The Organisation for Economic Cooperation and Development has lowered India's growth estimate to
5.3 per cent for 2013 and cautioned that structural bottlenecks could further constrain investment and growth potential.
The Paris-based think tank had projected 5.9 per cent growth for the country in November 2012.
The OECD Economic Outlook report, however, says the "GDP growth is projected to rise gradually over the next two years... Significantly more growth would be forthcoming if structural bottlenecks were swept away by fundamental structural reforms".
It says efforts to speed up the approval of large investment projects and the partial deregulation of foreign direct investment (FDI) may help the economy recover.
The report further says with inflation projected to decline, the Reserve Bank of India (RBI) could
ease monetary policy provided the government sticks to its fiscal consolidation plans.
"Fiscal tightening and the new fiscal consolidation roadmap are welcome and should allow monetary policy to be eased further. On-going efforts to better target household transfers are commendable although further progress is needed," the report adds.
However, subsidies could be better targeted and more
revenues could be raised in a less distorted way, the OECD says. "The large
Current Account Deficit may, however, make it difficult to cut interest rates significantly."
Talking about India's neighbour China, OECD forecast that its economy would grow 7.8 per cent this year, down from a previous estimate of 8.5 per cent.
It also noted that "until around 2020, China is set to have the highest growth rate among major countries, but could be then surpassed by India".
With inputs from PTI
PHOTO: Associated Press 
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