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Last Updated: Wednesday, 7 July, 2004, 10:05 GMT 11:05 UK
India 'set for 7-8% growth'
By Sanjeev Srivastava
BBC India correspondent in Delhi

The Indian economy, Asia's third largest behind Japan and China, is expected to grow in the range of 7-8% this year, according to a government survey.

Car factory in India
Low interest rates have boosted manufacturing
But the survey, which has come on the eve of the federal budget, suggests that interest rates may begin to move up soon.

After recording a growth rate of 8.2% last year, largely on the back of the best monsoon rains in a decade, the Indian economy is expected to remain on course this year as well.

The annual report card on the national economy has however raised concerns on interest rates moving up because of a high fiscal deficit and continued government borrowings.

Interest rates in India are currently at a 30-year low and have been a major driver giving a boost to different sectors of the industry, particularly housing and manufacturing.

The new government's commitment to the process of economic reforms will however be known only on Thursday when the first budget of the recently elected coalition government is tabled in the national parliament.

Since the previous regime was voted out because it was seen to be a pro-rich government by India's poor majority, analysts expect the new finance minister to strike a balance between prudence and populism.

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