However, India's economy will rebound to 8.5 per cent in 2009-10, Manila-based Asian Development Bank said in its Asian Development Outlook 2008.
Narhari Rao, principal economist with India Resident Mission of ADB, said recent duty cuts by the government to arrest inflation, which is racing towards 7 per cent, are likely to show results in 2-3
weeks.
However, the government might have to increase subsidies in some food items, like rice and wheat, to soften their prices as global prices are quite high and import duty cannot be reduced below zero, Rao said.
He anticipated inflationary pressures to persist for the next couple of months.
