulence.

Referring to the impact of global crisis on India, the IEG report said, the flight of foreign capital has created liquidity problem: ���In the medium term, this is expected to pull down industrial output growth, which is already in a slowdown phase.���