Indian growth tipped to be slowest in two years

India is expected on Wednesday to report economic growth below seven percent for the first time in more than two years, hit by a string of interest rate hikes and a deteriorating global economy.

The central bank has raised rates 13 times since March 2010 as it struggles to rein in inflation, which is still stubbornly holding at near 10 percent.

Gross domestic product figures are projected to show growth for the three months to September of 6.9 percent from the year-earlier period, according to the average forecast of economists polled by Dow Jones Newswires.

That is down sharply from the 7.7 percent growth logged in the previous quarter.

"There's a clear slowdown, definitely monetary policy is biting," D.K. Joshi, chief economist at leading Indian credit rating agency Crisil, told AFP ahead of the figures.

The last time India's economy expanded at below seven percent was in the quarter to June 2009 as Western economies were emerging from the global financial crisis.

The GDP figures have been foreshadowed by data earlier this month showing India's industrial output growth skidded to a two-year low in September of 1.9 percent year on year.

The higher interest rates have made borrowing for everything from cars to consumer appliances to plant equipment more expensive, and slowed investment and consumer demand.

While the forecast 6.9 percent growth appears rapid compared with sluggish Western expansion, economists say a slowing economy will undermine government efforts to tackle India's endemic poverty.

The decelerating economy and high inflation are a major headache for the besieged Congress-led government which is already battling a slew of corruption scandals that have sapped its popularity and sparked huge anti-graft protests.

The government is seeking to press ahead with its stalled ambitious economic reforms, which economists say are a key to spurring growth, by announcing last week plans to open its vast retail market to international supermarkets.

But the move has met with vociferous political opposition and has paralysed parliament.

The central bank expects expansion of eight percent in the fiscal year to March 2012, but many private economists predict growth of seven percent or even lower.

The economy accelerated 8.5 percent in the year to March 2011.