Moody's has projected that India's economic growth would decelerate to 7.9 per cent in the current fiscal from 9 per cent in 2007-08, on the backdrop of rising interest rates and slow credit growth.

The forecast by Moody's on the growth of Indian economy has come just two days ahead of quarterly release of GDP data for fiscal 2008-09 by the government.

"India's annual GDP growth is expected to decelerate sharply to 7.9 per cent in 2008. Amid slowing credit growth and higher interest rates," research arm of the Moody's Group, said

Led by an easing domestic demand, the private consumption growth is also likely to decline to around 5 per cent, Moody's economist Sherman Chan, who had compiled the report, said.

"Strong inflation will also squeeze household budgets, hurting consumption growth in real terms," he said.

However, in 2009 the situation is likely to improve with the economy rebounding mildly, the rating agency said.

Earlier in August, the Prime Minister's Economic Advisory Council had made a similar forecast and said the GDP growth rate for the year is expected to slide to 7.7 per cent, think-tank NCAER that had said economic growth of the country would be at 7.8 per cent.

Meanwhile the research arm of the leading economic magazine Economist, Economist Intelligence Unit, has estimated India's economic growth even lesser at 7.5 per cent this fiscal.

"This revision is in continuation with the earlier forecasts made by the business intelligence arm of The Economist Group, which clearly indicated the slowdown trend", the research arm said in a release issued in New Delhi.

However, CII President K V Kamath had quoted Finance Minister P Chidambaram as saying at a meeting on Tuesday that 8 to 9 per cent economic growth is here to stay.