The World Bank has scaled down its fiscal year GDP growth forecast for India to 6% citing infrastructure bottlenecks and slow policy reforms. The World Bank has also warned that there is a high risk that India's GDP growth could slow further if economic conditions in Europe deteriorate.
The World Bank had earlier forecast a GDP growth of 6.9% for India in the fiscal year through March 2013.
"The downside risks to growth in the Indian economy are high because of the risks to global growth from the precarious situation in Europe," the World Bank said in a report released late on Wednesday.
Factors affecting Indian growth include power shortages, corruption scandals in the mining and telecom sectors, and investor uncertainty due to pending legislative proposals, the World Bank said.
The IMF on Tuesday slashed India's growth forecast to 4.9% for 2012 from its earlier projection of 6.2%.
The World Bank said yesterday that with advanced economies growing at a slow pace, India will have to look to growth drivers at home to regain economic momentum. Implementing the recently-announced measures would be a step in the right direction, it said.
Inflation is likely to be pushed up to 8% by the end of March 2013 because of higher fuel and food prices, the World Bank said.
The World Bank also urged the Government to introduce reforms on direct taxes and early implementation of the much-delayed Goods and Services Tax (GST).
Some key legislative proposals, such as those to reform land acquisition processes and mining, must also be cleared quickly to help revive growth, it added.