Prompted by ongoing global financial turmoil and weakened investment outlook, the Asian Development Bank [Get Quote] on Tuesday lowered India's economic growth forecast for the current financial year (2008-09) to 7.4 per cent from earlier projection of 8 per cent.

"The change in the global economic environment and the policy adjustments needed to maintain macroeconomic stability prompt a downward revision of growth forecast to 7.4 per cent in FY 2008 and to 7 per cent in FY 2009," the multilateral lending agency said in its update of Asian Development Outlook 2008.

The revision in growth forecast "stems from a weakened investment outlook", it said adding the WPI inflation during the year would average 11.5 per cent, as against the 4.5 per cent projected in April.

Giving a justification for downward revision of gross domestic product (GDP) forecast for India, the report said, the baselines assumptions "now suggest a much less conducive environment for growth and price stability."

Moreover, it added, the extent and duration of the global credit market turmoil and its impact on India's access to external finance were not foreseen in April when the ADB forecasted 8 per cent growth rate.

Taking into account the monetary tightening already undertaken by the Reserve Bank and measures that may be taken during the course of year, the report said, "Inflation is expected to remain high partly owing to pass-through of the June increase in oil product prices before coming down to 9 per cent in March 2009."