World Bank downgrades India growth forecast

The World Bank has reduced the Indian economy's growth prospects for the fiscal year to March 2017 by 0.6% from previous forecasts - although at 7% the country is still expected to see the quickest expansion in the world.

The decision to lower the forecast was based on the Indian government's action to recall 1,000 and 500 rupee bank notes.

India decided in November that it would be getting rid of the notes in an attempt to cut out criminal activity and bring the country's economy towards a more digitised form.

The World Bank added that continued low oil prices helped India to remain the fastest growing economy in the global arena.

"Continued tailwinds from low oil prices and solid agricultural output [were] partly offset by challenges associated with the withdrawal of a large volume of currency in circulation and subsequent replacement with new notes," the World Bank said on Wednesday.

Forecasts for the next two years show that the Washington-based institution believes that India will regain its momentum after the downgrade for this year.

"India is expected to regain its momentum, with growth rising to 7.6% in fiscal year 2018-19 and strengthening to 7.8% in fiscal year 2019-20," the bank said.