India's economic growth will drop to its lowest in around a decade this year as the economy continues to be in the grip of regulatory, infrastructural and financing issues, the International Monetary Fund (IMF) said in its latest economic growth forecast report.

In its World Economic Outlook, released on Tuesday, the IMF predicted that India's economic growth will drop to 4.25 per cent in the financial year ending March 31.

The estimated growth figure is significantly lower than the Indian government's projection of gross domestic product (GDP) growth of 5-5.5 per cent. It would also be the lowest since 2002-03, when the Indian economy grew by just 4 per cent.

At market price, the IMF slashed its forecast for Indian economy's growth this year to 3.8 per cent, from its own previous estimate of 5.6 per cent.

The global lender, however, foresee some improvement in Indian economy's growth in 2014. It expected the economy's growth to jump to 5 per cent in the next financial year.

The IMF also slashed its estimate for global economy for the current financial year from 3.1 per cent to 2.9 per cent, citing deterioration of the economic prospects in emerging markets like China and India.