India to grow at 6.8% this year, 9.5% in 2013: E&Y

India is expected to grow at 6.8% this year, as against the previous forecast of 8%, but expansion is expected to accelerate strongly in 2013 to touch 9.5%, global audit and consulting firm Ernst & Young (E&Y) has said.

E&Y had pegged GDP growth for 2012 at 8% in the first Rapid-Growth Markets Forecast (RGMF) in October.

"While growth in the current year has moderated, India's medium-to-long-term growth prospects remain intact," E&Y India Partner & India Markets Leader Farokh Balsara said in a statement.

According to the latest RGMF, growth in India is expected to accelerate strongly in 9.5% next year as the global economy recovers, impact of previous interest rate tightening wanes, investments increase and exports pick up.

An improvement in both domestic and external demand will feed the recovery in growth, it said.

E&Y said slackening demand, turbulent and volatile markets and credit liquidity problems in Europe are beginning to squeeze rapid-growth markets (RGMs) but not to the extent of derailing robust economic performance.

The RGMs are expected to grow collectively by 5.3% this year, in stark contrast to the mild recession expected in the euro-zone in H1 2012 and modest growth in the US, according the latest E&Y report.