Asian Development Bank (ADB) on Wednesday revised down its growth forecast for India to 4.7 percent from 6 percent as projected in April.
"With gross domestic product (GDP) in the first quarter of Financial Year (FY) 2013 (which ends March 2014) expanding at its slowest pace since the global financial crisis, ADB revised down its growth forecast to 4.7 percent from 6 percent projected in April," the ADB report stated.
However, the bank said India might pull out from the slow growth rate by FY 2014 as it could see some moderate improvement, with growth estimated at 5.7 percent, but below the previous forecast of 6.5 percent.
India is the biggest borrower of ADB. The Manila-based multilateral lender had extended USD 2.4 billion loan to India in 2012 across sectors like transport, energy, commerce, industry, trade and finance.
Listing out reasons for slow growth rate, the ADB said the Indian economy has been under pressure with the recent depreciation of the rupee and capital outflows adding to structural constraints which are weighing heavily on its prospects for returning to a high growth path.
"The recent financial market turbulence is a timely reminder of the need for structural and fiscal reform not just to ensure long-term growth but also to keep financial markets stable in the short-run," said ADB Chief Economist Changyong Rhee.
The bank said Indian can return to sustainable growth path by bringing in structural reforms.
"Structural reforms must be strengthened to expedite large infrastructure projects already delayed, encourage foreign direct investment, and alleviate other constraints to long term growth," the bank noted