Ratings agency Crisil today lowered its growth forecast for the Indian economy in 2011-12 to 7%, from the earlier estimate of 7.6%, due to global slowdown and weak domestic investment climate.
"Crisil Research has lowered India's Gross Domestic Product (GDP) growth forecast for 2011-12 to 7.0% from its October estimate of 7.6%," the ratings firm said in a report.
"The forecast has been scaled down, in view of deterioration in the global economic outlook led by the Euro zone recession, a weaker-than-anticipated domestic investment climate and limited fiscal space to stimulate the economy," it added.
Crisil said said economic growth in the second half (October-March) of the current fiscal is likely to slip to 6.7%, from 7.3% in the first six months.
"This will restrict the overall GDP growth for 2011-12 at 7%. This would be the second-lowest growth in the past nine years after 6.8% in 2008-09, during the peak of global financial crisis," the report said.
The country's GDP growth slipped to 6.9% in the second quarter, the lowest in over two years.
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.
Finance Minister Pranab Mukherjee said last week 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.
"The industry growth will remain constrained by lagged impact of RBI's interest rate hikes, weak exports due to slipping demand, particularly from Europe and growing bottlenecks in the mining sector," Crisil said.
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.
Crisil said that while industry is expected to grow by 4.5% in the current fiscal, expansion in services will be 8.9%.
