The International Monetary Fund, or IMF, said India's GDP will shrink by 1.25% to 7.9% on account off tight monetary conditions, reports CNBC-TV18. It feels the fiscal stimulus will provide a partial offset. "Tight monetary conditions would affect investment rather than consumption," it added.

How can the input costs be brought down? A robust economy could perhaps be an answer. The International Monetary Fund says India's economic growth is likely to be around 8% this fiscal year.

The regional outlook report of the IMF said India's growth will be 7.9% following a decline by 1.25%. This is due to a slowdown in investment following tightening credit conditions.

This is in line with Finance Minister P Chidambaram’s statement that India will be the second fastest growing economy at 8 % despite turbulence in the global market. Inflation though continues to be a cause for worry.