RBI sees dark clouds over Indian economy Bs Reporter / Mumbai July 29, 2008, 0:24 IST The Reserve Bank of India today painted a gloomy picture for the economy. A survey conducted by the central bank said India's gross domestic product (GDP) would grow 7.9 per cent this year against the earlier projection of 8.1 per cent. Adding to the grim forecast was the RBI's assessment that the inflation rate would remain a concern, owing to high global oil and food prices. The inflation rate based on the wholesale price index was estimated at 11.89 per cent in the first half of July, pushed by an increase in fuel prices. The government's finances are also expected to be under strain on the back of high oil and fertiliser subsidies, farm debt waiver and the implementation of the Sixth Pay Commission recommendations. The Centre has budgeted for a fiscal deficit of 2.5 per cent of GDP and global rating agencies have already raised concerns over the government missing the target. The bad news doesn't end here. The RBI's Industrial Outlook Survey of private sector manufacturing companies pointed out that fewer respondents expected the overall situation to improve in the July-September quarter. "Most companies expect an increase in raw material prices, and the increased production cost is expected to be adjusted by keeping inventory levels (both raw material and finished goods) at