London: Indian economy is projected to grow by just 4.4 percent in the current fiscal, as the country has experienced "broad-based slowdown", according to Paris-based think tank OECD.
Presenting a gloomy picture for India, the Organisation for Economic Cooperation and Development (OECD) said that economic growth is expected to remain weak for sometime.
The economy is expected to expand 4.4 percent in the current financial year compared to 6.9 percent growth in 2011-12 period.
The latest projections from OECD, a grouping of mostly developed nations, are real GDP figures are measured at market prices.
However, OECD said that India could grow 6.5 percent in the next fiscal and further expand to 7.1 percent in 2014-15 period.
"The economy has experienced a broad-based slowdown and growth is expected to remain weak for some time. The current account deficit has narrowed as imports have softened on account of cooling domestic demand and a weaker rupee," OECD said in its latest Economic Outlook report.
The grouping said that inflation has temporarily been pushed up by hikes in regulated petroleum prices but is expected to decline as spare capacity mounts.
"This will create room for easing monetary policy, which has been hindered by persistently high inflation and a widening fiscal deficit," the report said.
Going by OECD, recent moves to liberalise foreign direct investment in some sectors, including retail and aviation, have boosted business sentiment somewhat and would promote higher investment and productivity over the medium term.
However, the group noted that fiscal position has weakened as tax revenues have been hit by the slowdown and spending has overshot.
"Spending restraint is needed to ensure that fiscal slippage is limited and confidence does not suffer further on account of policy uncertainty," OECD said.
India had been growing around 8-9 percent before the global financial meltdown of 2008. The growth rate in 2011-12 slipped to a nine-year low of 6.5 percent.
Finance Minister P Chidambaram has said India's economy should expand by 5.5-6 percent this fiscal.
For this year, OECD expects India to clock a growth of 4.5 percent, much lower than 7.8 percent seen in 2011.
Economy is anticipated to gather steam and grow 5.9 percent next year and further to 7 percent in 2014.
According to OECD, the monetary policy stance should be further eased in many economies.
"Current policies in the United States are appropriate as the employment outlook is improving only slowly and inflation expectations are well anchored.
"Additional easing is required in the euro area, Japan and some emerging market economies, including China and India," it said.
For the global economy, OECD has forecast a "hesitant and uneven recovery over the coming two years".
"Decisive policy action is needed to ensure that stalemate over fiscal policy in the US and continuing euro area instability do not plunge the world back into recession," the grouping noted.
OECD Secretary-General Angel Gurria said the world economy is far from being out of the woods.
First Published: Tuesday, November 27, 2012, 19:17