NEW DELHI (AP) -- India's economic growth is likely to slow to 7.7 percent 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 Wednesday.
Growth in agriculture is likely to be at 2 percent, sharply lower than 4.5 percent growth in the last fiscal year, the report from the Economic Advisory Council to India's prime minister said. Growth in industry and services will also slow to 7.5 percent and 9.6 percent, respectively, compared with 8.5 percent and 10.8 percent a piece in the last year, it said.
India's economy grew 9 percent in the fiscal year through March. And it grew at an annual average of 8.8 percent over the past five years, the report said, but it added that "a number of factors inimical to growth have 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," the report said.
The report said that while "expected losses from U.S. sub-prime exposures have by now been mostly acknowledged ... it is too early to assess whether the worst of the turmoil and loss of asset values is behind us."
"There may be further setbacks in the months to come, but broadly financial conditions are not likely to stabilize before early 2009," the report said.