Lower agricultural output, poor rains spoil Modi govt's dream of over 8% growth

Govt has lowered the economic growth forecast for the current fiscal to 7-7.5 percent from previously projected 8.1-8.5 percent.

Zee Media Bureau

New Delhi: Lower agricultural output due to deficit rains seems to have broken government's dream of over 8 percent growth.

The government on Friday lowered the economic growth forecast for the current fiscal to 7-7.5 percent from previously projected 8.1-8.5 percent.

The finance ministry's growth projection, in the Mid-Year Economic Review of the Economy tabled in Parliament, is broadly in line with 7.4 percent growth projection of the Reserve Bank of India.

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Retail inflation, it said, is likely to be within the target of about 6 percent.

It said the decline in nominal GDP growth will pose a challenge for meeting the fiscal deficit target of 3.9 percent of GDP.

"Slower than anticipated nominal GDP growth will itself raise the deficit target by 0.2 percent of GDP," it said, adding that "the anticipated shortfall in disinvestment receipts, owing to adverse market conditions for a portfolio that largely comprises commodity stocks, will add to the challenge."

The continuous political logjam in Parliament is also one of the main reasons that has delayed the proposed Goods and services tax (GST) which could revive both sentiments as well as aid in overall growth.

With Agency Inputs