Mumbai: The Centre for Monitoring Indian Economy (CMIE) has revised its estimate of the country''s GDP growth to 9.1 per cent in fiscal 2007-08, marginally up from its earlier estimate of 9.0 per cent.

CMIE , the independent think tank, based the revision on a robust growth in services and industry.

CMIE expects Indian industry to grow at 9.5 per cent and the services sector to grow at an even higher 10.7 per cent, in the fiscal year ending March 2008. It has also revised its farm output growth estimate to 3.9 per cent, from 3.1 per cent earlier.

"While fresh investments continue to flow in, slowdown in the production growth of consumer durables and decline in personal loan disbursement by banks raise questions over the sustainability of the consumer expenditure growth in future," CMIE said in its latest review.

India''s economy grew at 9.3 per cent in the June quarter, but analysts expect the pace to moderate later in the year.

CMIE expects inflation to moderate due to a higher base effect. "We expect inflation in the WPI (wholesale price index) to reduce a tad to close to 3.5 per cent in the coming months because of a higher base," it said.

The Reserve Bank and the government have vowed to keep the wholesale price-based inflation rate close to 4 per cent this fiscal.

CMIE expects interest rates to remain stable due to a strong growth in banks'' deposits, a slowdown in credit expansion, ample liquidity in the banking system and comfortable inflation levels.

The Reserve Bank of India governor Yaga Venugopal Reddy, meanwhile, said he still sees the Indian economy growing at 8.5 per cent during the current fiscal, though it could expand at a faster clip.

"We are still sticking to 8.5 per cent growth but there could be an upward bias because of domestic circumstances," Reddy told reporters in Mexico City.

However, he said the RBI would also be watching for "possible secondary effects" of recent turbulence in global markets.

"I say this in the context of the first quarter, since the first quarter registered 9.3 (per cent growth) and the government indicated that it could be higher," Reddy said after giving a speech at Mexico''s central bank.

In the fiscal year 2006-2007, India''s gross domestic product increased by 9.4 per cent, its fastest pace in 18 years.

Growth over the last four fiscal quarters has averaged 8.6 per cent, second only to China among major economies.

The RBI raised interest rates five times between June 2006 and March 2007, lifting the repo rate by 125 basis points to 7.75 per cent.

It has also raised the cash reserve requirement for banks by 200 basis points since December.

India''s inflation rate has fallen to 16-month lows below 4 per cent in annual terms in mid-August from a two-year peak of 6.69 per cent in late January.