The US investment bank Lehman Brothers expects India's GDP to grow by 9.9 per cent in 2007-08, which exceeds the government's own projection of around 9.2 per cent growth, against the expected 9.7 per cent for 2006-07.

Some analysts have voiced fears of growth moderating in the coming financial year as a result of the spate of measures by the Reserve Bank of India to curb monetary growth.

The US investment banks says strong investments and exports of manufactured products would be the major drivers for India's growth, unlike IT and services that were the major frowth drivers two years back.

Rob Subbaraman, Lehman's chief economist for Asia, was quoted by Reuters as saying in an interview, "You have got rising incomes, very strong credit growth still, positive wealth and confidence effects from the high asset prices, that is countering what is happening on the monetary policy front."

Data from the Central Statistical Organisation, released on Monday showed that in January 2007, by 10.9 per cent in January, compared to 8.5 per cent reported in January 2006. Manufacturing, which represents more than three-quarters of industrial output, grew 11.6 per cent.

The overall performance was boosted by a three-fold improvement in mining output and robust growth in manufacturing and intermediate goods. The cumulative growth rate during the April-January period stood at 11 per cent, compared to eight per cent in the same period last fiscal.

Subbaraman sees strong manufacturing growth partly due to "the urgent need for capacity expansion". He added that the investment to GDP ratio had started improving in recent years, which was reflected in the rising import of capital goods, higher FDI investments and increase in productivity and profitability of the private sector.