In contrast to Reserve Bank of India's [Get Quote] projection of 8 per cent economic growth, the US-based investment banker Lehman Brothers said on Monday the India's GDP is likely to grow at the rate of 7.3 per cent in fiscal 2009.

However, in the second half of the next fiscal Te economy is expected to rebound, it added.

"We forecast 7.3 per cent GDP growth (current financial year). We expect fundamentals to improve next year, propelling a recovery in H2 FY10," Lehman Brothers said in a report.

For the first quarter ended June 2008, the economy registered a growth of 7.9 per cent against 9.2 per cent in the same period last year.

The structural underpinnings of economic growth are intact, it said.

According to the report, the rising cost of borrowing, higher input costs, declining consumer purchasing power and weakening external demand are expected to slow growth.

The slowdown has so far been confined to the industrial sector, but it is expected to spread to the services sector, notably the financial, real estate and IT sectors, it said.

The investment growth rate is also likely to moderate as firms become more cautious given increasing uncertainty about the economic outlook and reduced availability of financing, it added.

Giving positive outlook for 2009-10, the report said, a number of negative forces surfaced simultaneously in 2008: global financial market turbulence, surging commodity prices, slowing foreign demand, election-related populist spending and aggressive rate hikes.

Many of these are expected to reverse in FY 2010, with the fundamentals improving in the second half.