24 With economic growth forecasted to slow, future incomes are expected to fall. If other things remain the same, how will the demand or supply of loanable funds in India change? India’s Economy Hits the Wall At the start of 2008, India had an annual growth of 9 per cent, huge consumer demand, and increasing foreign investment. But by July 2008, India had 11.4 per cent a year inflation, large government deficits, and rising interest rates. Economic growth is expected to fall to 7 per cent a year by the end of 2008.

A Goldman Sachs report suggests that India needs to lower the government’s deficit, raise educational achievement, control inflation and liberalise its financial markets