Noting that forecasts of gross domestic product growth for fiscal 2007-08 (ending March) are being revised downwards to 8.4-8.6 per cent (growth in 2006-07 reached 9.4 per cent), Oxford Analytica says this reflects the impact of a credit squeeze initiated by the Reserve Bank of India to combat inflation, which reached 6 per cent earlier this year.
A summary of analysis by Oxford Analytica, which claims to have 1000 scholars, was posted on the website of Forbes magazine.
On the positive side, it says, growth in agriculture, a perennial under-achiever, may accelerate following a favourable monsoon and there are also indications that a period of "jobless growth" is over, with rapid expansion in employment opportunities catching up with the rising rate of participation in the labour force.
A major positive sign is fast growth of capital goods industries and an expansion of infrastructure, which would support the economy in the long run. Besides, foreign portfolio flows are strong which are adding to local resources.
A recession in developed economies might increase outsourcing work to India, it says, noting that services, which account for over half of economy, continue to grow around 8 to 10 per cent.
Added to these are remittance flow of between USD 25 billion and USD 28 billion which help the current account deficit to close to 1-2 per cent of GDP.