The International Monetary Fund (IMF) has marginally lowered India's economic growth forecast to 6.9 per cent in 2012, from 7 per cent projected earlier, on weak global and domestic demand.
In its World Economic Outlook (WEO), released ahead of the IMF-World Bank Spring Meetings here, the IMF said that world economic growth rate would slump to 3.5 per cent from 3.9 per cent in 2011.
As regards India, the WEO lowered India's growth forecast for 2012 to 6.9 per cent, from earlier projection of 7 per cent made in January. It has pegged India's growth during the 2013 calendar year at 7.3 per cent and for 2011 it was 7.2 per cent.
"In emerging Asia, including India, strengthening domestic demand will require improving the conditions for private investment, including by addressing infrastructure bottlenecks and enhancing governance and public service delivery," WEO said.
Referring to the declining growth rate in India, the WEO said domestic factors also contributed to the slowdown, as a deterioration in business sentiment weakened investment and policy tightening raised borrowing costs.
As per the estimates of India's Central Statistical Organisation (CSO), the growth rate during the financial year 2011-12 slipped to a 3-year low of 6.9 per cent. While the government has projected a growth rate of 7.6 per cent for the current financial year which began on April 1, 2012, the Reserve Bank of India expects it to be 7.3 per cent.
The WEO said that "fiscal consolidation remains a priority in India, to anchor confidence and rebuild room to meet future challenges".