For 2018-19, India's GDP is projected to grow by 7.3 per cent, slower than ADB's previous estimate of 7.4 per cent.
The downgrade in projection comes weeks after Indian economy reversed a five-quarter slide in GDP growth to clock a 6.3 per cent expansion in July-September.
In its Asian Development Outlook Supplement, ADB said growth is expected to pick up in the remaining two quarters of the fiscal ending March 31, 2018, as "the government implements measures to ease firms' compliance with the new goods and services tax (GST)".
"However, owing to tepid growth in the first half of 2017-18, the lingering effects of demonetisation in November 2016, transitory challenges of a new tax system, and some risks to agriculture stemming from a spotty monsoon in 2017", the economic growth forecast has been lowered, it said.
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"However, inflation has picked up since July 2017 on a price uptick for food, especially pulses and vegetables. Fuel prices also inched up in response to rising global crude oil prices," it said.
The prices, ADB said, are expected to increase further in the remaining months of the fiscal. Inflation is now projected to average 3.7 per cent in 2017-18, somewhat below the 4 per cent earlier forecast.
The Organisation for Economic Cooperation and Development (OECD) has also cut its growth projections for India to 6.7 per cent for 2017-18.
Fitch Ratings on December 4 lowered its forecast for India's growth for the current fiscal to 6.7 per cent from the earlier projected 6.9 per cent, saying the rebound was weaker than expected.
Moody's last month projected India's real GDP growth to moderate to 6.7 per cent in the current fiscal, from 7.1 per cent last year.
While GST and demonetisation have undermined growth over the near term, real GDP growth will rise to 7.5 per cent in 2018-19 as disruption fades, according to Moody's.
According to Standard & Poor's, India's growth is among the fastest of all investment-grade sovereigns and projected real GDP expansion to average 7.6 per cent over 2017-20.
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