IMF lowers India growth forecast to 6.9 percent

New Delhi - The International Monetary Fund (IMF) Friday lowered India's economic growth forecast to 6.9 percent for 2012 as compared to 7 percent projection announced in January.

The Washington-based multilateral agency said it has lowered its growth outlook on India mainly due to lack of reforms and structural factors which has resulted in slowdown in investment.

However, the IMF kept its forecast for 2013 unchanged at 7.3 percent. As per the IMF data, Indian economy grew by 7.1 percent in 2011.

“Concerns about governance and slow project approvals by the government have weakened business sentiment, which in turn has adversely affected investment, along with cyclical factors such as global uncertainty and policy tightening,” the IMF said.

In its Asia-Pacific Economic Outlook report, the IMF said Asia and Pacific region economy is expected to grow by 6 percent in 2012 - the same growth as registered in 2011.

The report based on online surveys said economic growth in Asia and Pacific region would accelerate to 6.5 percent in 2013, led by India and China.

At the launch of the report in Kuala Lumpur Friday, Anoop Singh, head of IMF’s Asia and Pacific department, said policymakers in the region have challenge to support non-inflationary growth.

“Calibrating the right amount of insurance to support stable, non-inflationary growth is the main near-term policy challenge,” Singh said in the report.

“Policymakers should be ready to shift gears and renew tightening if overheating pressures become evident,” he added.