India's government downgraded its economic growth projection for the current fiscal, and expects inflation to slow over the January to March quarter, creating room for monetary policy easing.

In its mid-year economic review, the Finance Ministry on Monday said the economy is likely to expand in the range of 5.7 percent to 5.9 percent during 2012-2013. The estimate reflects a downward revision from the 7.6 percent growth projected in its annual budget.

Inflation is seen moderating to around 6.8 percent to 7 percent at the end of March, it said. The government said it will limit the fiscal deficit at 5.3 percent of gross domestic product.

The report came a day ahead of the Reserve Bank of India's interest rate decision. The central bank is widely expected to leave its key rates unchanged tomorrow.

Inflation based on the wholesale price index eased to 7.24 percent in November from 7.45 percent in the prior month.

RTTNews