The International Moneytary Fund (IMF) has forecasted a 8.25 percent growth for India in 2011. IMF released the World Economic Outlook report for April 2011 on Monday. The report, however, says that India's growth will slow down in 2012 and pegs it at 7.75 percent.

However, it did not cite specific reasons for the slowing down of India’s growth next year.

“Inflation pressure is most evident in India, where, despite some moderation, inflation has become more generalised and is projected to remain high--averaging 7.5 percent this year,” the report noted.

“Food inflation is already high, but core inflation has also been increasing in a number of economies, most notably India.”

India’s neighbour China will grow at 9.6 percent in 2011 while it will marginally fall to 9.5 in 2012, the report says.

“The global economic recovery is gaining strength, with world growth projected at about 4½ percent in both 2011 and 2012, but unemployment remains high, and risks of overheating are building in emerging market economies,” the IMF said in its latest forecast. 

The report also pointed out overheating of Asian economies. “Continued high growth has meant that some economies in the region are now operating at or above potential,” the IMF held.

The challenge for most emerging market economies is thus quite different from that of the advanced economies—namely, how to avoid overheating in the face of closing output gaps and higher capital flows.

Read the World Economic Outlook, April 2011