Standard Chartered Bank has revised upward India's economic growth to 7 per cent during 2003-04, and said fiscal deficit was not a matter of concern as long as the high growth in GDP is sustained.

"Seven per cent growth in GDP is achievable this fiscal. India will achieve strong growth with low interest rates," StanChart chief economist, Gerard Lyons, told PTI in New Delhi on Thursday.

StanChart had earlier pegged India's GDP growth at 6.6 per cent, but revised it upwards after the revival in agriculture and industry. Last fiscal, India's GDP growth plummetted to 4.3 per cent mainly due to a decline in farm output.

Kishlaya Pathak, the bank's economist in India, said, "While the economy is going to enjoy strong growth, it will be coupled with low inflation. Inflation will remain around 5 per cent for the next three months and start coming down from January onwards."

Lyons, who is also StanChart group head of global research, said India needs stable macro economic policies, infrastructure and development of the small and medium enterprises to sustain the growth.

The bank also expects industrial growth will pick up after November and would be much higher than 5.2 per cent recorded during April-August.

Contrary to the views of critics that high fiscal deficit of 5.6 per cent of GDP was a matter of concern, he said, "I think it is not. If there is a strong growth, then it can address the fiscal deficit."

Lyons, however, said the government needs to control its expenditures and step up revenues, especially indirect taxes.

"The tax base could be broadened through implementation of value-added tax," he said.

StanChart sees China and India as the most prospective investment destination now.

"Growth opportunities exists not in Europe but in Asia. As people are talking about China right now, they will talk about India in the coming years," Lyons said.

The overall mood of the business community was negative last year, he said, adding, "now it is positive."

The dollar was slated to weaken further and the Indian rupee is expected to end at Rs 43.50 a dollar by the end of 2004, Lyons said.