India's Economic Growth to Slow to 7.7% This Year

India's economic growth is likely to slow to 7.7% for the fiscal year that started April 1, due to the drag of higher food and oil prices and tightening in credit and equity markets after the U.S. subprime crisis, a government report said. Growth in agriculture is likely to be at 2%, sharply lower than 4.5% growth in the last fiscal year, the Economic Advisory Council report to India's prime minister said. Growth in industry and services will also slow to 7.5% and 9.6 %, respectively, compared with 8.5 % and 10.8 % a piece in the last year, it said. India's economy grew 9% in the fiscal year through March. And it grew at an annual average of 8.8% in the past 5 years, the report said, but it added "a number of factors inimical to growth intensified in 2008." The report specifically cited higher oil prices, tightening in credit and equity markets and a global slowdown in growth. "Overall, economic growth will slow down. While expected losses from U.S. sub-prime exposures have by now mostly acknowledged it's too early to assess whether the worst of the turmoil and loss of asset values is behind us. There may be further setbacks in months to come, but broadly financial conditions are not likely to stabilize before early 2009," the report said.