However, Manmohan Singh said India's high domestic savings would help achieve a 9-10 percent growth rate in the medium-term.
The Indian economy is slowing on a combination of feeble growth in the United States and Europe, a ratcheting up of interest rates to quash high inflation and a decision-making paralysis in government.
Growth at 6.9 percent in the quarter ending September was the weakest in over two years, obliging the government to pare the forecast for the fiscal year to end-March 2012 to about 7.5 percent from 9 percent made in last year's budget.
"Despite an adverse international environment, the Indian economy is expected to grow by about 7 percent this financial year ending 31st March," Singh said in an address in Jaipur at Pravasi Bharatiya Diwas,a gathering of Indians living abroad, made available by his office.
"However, we hope to bring back the rhythm of our growth processes to sustain an annual growth rate of 9-10 percent in the medium-term. Our domestic savings rate, which currently stands at 33-35 percent of our GDP, will greatly facilitate the realisation of our growth objectives."
Singh also said the fight against high inflation was yielding results, leading to an improvement in the situation.
India's headline inflation has stayed above 9 percent for a year despite 13 rate hikes by the RBI since March 2010.
However, a rapid slowdown in food inflation in December has raised hopes of a cooling in overall inflation. The food price index fell an annual 3.36 percent in mid-December, the first drop in nearly six years.
