The Centre for Monitoring Indian Economy (CMIE) has lowered its projection for the growth of the Indian economy to 7.5 per cent from its earlier estimate of 8.2 per cent.

CMIE said it now expects the Indian economy to grow at a slower pace due to the global financial market meltdown, which would result in slowdown in some sectors. The impact of the global crisis on the Indian economy would be considerably greater in the third quarter of the current fiscal (October-December), he said.

CMIE also revised downward industrial output growth to 6.3 per cent in FY 09 as against the earlier estimate of 8.3 per cent as the industrial production index showed steep falls in electricity, textiles, cement, commercial vehicles, machinery, fertilisers, crude oil, petroleum products, man-made fibres and PVC pipes and tubes.

The poor performance of the IIP in the first half and the new stress seen in select industries warrants a substantial downward revision in our forecast for FY 09, CMIE said.

"We have scaled down our forecast in the fact of a stark contradiction. While the IIP grew by a meagre 4.9 per cent in the first half of FY 09, the inflation-adjusted sales of manufacturing companies recorded an excellent growth in output of 12 per cent," CMIE said.

It, however, said the quality of the IIP has deteriorated and is not truly representative of the real economy. CMI said its forecasts have been more based on an understanding of the corporate world than the IIP.

Transport, trade, industry and finance sectors will be the worst affected, CMIE said, adding, the impact of global financial turmoil will remain for the next few months.

The government's efforts to revive growth through monetary and fiscal interventions while helping to ease the pain of a slowdown, will not solve the full impact of the global liquidity crisis, CMIE said in its monthly review.

''Fiscal 2008-09 is expected to end with a growth of 7.5 per cent. This is much lower than our earlier forecast of 9.4 per cent that has been revised progressively since the global liquidity crisis to 8.7 per cent and 8.2 per cent in October and November 2008, respectively," the review said.