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A technician works inside the Oil and Natural Gas Corp (ONGC) group gathering station on the outskirts of Ahmedabad, India, September 30, 2016 (representational image).Reuters file

Even as the Narendra Modi-government is already being rapped for its economic policies, this might just be another setback. The World Bank has said that India's growth rate may slow down to 7.0 percent in 2017 from the previous 8.6 percent in 2015.   

Explaining the reason behind this, it said that the Indian economy has witnessed quite some changes in the last few months. The bank, in its South Asia Economic Focus, a biannual economic update, further said that demonetisation and the uncertainties around the Goods and Services Tax have also affected the country's growth.

However, it did add that well-planned policies could pull up the growth to 7.3 percent by 2018.

While India has witnessed the slowdown, the country's economic momentum has also affected the growth rate of South Asia as a whole. "Real GDP growth slowed to 7.1 percent in 2016, from 8 percent in 15/16, and further to 5.7 percent in Q1 FY2017," the Press Trust of India quoted World Bank's statement as saying.

Like demonetization of Rs 1,000 and Rs 500 currency notes disrupted the economy in early 2017, the GST is likely to have a similar impact early 2018.

The World Bank has also said that India should be prepared for a tepid private investment trend due to bottlenecks within the country. "If the internal bottlenecks are not alleviated, subdued private investment would put downside pressures on India's potential growth," the report added.

Meanwhile, India has also lost its tag as the world's fastest growing economy in the tally by the International Monetary Fund (IMF). The organisation trimmed India's growth projection for 2017 by 0.5 percent to 6.7 percent on Tuesday.

However, an IMF official told the media that this was just a "blip" for the country in the long term and that India is likely to regain the tag once again in 2018 with a 7.4 percent GDP rate.

Meanwhile, IMF too has attributed the slowdown to demonetisation and uncertainties over GST. But the organisation also clearly said that GST may have had a slowing effect, but "is among several key structural reforms under implementation that are expected to help push growth above 8 percent in the medium term."

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An employee works inside a research and development wing of Gas Lab Asia in New Delhi, India, March 8, 2017. Picture taken March 8, 2017.Reuters file

With this, China has become the country to snag the rank with a projected growth rate of 6.8 percent, reported IANS.

At the end of September, the Asian Development Bank had downgraded India's 2017 growth forecast to 7 percent from its July estimate of 7.4 percent. As in the case of IMF, the ADB too had said that demonetisation and GST had disrupted the economy, but the pace would pick up over the medium term.