Govt lowers growth projection to 7-7.5% for 2015-16

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New Delhi: The government on Friday lowered its economic growth forecast for 2015-16 to 7-7.5 percent from 8.1-8.5 percent, but said budget deficit target will be met as higher tax revenues offset a shortfall in PSU stake sale.

In its Mid-Year Economic Analysis presented in Parliament, the finance ministry said it will be able to stick to fiscal deficit target of 3.9 percent for the current year, but the target of bringing it down to 3.5 percent in the next will face pressure from higher outgo on central staff wages due to implementation of the 7th Pay Commission and Defence pensions.

“Given the challenges…, we estimate that real GDP for the year as a whole will lie in the 7-7.5 percent range,” it said, adding that retail inflation is likely to be within RBI’s target of about 6 percent.

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