India growth story intact: Goldman

Goldman Sachs, a global investment banker, said India's growth prospects remain strong despite adverse global developments like high commodity prices that have pushed inflation to high levels. The growth in 2008-09 is expected to be slow at 7.8 per cent as against 8.7 per cent in the previous financial year.

Much of the growth in China and India is driven by domestic demand, a factor working in favour of maintaining momentum, according to Jim O'Neil, MD, Goldman Sachs.

Inflation is expected to go down if commodity prices start softening in the next few months. Inflation is expected to remain at an average of 6.5 per cent over the next 6 months, gradually coming down to 5 per cent by March-end 2009,

he said.

Pointing to challenges before the Indian economy, Tushar Poddar, vice-president, Asia Economic Research, said the rising subsidy bill for fertilisers, incomplete pass-through of rising crude oil prices and pay hike for government employees may increase fiscal deficit.

The investment banking company has reaffirmed that strong growth prospects of Bric economies (Brazil, Russia, India and China) remains intact in the present environment characterised by high commodity prices and inflation pressures.

The Bric countries are expected to be among the top-six economies by 2050. India is pegged to have a GDP of above $40,000 billion by 2050.