( dpa ) - India is set for steady economic growth, brisk foreign investment and financial stability over the next few years, but inflation is a risk, the International Monetary Fund said Monday.
India's economy, one of the world's most dynamic over the past 15 years, is expected to slow from about 8.75 per cent growth in fiscal year 2007-08 to about 8.3 per cent in 2008-09 because of the global slowdown, the IMF's annual report on India said.
But annual growth will remain at or above 8 per cent through 2013, IMF analysts forecast.
"Medium-term prospects are for sustained growth, contained inflation and continued economic and financial stability," the report said.
The agency tempered its upbeat outlook with calls for India to broaden financial markets, tighten government spending, press ahead with further market reforms and to let the rupee's exchange rate move more freely.
Inflation was cited as the main risk, partly because of sharply rising wages for skilled workers, continued fast economic growth and and rising global food and fuel prices.
Risks that slow growth in rich nations will dampen exports are limited by India's growing markets in Asian and Gulf countries, the report said. And investment flows could be higher than expected, given strong corporate profits and domestic savings, the IMF said.
Financial risks in India are under control, the report suggested, in part because banks are well capitalised and companies' debt, while rising, remains low.