The economic growth could slow down to 7.8 per cent in 2008 from over 9 per cent currently due to policy bottlenecks resulting in deceleration in investment growth in the country, says a World Bank report.

Global Development Finance Report 2007 of World Bank has, inter alia, observed that "In India, more restrictive policy conditions are expected to lead to deceleration in investment growth and weaker private consumption and government spending, contributing to a slowdown in GDP growth to 7.8 and 7.5 per cent in 2008 and 2009, respectively," Finance Minister P Chidmabaram said in a written reply in the Lower House.

He, however, said that the report covered outlook for all developing nations in a global context, and was not exclusive on India.

In regard to developing countries as a group, the report suggested that good economic policies need to be sustained and extended for managing adjustments.

The bank also highlighted the need for greater efforts to spur the development of well-regulated and liquid local capital markets that provide developing countries with sound protection against external shocks and ensure prudential regulation of foreign borrowing by domestic banks and other regulated financial entities, he said.