The Reserve Bank of India Thursday projected an economic growth rate of 7.4 per cent for the next fiscal, up from 7.2 per cent estimated for the current fiscal by Central Statistics Office (CSO).

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The gross domestic product (GDP) growth is likely to be influenced by growth in bank credit and overall financial flows to the commercial sectors, though slowing global demand could play a dampener, said an RBI document released after the three-day meeting of the central bank's Monetary Policy Committee (MPC).

The RBI had projected the GDP growth for 2018-19 in the December policy at 7.4 per cent (7.2-7.3 per cent in H2) and at 7.5 per cent for H1:2019-20, with risks somewhat to the downside.

The CSO has estimated GDP growth at 7.2 per cent for 2018-19.

"Looking beyond the current year, the growth outlook is likely to be influenced by... aggregate bank credit; and overall financial flows to the commercial sector continue to be strong, but are yet to be broad-based," the MPC said.

It further said that in spite of soft crude oil prices and the lagged impact of the recent depreciation of the Indian rupee on net exports, slowing global demand could pose headwinds.

"In particular, trade tensions and associated uncertainties appear to be moderating global growth," it said.

RBI Governor and member of the MPC Shaktikanta Das said the risks are evenly balanced for growth.

The six-member MPC, headed by Das, also noted that the output gap has opened up modestly as actual output has inched lower than potential.

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Investment activity is recovering, but supported mainly by public spending on infrastructure, it said.

The need is to strengthen private investment activity and buttress private consumption, said the MPC document, as the central bank reduced the key lending rate by 0.25 per cent, for the first time in the current fiscal.