The International Monetary Fund (IMF) in its latest World Economic Outlook report has lowered India's economic growth forecast by one percentage point to five to six percent for 2012-13.

The IMF said, "Growth in India is projected to average 5-6 per cent in 2012-13, more than one percentage point lower than in the April 2012 WEO (World Economic Outlook)."

"The downgrade reflects both an expectation that current drags on business sentiment and investment will persist and a weaker external environment," the report said.

Released in Tokyo ahead of the IMF-World Bank 2012 Annual Meetings, the report said: "In India, growth weakened more than expected in the first half of 2012-13, an outcome of stalled investment caused by governance issues and red tape, and a deterioration in business sentiment against the backdrop of a rising current account deficit and the recent rupee depreciation."

The IMF forecast for global growth was marked down to 3.3 per cent this year and 3.6 per cent for 2013.

The multilateral agency said advanced economies were projected to grow by 1.3 percent this year, compared with 1.6 percent last year and three percent in 2010, with public spending cutbacks and the still-weak financial system weighing on prospects.

RTTNews