Growth to slow down to 7.5 per cent: Mid-year review

NEW DELHI: Amid worsening global scenario and rising prices, the government today lowered the growth projection for the current fiscal to 7.25-7.75 per cent and hoped inflation would moderate to 7 per cent by March-end.

"The sharply deteriorating global economic environment has had a dampening effect on India. Compounded with some domestic factors, the global situation has led to a clear slowdown in the growth rate of the Indian economy ...", said the mid-year report card of the economy tabled by Finance Minister Pranab Mukherjee in Parliament.

The Mid-Year Analysis 2011-12 has lowered the growth projection for the current fiscal to 7.5 per cent (plus/minus 0.25 per cent) from 9 per cent estimated in February. Economy grew by 8.5 per cent in 2010-11.

On the prospects for the next fiscal, the analysis said, "the outlook remains mixed". However, given the country's strong fundamentals, it would be possible to get back to the long-run target of 9 per cent.

The analysis further said that the overall inflation is likely to decline from this month and moderate to 7 per cent by March-end. The headline inflation was 9.73 per cent in October.

On the fiscal deficit target of 4.6 per cent of the GDP in 2011-12, the government said it will not be easy to meet the target.

"...adhering to the fiscal deficit target of 4.6 per cent of GDP is a major challenge," it said adding the government will find it difficult to raise Rs 40,000 crore from disinvestment and Rs 13,000 crore telecom spectrum auction.