India's economic growth is expected to slow to 8.5-8.7 percent in the year to March from 9.4 percent a year earlier as high interest rates and erratic power supplies affect factory output, an industry body said in a report on Saturday.
The Associated Chambers of Commerce and Industry of India (ASSOCHAM) also said uneven monsoons that flooded some parts of the country but left others with little rain could dent farm output.
India's central bank has forecast 8.5 percent GDP growth in 2007/08, and it has been tightening monetary policy since June 2006 to fight inflation in the fast-growing economy. ASSOCHAM said rising interest rates, erratic power supplies and the uneven monsoons pushed up input costs and impacted on industrial production and prices.