The Indian economy will grow by a moderate 4.9% in 2012 and between 5% and 6% in 2012-13, dragged down by sluggish structural reforms, weak investment, poor business sentiment and an uncertain world economy, the International Monetary Fund (IMF) has said. The IMF’s latest growth forecast is sharply lower than its July projections when it had predicted a 6.1% growth for Asia’s third largest economy in 2012.

“India’s (economic) activity suffered from waning business confidence amid slow approvals for new projects, sluggish structural reforms, policy rate hikes designed to rein in inflation, and flagging external demand,” the IMF said in the World Economic Outlook (WEO) released in Tokyo ahead of the IMF-World Bank 2012 annual meetings.

The UPA government, struggling to reverse a slowdown in the economy that grew by 5.5% in April-June, has unveiled a slew of reforms initiatives.