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Shine off India’s economy as gloomy data piles up

NEW DELHI, August 17, 2008 (AFP) - Until a few months ago, the most popular buzz phrase for India was "economic miracle", with the nation appearing impervious to the financial turmoil engulfing the developed world.

"No other issue is likely to dominate the political scene" as much in the coming months, he said.

The government has already shifted gears, saying it is giving priority to subduing prices over boosting growth.

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While official growth forecasts for the year to March 2009 range from 7.7 to eight percent -- down from the nine percent expansion last year and 9.6 percent the previous year -- some brokerages see it as low as seven percent.

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That's still strong by anaemic Western levels but not enough to lift India's hundreds of millions from poverty.

Downbeat data has fed pessimism.

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Industrial output grew by just 5.4 percent in June, a sharp fall from 8.9 percent a year earlier.

The trade deficit has widened to record levels and the reluctance of the government to pass on global oil price rises to consumers and a host of pre-election goodies are swelling the fiscal deficit.

Prime Minister Manmohan Singh's cabinet has approved an average 21 percent salary hike for

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