The news on the economic front is grim. The Prime Minister’s Economic Advisory Council (EAC) has cut India's GDP growth estimate to 7.7 per cent for the year 2008-2009.

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The news on the economic front is grim. The Prime Minister’s Economic Advisory Council (EAC) has cut India's GDP growth estimate to 7.7 per cent for the year 2008-2009. The EAC says growth will suffer due to steps taken to tackle inflation, which could cross 12 per cent.

However, experts on the panel feel that tighter monetary steps could bring inflation down to 8-9 percent by March next year. The panel believes the RBI's target of 7 percent inflation will be 'challenging'. But on the positive side, the panel believes that inflation will start to subside in the next 1-2 months. The economy will grow at a slower pace this year. Outgoing chairman of the EAC, C Rangarajan has an even more grim prediction on inflation. He believes it could cross 13 per cent in the near term.

“To bring the inflation down to seven per cent by March 2009 would take a lot of effort and a happy confluence of factors such as a good monsoon, fall in oil prices, etc. But it is still possible for inflation to climb further up. We do expect inflation to remain around eight to nine per cent by March 2009,” Rangarajan added as remedies to curtail the spiraling inflation. Rangarajan also advised an objective look at the issue. "It all depends on what they say - glass is half-empty or half full. We are seeing a slowdown in the growth rate. Last year it was 9 per cent and this year it is 7.7per cent.

The report was presented to Prime Minister Manmohan Singh, and it also projected a sharp decline in foreign investment as compared to the last fiscal year. The Finance Minister has upped the growth target to eight per cent. “If the Prime Minister's economic advisory council says 7.7%, then I can confidently say it will be close to eight.” Foreign investments had fallen to $23.8 billion from the previous $44.8 billion last fiscal. The inflation is currently pegged at 12.01 percent for the week ended July 26.