The Indian economy is likely to grow at a moderate rate of 8.7 per cent during the current fiscal as against 9.6 per cent during 2006-07, which was the highest in previous 18 years.

"GDP at factor cost at constant (1999-2000) prices in the year 2007-08 is likely to attain a level of Rs 31,14,452 crore (Rs 31,144.52 billion) as against Rs 28,64,310 crore (Rs 28,643.1 billion) in 2006-07," according to the advance estimates of national income released by the government on Thursday.

The estimated growth rate is slightly higher than the conservative RBI projection of 8.5 per cent.

Finance Minister P Chidambaram had earlier exuded confidence that the economy will grow at close to 9 per cent during 2007-08.

The GDP grew at 9.1 per cent during the first half of this fiscal. It grew at 9.3 per cent in the first quarter and 8.9 per cent in the next three-month period, hinting at a further moderation during the rest of the year.

The advance estimates revealed that agri and allied activities will likely grow at a much slower rate of 2.6 per cent during the fiscal, against 3.8 per cent in the previous year.

Among industrial sector, manufacturing growth is also likely to come down from 12 per cent last fiscal to 9.4 per cent. Mining and quarrying sector is estimated to grow at 3.4 per cent as compared to 5.7 per cent in the previous financial year.

Among the booming services sector, trade, hotels, transport and communication activities are likely to expand by 12.1 per cent from 11.8 per cent.

However, finance, real estate and business services are estimated to grow at 11.7 per cent as against 13.9 per cent.