Inflation, weak demand to pull down GDP growth to 8.2%: PMEAC

ThePrime Minister's Economic Advisory Council (PMEAC) on Monday lowered theeconomic growth projection for the current fiscal to 8.2 per cent from 9 percent earlier, citing the uncertain global outlook, high domestic inflation andsubdued industrial performance .

The PMEAC, in its EconomicOutlook for 2011-12, also said inflation will remain around 9 per cent tillOctober and thereafter, it would ease to 6.5 per cent by the end of March,2012, indicating that the RBI may continue with its tight monetary policy forsome more months to come.

"The projected growthrate of 8.2 per cent, though lower than the previous year, must be treated ashigh and respectable, given the current world situation," PMEAC Chairman CRangarajan said.

Rangarajan, who hadearlier presented the report to Prime Minister Manmohan Singh, said India'sagriculture output is projected to grow at 3 per cent in 2011-12, with afavourable monsoon on the cards, as against 6.6 per cent witnessed in the previousfiscal.

Underlining the weakperformance by industry, he said the sector is likely to grow by 7.1 per centin 2011-12, as against 7.9 per cent in 2010-11, due to a slowdown in investmentand the weak business sentiment.

"Domestic industriesare uncertain about their investments, because they feel, right or wrong,something is not moving... Surely foreign investors will be doublyconscious," PMEAC member Saumitra Chaudhuri said.

The services sector, whichaccounts for over 50 per cent of the GDP, has, however, been projected to growat 10 per cent this fiscal, compared to 9.4 per cent in the previous fiscal.