The government Friday officially downgraded the gross domestic product (GDP) growth rate to around 7.5 percent for the current fiscal, citing the domestic slowdown and international economic uncertainty.
"The analysis of several data series and simple macro-econometric modeling lead us to forecast a GDP growth rate of 7.5 percent (plus or minus 0.25 percent) during 2011-12," said the mid-year economic review presented by Finance Minister Pranab Mukherjee to parliament.
"We expect some revival next year, but the outlook remains mixed."
The GDP in the first half of 2011-12 registered a growth rate of 7.3 percent over the first half of 2010-11. The growth rate of first quarter was 7.7 percent.
In the quarter ending September, the GDP growth slowed to its slowest pace in over two years and was recorded at 6.9 percent.
Latest data on the index of industrial production (IIP)-- a barometer of factory output -- showed industry production in for September at 1.9 percent, the slowest in over two years as rising interest rates and a slump in investments started to bite.
The review pointed at the slow growth in manufacturing, construction and mining sector for slackening pace of economic expansion.
Data for the second quarter showed manufacturing growing at a sluggish 2.7 percent, agriculture ouptut rising by 3.2 percent and the construction sector managing an expansion of 4.3 percent. Mining and quarrying, however, saw a decline.
At the same time, the government said inflation, which was a major worry during the current fiscal had started showing signs of abating.
It attributed recent decline in non-food inflation to the monetary tightening taken by the Reserve Bank of India.