New Delhi: While there may be signs of growth moderation during the current and the next fiscal, the Indian economy has for the first time logged an average 8% growth during a five-year period. The latest estimates released by the Prime Minister’s Economic Advisory Council on Thursday has estimated that the economy would grow 8.9% this year — compared to 9.4% during 2006-07 — and is projected to see output rise 8.5% next fiscal. While there is clearly more optimism in the farm sector, thanks to abundant rains, interest rate hike and appreciation of the rupee seem to have impacted the double-digit manufacturing growth story, which the panel headed by C Rangarajan predicting 8.9% growth during the current fiscal. In fact the impact of RBI’s twin measures seem to have been much higher than was expected earlier with the EAC lowering the forecast from 11.3% in the July outlook. With the panel suggesting that oil prices need to be hiked to factor in the rise in global crude rates, inflation could immediately cross the 4% level, from the 3-3.5% range. Despite the gloomy picture on manufacturing, the per capita income is projected to grow above 7% for the third successive year and for the first time, close the year above the $1,000 mark, while the Indian economy would be nearly $1.2 trillion. In 2008-09, growth rate is expected to dip further as the demand for consumer goods is expected to see a moderate rise, while the farm sector is assumed to be growing at around 2.5%. Even the usually buoyant service sector is likely to see slower growth in trade, hotels, transport and communication. While Rangarajan was quick to point out that this was the baseline scenario the actual level of rise in economic activity would depend on how the subprime and credit woes play out in the coming months. If it is mild then the impact on India — which the report said was less dependent on the rest of world than China — might be moderate. But in case the problem was deep then it could impact Indian trade and capital flows, Rangarajan said. With warning of pressure on rupee to appreciate in the immediate future, EAC said government should send “clear signals” to the industry to adjust through productivity improvements and tapping the domestic market instead of focusing on exports.