Global financial services major Citigroup has projected that investment trends in India may weaken as the impact of monetary tightening sets in, with the entire year clocking a slower growth rate of 7.5 per cent.
The investment banking giant Goldman Sachs has, however, projected that the economy would register a growth rate of 7.8 per cent in the current fiscal year, a shade lower than GDP rate posted in the first quarter.
Rising interest rates pulled the economic growth rate down to 7.9 per cent in the first quarter of this fiscal, lowest in any quarter in three-and-a-half years.
Citigroup in its latest report Indian Eco Flash stated that it has revised FY09 estimates from 7.7 per cent to 7.5 per cent.
"Investments have faced a double whammy with rising input costs on the one hand and more stringent borrowing constraints on the other," Citigroup analyst Rohini Malkani said in the report.
Besides, Goldman Sachs in its latest report stated that, "in FY'09, slowing investment demand will likely be offset by a large fiscal stimulus through greater spending on a rural employment scheme, a debt waiver to farmers and wage hikes to civil servants."
Further, a near-normal monsoon is expected to support the food grain production this fiscal, it added. The Indian economy expanded by a slower 7.9 per cent in the first quarter of current fiscal as rising interest rates hit manufacturing and other key growth engines of the economy.