The economic growth rate of India may moderate to 8% during the current (2008-09) fiscal year.

Planning Commission Deputy Chairman Montek Singh Ahluwalia said that the 13-year high inflation rate of 11.42 percent may result into a little lower growth rate but if necessary steps to control inflation are taken, the growth objective of 9% will not be difficult to achieve.

On the other hand the central bank expects the economy to clock a 8-8.5 percent growth in 2008/09.

In order to control inflation, the Reserve Bank of India (RBI) raised its key rate last month, first by 25 basis points and then by 50 basis points.

High inflationary pressure is likely to have a negative impact on the demand as well as on the global economy.

However, Ahluwalia hopes that inflation will be brought down gradually. He also said that there would be nothing to worry even “if the budget deficit is exceeded a little bit.”

He added that if a country is under a shock, that shock is reflected in the budget but it should not be an open-ended and continuous process.