India's economy is expected to grow at 6.9 percent in the current financial year, its slowest pace in three years, according to the official data released by the government.

Commenting on the GDP growth estimates, Planning Commission deputy chairman Montek Singh Ahluwalia said: The 6.9 percent is consistent with what we have been saying.

Growth has slowed after the Reserve Bank of India raised rates by a record amount from 2010 until October last year to fight price increases. Also Europe’s debt crisis has added to the government’s attempts to attain foreign investments.

The government expects manufacturing output to grow 3.9 percent this fiscal year compared with a 7.6 percent increase a year earlier. Farm output is expected to rise 2.5 percent, compared with 7.0 percent.

India’s inflation in December remained the fastest in the BRIC group that also includes Brazil, Russia and China.

Meanwhile Standard & Poor's, a global rating agency, expects India's GDP growth at 6.8 percent in 2011-2012 and 6.5 percent in 2012-2013. S&P has already warned that India's investment-grade credit rating was under pressure due to weak government action, slower economic growth, stubborn inflation and growing public debt.

The S&P report released earlier upheld India's current rating at BBB−. Indian government's ability to implement policies has weakened, due to the slow and complex decision-making process and the extent to which the UPA government can implement measures to improve economic growth and fiscal prudence will be vital to boosting confidence in India, the report said.