India’s growth outlook “appears more subdued than last year,� but analysts still expect to see it hover around 8 percent, reported U.S. Grains Council Consultant Amit Sachdev.

The International Monetary Fund now pegs Indian growth at 7.8 percent for 2011/2012, citing challenges from high inflation and higher interest rates, which could dampen demand. The Prime Minister’s Economic Advisory Council, meanwhile, projects growth close to 8 percent. 

The Reserve Bank of India recently raised interest rates for the twelfth time in 18 months in an effort to slow inflation and reduce demand, but since borrowing by Indian households is low, consumers have liquidity to absorb the increase. Monthly installment payments on loans represent less than one percent of Indians’ total household income.

Even with a slowdown, India’s growth is likely to outstrip many other nations’ this year. India is now the world’s fourth-largest economy, following the United States, China and Japan, and is about to surpass the Japanese economy in size. In 2010, the Japanese economy was valued at $4.31 trillion, but since then, the tsunami and earthquakes have meant major economic losses. Meanwhile, India’s economy, valued at $4.06 trillion last year, has continued to grow.

In the agricultural sector, India’s government is trying to boost production, including especially the output of oilseeds and pulses, and scientists at the Indian Council of Agricultural Research are concentrating especially on developing crop varieties that require less water.

This year, however, the issue has been excessive precipitation, as monsoon rains were 39 percent above normal in the first week of September. While heavy rains are likely to increase crop plantings, they are also delaying the harvest of mature crops, including cotton, soybeans, onions and corn.