Financial service firm Moody's today said India's growth prospects over the next few years remained robust and the economy could be expected to expand by 8.5-9.5 per cent annually despite the slowdown during the January- March quarter of last fiscal.
Moody's said inflation remained the biggest challenge before the Indian economy and the Reserve Bank should focus on controlling the price rise, adding striking a balance between growth and inflation would be a test for policymakers.
"The slowdown in India's real GDP in the three months to March was not entirely unexpected... The economy is still carrying strong growth momentum into 2011 and should grow in a range of 8.5-9.5 per cent over the next few years, in line with its recent trend," it said in a report.
India's economy grew by 7.8 per cent during the quarter ended March, which was the slowest pace of growth in the last five quarters due largely to the poor performance of the manufacturing sector.
The sector had registered a growth of 9.4 per cent in the corresponding quarter of the previous fiscal and 8.3 per cent in the third quarter of 2010-11.
Overall, the economy registered a growth during 2010-11 of 8.5 per cent, which was a little below the government's forecast of 8.6 per cent, but appreciably above 8 per cent registered in 2009-10.