The World Bank on Tuesday raised its Indian economic growth forecast to 7 percent for the current fiscal year, from an earlier estimate of 6.6 percent, helped by government spending on infrastructure.

India's economic growth slowed to 6.7 percent in April-June as a decline in government spending during national elections weighed, data showed last week.

The Asian nation's central bank expects the economy to grow 7.2 percent in the fiscal year 2024/25.

India's medium-term economic growth rate will remain strong at an average of 6.7 percent over the next two fiscal years, the World Bank said, adding it expects private investment to gradually come in and aid consumption recovery.

The main challenges to India's economy include job creation. The urban unemployment rate remains high at an average of 17 percent, the World Bank said.