Global ratings major Moody's has said that tough times are ahead for the Indian economy and it may revise downwards the country's growth forecast for 2011-12 to 6.5%.
"We may need to revise our 2012 growth outlook from the current rate of 7% and towards something like 6.5%... It looks like tough times are ahead," Moody's Analytics said in a report.
The country's Gross Domestic Product (GDP) growth slipped to 6.9% in the second quarter, the lowest in over two years. For the first half (April-September) of the fiscal, the average growth rate stood at 7.3%.
The economic growth in 2010-11 stood at 8.5%.
Growth in eight core infrastructure industries dipped to 0.1% in October, the lowest in five years.
RBI has already revised its growth projection for the Indian economy to 7.6%, from 8% earlier.
Yesterday, Finance Minister Pranab Mukherjee said that GDP growth in the current fiscal is likely to be around 7.5%, far below the 9% projection made by the government in its pre-Budget survey.
Moody's said that the economy is struggling under the weight of higher interest rates but this had failed to achieve the objective of cooling inflation, which have been above the 9% mark since December last year.
RBI has already hiked its key-policy rates 13 times, totalling 350 basis points, since March 2010 to tame demand and curb inflation.
India Inc has blamed the repeated rate hikes, which have led to increased cost of borrowings, for hindering fresh investments and slowing down industrial growth.
"It is difficult to see this (economy) turning around any time soon, especially as the troubles in Europe appear to have some way still to play out," Moody's said.
While Moody's has hinted as revising India's growth forecast downwards, even its existing 7% economic growth projection for the current fiscal is less than that of many other global institutions and ratings agencies.
It is also less than the projections made by the Organisation for Economic Cooperation and Development (OECD), Centre for Monitoring of India Economy (CMIE), Crisil and ICRA, who have all put growth to be between 7.3% and 7.6%.
Finance major Citigroup last week revised downwards its growth forecast for the Indian economy to 7.1%, from the earlier estimate of 7.6%, for 2011-12 on account of global slowdown and domestic factors like impact of tight monetary policy.