Mumbai: The Indian economy will grow at a robust 9.4 per cent in FY 09 despite the gloomy economic outlook, the Centre for Monitoring Indian Economy (CMIE) said in its monthly report.

The CMIE, which had revised its earlier projection of 9.1 per cent GDP growth to 9.5 per cent, has now lowered it marginally to 9.4 per cent. The economic think tank kept GDP growth forecast above the 9 per cent mark despite the gloomy forecast of a 7.7 per cent growth projected by the prime minister's Economic Advisory Council.

The Reserve Bank of India (RBI) also had predicted that real GDP would grow at 8-8.5 per cent in FY 09, which the RBI governor later brought down to about 8 per cent.

''We had predicted a growth of 9.1 per cent in our first forecast in February 2008, which was revised up to 9.5 per cent in June 2008. We now believe that the economy would grow by 9.4 per cent in FY 09," CMIE said.

The marginal dip has been due to an revision of industrial sector growth from 11.4 per cent to 11.1 per cent, CMIE said.

CMIE had predicted an industry growth of 11.4 per cent. However, following a slowdown in the output of a few industries, ''we now believe that the industrial sector would grow by 11.1 per cent and not 11.4 per cent as predicted earlier," the report said.

CMIE said while some prominent industries like cement, sugar, glassware and milk powder may witness a slowdown, the investment climate in the country has generally been good.

So far as the RBI was concerned, its policy stance has been based on inflation and credit growth. But credit growth has been robust so far and corporate sector sales have been brisk with an overflowing order book position, it pointed out.

CMIE said inflation was not that high as to hurt growth and that inflation in itself won't hurt growth. Moreover, the wholesale price-based estimates provide an inappropriate measure of inflation, it said, adding, the consumer price index would have been a more appropriate measure.

CMIE also faulted the official data on industrial production growth, saying corporate India has in fact been aggressively investing in new capacities despite all the gloomy forecasts.

It discounted projection of a sharp slowdown in Q1 FY09, saying data obtained from other sources indicate that the industrial sector has recovered from its recent slowdown and aggressive investments currently under implementation to create new capacities would accelerate industrial growth in FY 09.

CMIE said the faulty IIP data may lower GDP growth estimate in the first quarter of FY 09 scheduled to be released by the Central Statistical Organisation by the end of August.