The International Monetary fund (IMF) has cut its forecast for India's gross domestic product (GDP) growth to 7.3% in the current fiscal year from an earlier forecast of 7.5% made in July.

However, the IMF expects the country's growth to rebound to 7.5% in the next fiscal year ending March 2017 as a result of reforms, rise in investment and falling commodity prices.

India would still remain the fastest growing economy in the world even if it meets the current estimate of IMF, as China's economic growth is estimated to fall to 6.8% in 2015 as compared to 7.3% last year.

"India's near-term growth prospects remain favourable," said the IMF in its latest World Economic Outlook (WEO).

India's GDP growth slowed to 7% in the April-June quarter as compared to 7.3% in the previous quarter.

Recently, some agencies have reduced their growth outlook for India citing a slew of factors such as failure to pass reforms, weak monsoon rainfall and poor external conditions.

While announcing a cut in key lending rate by 50bps last week, the Reserve Bank of India (RBI) downgraded its outlook for India's GDP growth to 7.4% in the current fiscal year.

Asian Development Bank also lowered its projection for India's growth to 7.4% in 2015-16 from a previous estimate of 7.8%.

IMF said that a significant drop in inflation rate in the country has widened the scope of a reduction in nominal policy rate.

Nevertheless, the agency warned against additional easing of monetary policy even though it expected inflation to drop further this year.

"Real policy rate needs to remain tight for inflation to decline to the inflation target in the medium term, given the upside risks to inflation," Business Standard quoted IMF as saying. 

IMF estimates India's current account deficit to come at 1.4% of GDP in the current financial year and increase to 1.6% in 2016-17.

It also slashed world's GDP growth to 3.1% in the current calendar year from 3.3% forecast earlier.