Asian Development Bank (ADB) on Wednesday lowered India's growth forecast for the current fiscal to 5.6%, from 7% projected earlier, citing falling global demand and impact of delayed monsoon on agricultural production.
India, however, can reverse the trend of falling growth by promoting economic reforms and taking steps to improve investment climate, said the ADB's Asian Development Outlook 2012 update.
For the Asian region as a whole, the ADB Update expects the Gross Domestic Product (GDP) growth rate to drop to 6.1% in 2012 from 7.2% in 2011. The growth rate for the region has been projected at 6.7% in 2013.
"The deceleration of the region's two giants – the People's Republic of China and India – in tandem with the global slowdown, is tempering earlier optimism," ADB said.
As for India, it said that growth rate will decelerate to from 6.5% in 2011-12 to 5.6% in the current fiscal. ADB had earlier projected the country's growth rate at 7% for 2012-13.
The growth rate for 2013-14, according to the ADB Update, has now been estimated at 6.7%, down from 7.5% projected earlier.
Falling global demand and a delayed monsoon curtailing agricultural growth have exacerbated India's recent economic slowdown, and have led to reduced growth forecasts by the ADB for fiscal years 2012 and 2013, ADB said.
"India can start reversing this trend by improving its investment climate and expediting reforms," ADB chief economist Changyong Rhee said.