New Delhi: In a report that clearly manifests the challenges confronting the Indian growth story, the Reserve Bank of India has said that if the global business sentiments do not improve in near future the financial year 2012-13 would be more challenging than the current fiscal for the Indian economy.

Runaway inflation, devaluation of Rupee, dwindling investment and the decreasing industrial growth are some of the key factors plaguing the Indian economy during the current fiscal.

As per the report, the devaluating rupee would pose severe challenges ahead. The report adds that condition of private sector is not very encouraging and the banking sector is also showing signs of worry.

As far as the agriculture sector is concerned, the situation seems to be encouraging but that is not enough to support the economy. While clouds of recession are shrouding over the industrial sector, there are clear signs of reductions in demand.

The Indian Industrial Production index is all set to head south, as production of fertilizer, steel and cement has gone down.

The service sector growth is also likely to nosedive in the coming months.

With business sentiment being grim, the companies could well choose to put brakes on further investment, which would ultimately affect growth, the RBI report says.

Based on such deductions, the central bank has said that while the growth rate for the current financial year would clearly be less than what was projected, the real challenge lies ahead during the next fiscal (2012-13).

It is noteworthy that international financial organizations like IMF have already lowered the expected growth rate of Indian economy for the current fiscal.