India is expected to grow by eight per cent in the current financial year, driven by the robust growth during the first six months, research firm Dun & Bradstreet said.
"We had earlier projected an eight per cent growth for the financial year 2009 and we maintain that. Though there has been a slated fall in the optimism level, the momentum of the first six months will see us through this fiscal," Dun & Bradstreet India Chief Operating Officer Kaushal Sampat said.
Saying that the current credit crunch and global financial turmoil will impact the growth to some extent, Sampat said India has the capability as well as the momentum to tide over the crisis.
Regarding the significant foreign fund outflow from the country, he said foreign institutional investors are pulling out money from the country not because they do not believe in the India growth story but because they have redemption pressures in their home countries.
FIIs have pulled out as much as $ 10,053.30 million from the Indian market so far this year.
Though there are a various dampeners such as global turmoil, liquidity pressure, subdued demand and volatility in the equity, commodity as well as forex markets, the October-December period is historically considered a strong quarter post-monsoon. During the festive season, business optimism is generally positive.
India Inc's business optimism in the last three months has declined substantially. Dun Bradstreet, in its latest report, said that the composite business optimism index for Q4 2008 stands at 138.9 points, a record decline of 28.1 per cent on year-on-year basis.
Similar sentiment was echoed when a senior IMF official on October 8 said, "There is some impact from tighter global liquidity conditions, but again we don't see major drag from this impact on India. Overall, we see the Indian economy continuing to perform well."
However, market analysts said that the current decline in the country's industrial growth might have a negative impact on the economy. India's industrial growth nosedived to 1.3 per cent in August, from a high of 10.9 in the corresponding period last year, mainly on account of poor performance by the manufacturing sector.
Finance Minister P Chidambaram, however, expressed doubts over the Index of Industrial Production numbers, saying it is not very reliable.
The finance minister has also said that Indian economy is likely to grow close to 8 per cent in the current financial year.
Responding to questions that International Monetary Fund has scaled down India's growth projection to 7.9 per cent, Chidambaram said, "My assessment is that we will grow close to 8 per cent."
Even at 8 per cent, Chidambaram had added, "India will still be the second fastest growing economy in the world... It will also be growing twice the rate of the world economy."