The International Monetary Fund (IMF) has estimated 8% growth for the Indian economy in the next fiscal even though the industrialized countries show a slower recovery. IMF projected the growth rate of the current fiscal at 6.75 per cent for the country.

The international body's Executive Board held consultations with Indian officials on January 25 and said that the Agricultural sector in the country would contract by 1% due to drought while other sectors would record higher growth.

The IMF report said, "With India's long-term prospects remaining strong and private sector balance sheets sound, we expect growth to be back at potential in 2010-11 even if advanced economies grow below trend."

The IMF also said that the short term risks in the economy are "broadly balanced" and reforms and capital flows could bring in more investments in the country. On the other hand the IMF saw high inflation and fiscal deficit as the main risks in the process of recovery in the economy.

The director of the fund said that India's main long term priorities include facilitating infrastructure investments and fiscal consolidation.

Relating to the fiscal consolidation, the board members said that the country has to put in place "a concrete strategy for reducing debt through durable reforms which would boost credibility and foster growth"

The projection of IMF is however lower than that of RBI which expects a growth of 7.5 per cent in the fiscal. RBI had earlier projected a rate of 6 per cent, in its quarterly monetary policy review.

The central bank raised its projection after the economy recorded a growth of 7.9 per cent in the third quarter of 2009. The finance ministry also expects a growth of 7.75 per cent for the current fiscal.