" ... headwinds to growth from domestic constraints continue to pose downside risks, and vulnerabilities to sudden shifts in the external environment remain," RBI Governor Raghuram Rajan said in the second quarter monetary policy review.
The RBI had projected an economic growth for India of 5.5 per cent for 2013-14 in its first quarter monetary policy on July 30.
The economy grew by 4.4 per cent in the first (April-June) quarter of current fiscal. It had expanded by 5 per cent in 2012-13 fiscal, the lowest level in a decade.
"Strengthening export growth and signs of revival in some services, along with the expected pick-up in agriculture, could support an increase in growth in the second half of 2013-14 relative to the first half," Rajan said.
He said the revival of large stalled projects and clearances by the Cabinet Committee on Investment (CCI) would buoy investment and overall economic activity towards the close of the year.
The RBI's projections are in line with that of the World Bank and International Monetary Fund (IMF) which lowered the growth forecast for India earlier this month.
The World Bank slashed India's economic growth forecast for the current financial year to 4.7 per cent from an earlier projection of 6.1 per cent. Besides, IMF projected an average growth rate of about 3.75 per cent for India in 2013-14.
Rajan said industrial activity has weakened with a contraction in consumer durables and capital goods sector, reflecting ongoing downturn in both consumption and investment demand.