India can comfortably grow 7-8 pct - former RBI head

Reddy, who stepped down as governor of the central bank last September after a five-year term, said India could comfortably achieve a growth rate of 7-8 percent, but growth faster than 9 percent could stretch its infrastructure.

"Infrastructure as a simple bottleneck does impose some limits to the extent to which you can boost growth entirely through fiscal stimulus without any effect on the inflation side," he told Reuters in an interview.

Growth in India, Asia's third-biggest economy, is expected to hit a seven-year low of 6 percent or less in the 2009/10 fiscal year that began on April 1, after growing at or above 9 percent in the three years to 2007/08. Growth in 2008/09 is expected to have slowed to 7 percent or less.

"The cause of the slowing down essentially is the export demand," Reddy said, adding even India's diversified export basket was of little help in a global downturn.

Reddy spoke ahead of the release of his book, "India and the Global Financial Crisis", a collection of 23 of his speeches as governor.