India’s economic growth will slowdown to 7.5 percent this fiscal and tight money policies will continue, UK’s Economist magazine said on Wednesday.

In a statement, the magazine’s Economist Intelligence Unit (EIU) said its revised growth forecast “clearly indicated the slowdown trend.”

This forecast was in continuation of the 7.7 per cent growth that it had predicted in March 2008, the EIU statement said. The EIU, the business-to-business research and advisory arm of The Economist Group, also expected Reserve Bank of India (RBI) to remain under pressure to raise interest rates further despite the sharp tightening of monetary policy in June and July.

It said the Reserve Bank of India would likely increase the repo rate from 9 percent to 9.5 percent in the second half of 2008, and the reverse repo rate from 6 percent to 6.5 percent.

Monetary easing
“The RBI’s more aggressive approach reflects its growing concern about the sudden acceleration in inflation to nearly 12.7 percent earlier this month,” the statement said.

According to the EIU, monetary easing will not occur until 2009, by when it expected inflationary pressures to subside.