The GOI has lowered its economic growth forecast for 2015-16 to 7-7.5 per cent from 8.1-8.5 per cent. 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 per cent for the current year, but the target of bringing it down to 3.5 per cent in the next will face pressure from higher outgo on central staff wages due to implementation of the 7th Pay Commission and Defence pensions.

Chief Economic Advisor Arvind Subramanian, the author of the analysis, said: “The economy is recovering, but it’s hard to be very definitive about the strength and breadth of the recovery for two reasons — the economy is sending a mixed signal and second, there is some uncertainty on how to interpret GDP data that have come.”

As per the analysis, “the data uncertainty is in fact reflected in the mixed, sometimes puzzling signals emanating from the economy”. Minister of State for Finance Jayant Sinha, however, added that the analysis indicates that fiscal and economic performance the government has been able to demonstrate is excellent. The Govt is doing very well (though) there are some areas of economy where we can do much better.

The government, in its Economic Survey in February, had projected a growth rate of 8.1-8.5 per cent for 2015-16, but has now lowered it to 7-7.5 per cent, mainly on account of deficit rainfall and slowdown in exports because of global factors.