Conforming to forecast of PM's Economic Advisory Council and other economists, economic think-tank NCAER has also projected moderation in economic growth at 7.8 per cent for the current fiscal, from the earlier estimate of 8.8 per cent.
The one per cent downward revision is attributed to recent hike in interest rates, rising inflation and crude oil prices and reduction in the private investment by about Rs 60,000 crore.
Besides, increase in central government subsidies by Rs 20,000 crore and reduction in the world output by one per cent to four per cent in 2008 would have bearing on the growth, NCAER said in its latest monthly report.
Though fiscal deficit is not projected to rise much above three per cent, the Current Account Deficit is projected to grow to 6.5 per cent of GDP, it said.
Assigning the reasons for high CAD, the report said, a combination of higher crude oil prices and lower global demand has widened the projected current account imbalance.
Notably, Indian economy witnessed a growth of 9.1 per cent during 2007-08.
More From This Section
The decline in growth is lower in all the main sectors of the economy, it said, adding, industry is expected to grow at 8.4 per cent, against the previous forecast of 9.4 per cent while services would expand by 9.1 per cent, compared to 10.5 per cent.
However, the growth in the agriculture sector has been kept unchanged at 2.5 per cent.
On inflation, the NCAER report said the Wholesale Price-based inflation is likely to be at 7.9 per cent during the fiscal, against the earlier projection of 5.2 per cent.