Indian economy to grow at 8.5 percent

The Indian economy is set to grow at a rate of 8.5 per cent during 2008-09 after factoring in the volatility of the current global financial turbulence, said Finance Minister P Chidambaram at the World Economic Forum on Thursday. Chidambaram, who is leading the Indian delegation to the annual event, said that India expected the turbulence to continue for "a few months" but added that the country was not in favour of imposing capital controls to dampen capital inflows.

The US government move to lower interest rates will increase the differential with the Indian rate, which could see greater capital inflows into the Indian market, he said. However, he said a distinction needed to be drawn between "good and bad" capital inflows, the former category including foreign direct investment, remittances from non-resident Indians and tourism revenues.