New Delhi, Sep 3 (IANS) India's scorching economic growth rate, the second fastest in the world after China for the last three years, is expected to slow down this fiscal due to high international oil prices and fear of high inflation.

The Confederation of Indian Industry (CII) is sticking to its June projection of India clocking around eight percent growth in 2006-07, less than the economic growth of 8.4 percent last fiscal.

The estimate of lower growth, the leading industry lobby states in its latest State of the Economy (SOE) report, is based on expectations of higher inflationary pressures and rising interest rates.

"Oil price hike and fear of high inflation coupled with increasing interest rates are expected to affect the performance of manufacturing and services sectors adversely and this is expected to bring down the growth rate slightly for the current fiscal," says the report released Sunday.

In its June issue of SOE, the CII had observed that the economy in the current fiscal might clock a growth of less than 8.4 percent reached in the last fiscal.

"As there are no significant developments in economic conditions since then, CII stays with the projection made earlier," the report states.

The estimates are that during the current fiscal agriculture would clock 3 percent growth while industry will register 8.5 percent and services 9.6 percent, "with overall GDP growth forecast at 8 percent".

The report points out that the agriculture, industry and services contributed to the total economic growth last year by 9.0 percent, 27 percent and 64 percent respectively.

For the April-June quarter of 2006-07, the CII expects the GDP growth at around the 8 percent mark.

In comparison, China scored 11.3 percent growth in GDP in the first quarter boosted by the growth in imports and exports, which created favourable conditions for further economic and trade cooperation.

In a comparative study, the report points out the most major industrial countries have witnessed inflation on an upswing mainly on account of global oil price increases.

In the first quarter, the inflation index in China showed a rising trend and stood at 1.5 percent in June. In India, inflation measured by wholesale price index rose from 4.1 percent in March-end to 4.7 percent at the beginning of July.

With the global oil prices continuing to maintain volatile trend, the CII expects continued risk to the growth and inflationary performance.