Mumbai: Industrial sector in the country is expected to grow at 10.4 per cent, economic think-tank Centre for Monitoring Indian Economy said in its projection for the Indian Economy.

CMIE has pegged industrial expansion in the country at 10.4 per cent for fiscal 2009, despite a gloomy picture painted by the latest government data on industrial growth

"We expect the industrial production to grow by 10.4 per cent in FY09. The current investment boom is expected to correct the slowdown problem," CMIE said in its monthly report.

CMIE attributed the current slowdown in industrial production to supply problems faced by sectors like cement, aluminium, electricity and steel.

Industrial production growth in India slipped to 5.3 per cent in January against a 11.6 per cent growth achieved in the same month last year as growth in all major sectors, including manufacturing, electricity and mining, declined.

"We expect interest rates to start easing in the first quarter, thus, reviving demand for consumer durables," the report added.

Gross capital formation in the country is expected to increase by 15.5 per cent in FY09 while the country's gross domestic product (GDP) was expected to grow by 8.9 per cent in FY 08 and 9.1 per cent in FY 09, CMIE said.

India's real GDP grew by 7.5 per cent in FY 05, nine per cent in FY 06 and 9.6 per cent in FY 07.

CMIE based its projection of a 9.1 per cent growth in real GDP in FY09 on the assumption of an adequate monsoon as also the proposed sharp cuts in tax rates.